With Apple Inc. (NASDAQ:AAPL) rumored to be developing its very own electric car, some may wonder what value a company primarily in the business of consumer electronics – albeit a very good one in its field – can add to the automotive industry which it appears to be entering.
According to David Garrity, GVA Research principal, in an interview with CNBC, Apple Inc. (NASDAQ:AAPL) can leverage its prowess in design and consumer experience and relations for its entry into making cars.
“I think certainly with respect to Apple being able to take what is clearly a dominant consumer franchise and given a user experience or user interface if you will that I think has been superior to anyone of a wide range of competitors, Apple clearly has some very significant points that they can leverage,” Garrity said.
Furthermore, he noted that Apple is rich and has a ton of cash on hand, more than a lot of other companies out there, that they can spend in ventures like this. The GVA Research principal said that Apple Inc. (NASDAQ:AAPL) has roughly $180 billion in cash.
However, Garrity also noted that if the technology juggernaut does pursue making its very own electric car, it presents a risk to investors.
Nonetheless, he said that when you think of it, cars can be extensions of our mobile world with these machines possibly being regarded as “the ultimate mobile device”. He also pointed out that among its peers in Silicon Valley, the iPhone maker has strengths in can draw from to compete in the automotive industry.
“To the extent that if you look across Silicon Valley and you look at competitors such as Google going out and basically working on coming out with driverless vehicles, certainly Apple, given their own strengths with respect to consumer design and interaction and consumer experience, they actually have a great deal of value to offer in this area,” Garrity said.
Apple Inc. (NASDAQ:AAPL) has always been criticized for its success, Garrity said, with the company being questioned how they are going to expand their market with other products. The GVA research principal said that the automotive industry is multiples bigger than what Apple currently.
The iPhone maker will also not need to set up manufacturing facilities as there’s a surplus in capacity the company can tap into in the market. Apple’s expertise in managing successful and efficient supply chains will come in handy if they build their very own car, Garrity said.
In terms of its first entry in the market if the iPhone maker does decide to make a car, it would be a connected performance car with driverless capabilities which its driver can still drive manually, Garrity ventured.
Carl Icahn’s Icahn Capital LP owned just over 52.76 million Apple Inc. (NASDAQ:AAPL) shares by the end of the third quarter of 2014.
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