Apple is chasing Musk

Cook may be stepping into the same river as Musk once again.

On August 15th, Beijing time, Bloomberg's renowned Apple analyst Mark Gurman revealed that Apple is developing a home robot.

According to Gurman, the robot will combine a display similar to an iPad with a mechanical arm; it will be led by the well-known Apple Vice President of Technology, Kevin Lynch, who has not only managed the engineering work for Apple's smartwatch and health software but was also in charge of Apple's previous car project; in terms of specific plans, the robot will incorporate the latest Apple Intelligence, is expected to be unveiled in 2026 or 2027, and will be priced at $1,000.

The rumor that Apple is making a home robot is not new, and even the concept of a desktop robot has been exposed as early as July this year, but the information was very vague before.

After the news spread, Apple's stock closed up 1.35% that day. It is understandable that the market lacks enthusiasm: Cook is up to something new, which is also not news. Cook has been the CEO for 13 years, and now the iPhone has reached the ceiling of growth. Although the smartwatch and wireless earphones that he led Apple to develop have achieved some success, they are still far from becoming the next iPhone. Apple's growth anxiety still accompanies Cook.In the past two years, Apple's "innovation" has accelerated, frequently launching new products. In June last year, Apple's mixed reality headset, Vision Pro, was officially unveiled and subsequently released in various locations around the world. By the end of February this year, Apple's automotive project was disbanded, and in June, Apple's smart home initiative was officially announced.

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Robotics is another hot track in the current market, and Apple's presence, though late, is expected. Although the ten-year automotive dream has failed, it has left a certain amount of technological accumulation and talent reserves. Apple's smart home initiative serves as the "brain" that adds color to the ecosystem, and these can provide nourishment for the home robot project.

The path chosen by Cook coincides with that of another Silicon Valley bigwig, Elon Musk, who is also facing growth anxiety.

At Tesla's shareholder meeting in June, Musk even brought the "Optimus robot" to challenge Apple, claiming that in the future, Optimus will help Tesla's market value to be ten times that of Apple. Moreover, Musk's founded xAI has already begun to stand out in the industry, with its large model Grok having been updated several times, with a valuation reaching $24 billion. Tesla's autonomous driving technology, xAI's large model, and the Optimus robot can complement each other and benefit mutually. Faced with a bottleneck in the sales of Tesla's electric vehicles, Musk is also actively looking for a way out.Similar anxieties, similar recipes, similar paths. The difference is that Musk is always one step ahead of Cook. From cars, to the era of ChatGPT in the pursuit of artificial intelligence, and then to robots, it is all the same — there is a sense that the elder Cook is somewhat chasing after Musk.

 

A

 

Apart from the specific form, the person in charge, the planned market launch time, and the selling price, Gurman also revealed that the project was approved as early as 2022, and has been officially launched and accelerated in recent months.

 

The reason the project did not start for two years is that there has always been hesitation within Apple about it, including many in the engineering and marketing teams who were worried that consumers would not pay for such a product.

 

The report specifically points out two supporters, one is the hardware engineering chief John Ternus, and the other is CEO Cook.Perhaps due to the enthusiastic response in the market and among consumers following the official announcement of Apple's smart assistant in June this year, if the report is true, Apple's determination to enter the robotics field has overcome concerns.

Details from the report also indicate that this is not a small project.

In addition to leading the team personally, Lynch has recruited key deputies from the Apple smartwatch to assist, and has also brought on board well-known robotics researchers and engineers (who have not been disclosed).

The robotics project is closely related to Apple's artificial intelligence efforts, and Lynch will report directly to John Giannandrea, Apple's head of artificial intelligence. The product will primarily be controlled by Siri and Apple's smart systems. The robotic arm controls the direction of the flat panel display, allowing it to turn in specific directions while responding to commands.

Furthermore, the hardware engineering team is also involved. Matt Costello, who was in charge of the development of Apple's HomePod smart speaker, is overseeing the hardware aspects of the robot project.In addition to desktop robots with robotic arms, Apple has also internally discussed the possibility of humanoid robots. The latter is led to some extent by roboticist Hanns Wolfram Tappeiner, with about 100 former automotive team engineers reporting to him.

Apple's entry into robotics is inseparable from its years of accumulation in the automotive project. According to a report by Bloomberg in April this year, Apple's robotics project originally sprouted from the automotive project "Titan."

At that time, Titan was led by Doug Field, who brought in several executives to carry out plans related to robotics, ranging from almost silent drones to home robots. After Field left Apple in 2021, the work related to robotics was transferred to the home device department. At least one former hardware team from the automotive project was also reassigned to the home device and robotics field. According to people familiar with the work, the automotive operating system - SafetyOS - could theoretically be customized for robots as well.

Do you remember why the Apple car project eventually failed?

According to multiple foreign media reports, the Apple car project, which was a dream for a decade, ultimately failed due to internal disagreements at Apple, Cook's indecisiveness, technical challenges, and the harsh reality of the automotive industry. At the beginning of the car project, Apple had an all-or-nothing attitude, wanting to develop a car with L5 autonomous driving technology, no steering wheel, and a futuristic appearance that was "far ahead" of its time.After the dissolution of the automotive project, whether it's Vision Pro, Apple's smart initiatives, or the current home robot-related leaks, Apple seems to have learned its lesson and shifted away from its previous perfectionist tendencies, no longer pursuing a "one-step solution." Instead, it is becoming more pragmatic in its pursuit of incremental progress.

Apple's smart initiative was officially announced just a few months after the automotive project, not going for the "super-sized" version as speculated by the outside world, but opting for a smaller model, adjusting in hopes of maximizing its support for the ecosystem. The rumored robot project, while discussions about the more challenging humanoid robots have taken place, it is the more feasible desktop robots that are being launched first.

Stepping back, Apple, in its search for incremental opportunities, has set its sights on the robot race, which is already a hot sector. Perhaps Cook has realized that even the best ideas are useless if they don't come to fruition, and burning $10 billion won't help either.

B

In the river that Cook has entered, Musk is already playing in the water.In the year preceding the rumored "Project Through" of Apple's desktop robot, in August 2021, Tesla first proposed a humanoid robot plan. The following year, at Tesla's AI Day, the "Optimus" prototype really took to the stage, making its debut. Now, Optimus has already evolved to the second generation, and according to Musk, several Optimus robots have already entered Tesla's factories for "internships."

In June of this year, riding the wave of the approval of the $56 billion compensation case, Musk repeatedly emphasized on stage at Tesla's shareholder meeting that Tesla has become a leader in the robotics industry, and will be ten times higher than the world's most valuable company in the future, of course, this refers to Microsoft and Apple, which were valued at $3.3 trillion at the time.

Musk once boasted that Optimus would be mass-produced in 3 years and commercially available in 5 years, with a price not exceeding $20,000.

Before these goals are achieved, these dazzling numbers can only be considered as Musk's (consistent) way of painting a pie for the world. A more practical progress is that the market is still waiting for the "limited production" of Optimus next year, that is, small-scale mass production.

According to delivery reports, Tesla's car sales have declined year-on-year for two consecutive quarters. In addition, according to financial reports, Tesla's car revenue in the second quarter also declined year-on-year, and the gross margin weakened. The advantage of "earning $10,000 per car" that once led the industry is also being gradually eroded by the sluggish sales.In the second quarter's revenue, the income from the automotive business accounted for as much as 78% of the total revenue. Electric vehicles have been, and currently remain, the main pillar of Tesla's revenue, and Musk is naturally anxious.

Currently, the Optimus, Dojo supercomputer, Robotaxi, and affordable car models are all new stars of Tesla that Musk frequently mentions. In addition, there is xAI, an artificial intelligence company founded by Musk, which, although not under Tesla, has had talent exchange and allocation of computational resources with Tesla. Furthermore, Musk has considered investing $5 billion in xAI for Tesla.

A significant characteristic of these businesses is that they branch out in various directions, yet complement each other. Musk is digging channels for incremental growth and looking forward to eventually converging into a vast sea.

Apple has also encountered setbacks with its mainstay, the iPhone. Apple's financial report for the third quarter of the fiscal year 2024 (corresponding to the second quarter of 2024), released at the beginning of August, shows that although its revenue and net profit have increased year-over-year, the iPhone, as its core hardware product, has become one of the few products with a year-over-year decrease in revenue, slightly down by 1%. Another business with a year-over-year decline in revenue is the wearables, home, and accessories segment, which has been the main focus of "innovation" since Cook took office 13 years ago, with revenue of only $8.2 billion for the quarter, down 2% year-over-year.

In addition, Apple is facing a significant market—China—where growth has been lost. Apple has experienced a decline in revenue for four consecutive quarters in the Chinese market. The strong return of Huawei's high-end models has further reduced Apple's appeal in China's high-end smartphone market.Elon Musk's ambitious rhetoric is sufficient to "inspire" Tim Cook—both not only possess experience in car manufacturing (although Tesla's experience is more practically valuable), but also have accumulated years of expertise in artificial intelligence. More importantly, both share a similar "incremental anxiety."

C

This is not the first time Cook has stepped into the same river as Musk, albeit a step slower.

As early as the initial stages of the Apple Car project, Tesla was considered a primary competitor and obstacle. Apple's automotive dream dates back to the era of Steve Jobs. According to the biography "Steve Jobs," Jobs himself had a fondness for cars, and after removing the word "computer" from the company's name in 2007, he repeatedly mentioned the idea of building a car in public. He drew an analogy between cars and iPhones, believing that "cars have batteries, computers, engines, and mechanical structures, and so do iPhones."

However, at that time, the American automotive industry was in a slump, and the 2008 global financial crisis erupted, leading to a contraction of capital. It wasn't until 2014, three years after Jobs' passing, that Cook, who had taken over as CEO, led Apple to embark on a car project that would last a decade.At that time, Musk had already been in charge of Tesla for six years, with two mass-produced models, the Roadster and Model S, on sale, and the Model X was about to begin deliveries. Meanwhile, autonomous driving had become a hot race in Silicon Valley, with companies like Google vying for a spot.

Apple had just released its first new category under Cook's leadership—the smartwatch—and Apple had anticipated that iPhone sales would slow down in the coming years. The vast consumer market with a notable average transaction value in automobiles seemed like an obvious choice.

Interestingly, according to a report in The New York Times, part of the reason Cook approved the project at the time was to prevent engineers from defecting to Tesla. However, Cook was also aware that Apple was a bit late to the game, as it would take at least two to three years from development to market launch, by which time Tesla would have already dominated the market for several years.

It turned out that Cook's concerns did not materialize, but the reality was even more brutal: a decade later, Tesla indeed dominated the market for many years, but Apple's car project burned through $10 billion without even producing a prototype.

On this long journey of car manufacturing, Cook also led Apple to try other things, among which the most anticipated was the mixed reality headset. The Apple headset was initially planned to be announced in 2019 and publicly released in 2020, but the timeline kept changing. There have been leaks about this Apple "next big thing" since 2021, and in 2022, the media even speculated that the product could be "launched this year at the earliest."But as we all know what happened next, it wasn't until the middle of 2023 at Apple's WWDC that the Apple headset device, Vision Pro, was officially released. After a long wait, it was finally launched in the United States in February of this year, and in June, it became available to more countries and regions around the world.

This is one of the rare divergences between Cook and Musk on the path to seeking incremental growth. Musk not only has not ventured into the field of mixed reality headsets but also looks down on them. As early as the end of 2021, when discussing headset devices, Musk exclaimed that he did not understand them, considering them to be "televisions worn on the face." His solution for virtual reality is the brain-computer interface. Indeed, after the release of Vision Pro, Musk was extremely sarcastic, saying that it would be better to spend 20 dollars on a bag of hallucinogenic mushrooms rather than 3500 dollars on it.

Although the user experience has made digital reviewers exclaim "eye-opening," the starting price of Vision Pro in Mainland China is 29,999 yuan, which almost certainly dooms it to be a toy for a small number of people. According to data recently released by IDC, Vision Pro only briefly caused a sensation at launch and has not sold more than 100,000 units in a quarter, with a downward trend, and it is predicted that the annual global sales will not exceed 500,000 units. In addition, there have been rumors of a high return rate for Vision Pro (many people returned it after experiencing it). It can be said that, at least for now, Apple has spent four to five years carefully polishing a "beautiful waste," which is not making much contribution to the company for the time being.

After Vision Pro, Cook coincidentally appeared again, running behind Musk.

At the end of November 2022, while Apple was still delaying the release of its new headset, OpenAI launched ChatGPT, which set off a global AI gold rush. Unlike Microsoft, which caught the wave from the start, Google, which quickly joined the battle, and Musk, who has been on the front line denouncing OpenAI from the beginning, Apple was quite low-key for almost a year, hardly talking about artificial intelligence.In July 2023, after a long "feud" with OpenAI, Musk suddenly turned around and established his own startup, xAI, joining the battle for large models. By the end of January this year, xAI had unveiled its first self-developed large model, which has been continuously iterated since, and completed a $6 billion financing round, with a valuation reaching $24 billion.

Also during this period, Apple's stance in the artificial intelligence competition gradually became clear. First, it suddenly disbanded its automotive team at the end of February, transferring many employees to the artificial intelligence team. Shortly after, in June this year, Apple introduced Apple Intelligence to the world, a pace that is lightning-fast compared to its previous automotive and Vision Pro projects.

Optimistically speaking, Apple's foray into home robotics is likely to prioritize practical implementation over perfection, using a nimble approach to explore new product categories.

Pessimistically speaking, the field of home robotics has not yet seen a product that has been mass-produced and achieved significant profits in the consumer market. Amazon's previously launched home robot, Astro, has performed modestly, and it's not even widely known.

After the starting gun of incremental anxiety, Cook and Musk run onto the same diverging path, one after the other. However, this path has neither streetlights nor signs, and whether it leads to a dead end or a broad avenue remains to be seen.