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Happy Wednesday. Today's update will have a Project Titan theme.
A few Above Avalon members have mentioned that Apple looks to have made progress yesterday trying to fix some of the iPhone Upgrade Program issues we discussed. I noticed that launch supply for a few iPhone Plus models has improved for iPhone Upgrade Program users, although Jet Black will likely not be available at launch. I do get the impression that Apple has placed these iPhone Upgrade Program issues as a top priority.
We will have a Thursday Q&A tomorrow - the part of the week where I answer questions from Above Avalon members. If you have questions (any subject), send them my way.
Let's jump into today's update.
New Project Titan Details
One of the more fascinating summaries of Project Titan was published last week courtesy of Autocar (available here). I didn't see too many publications notice the article, likely a result of Apple's keynote grabbing most of the attention last week. In addition, the article is written to be a recap of everything we know about Project Titan, which may have turned some people off. However, there were a few new items buried within the article that caught my attention.
Autocar is a weekly British automobile magazine founded in 1895. While Autocar has not written much about Project Titan in the past, there were a few signs found within the article that gave me confidence Autocar did its homework on Project Titan.
I will list all of the new details found in the Autocar report, and then we will go into more detail on a few items.
Apple has an electric car workshop for Project Titan at 960 Kifer Road in Sunnyvale, California. A shell company formed by Apple leased the site in November 2015.
The fleet of Dodge Caravans, leased by Apple, that has been publicly referred to as for "Apple mapping" is very likely being used to test autonomous driving technology. The Dodge Caravans are seen regularly visiting 960 Kifer Road as well as GoMentum Station, a self-driving car testing site outside of San Francisco.
Apple is targeting an initial 500,000 annual sales rate for its automobile.
Apple is investing in a new assembly process for an Apple Car, allowing the car to be be built for a low cost at a number of locations around the world.
Autocar is hearing that Project Titan now has a structure where different departments are tasked with working on solutions to different problems, whereas things were much more combined into one group in the past (we will get into details about this in the story below).
The new Project Titan R&D lab in Berlin, Germany is actually being used for Apple Maps and was launched to poach executives from HERE maps.
Apple approached German automakers to see if there was interest in serving as an assembler for an Apple Car. Everyone passed.
For a few of those bullets, I did a little bit more investigating.
960 Kifer Road. I didn't have this particular location on my Project Titan building map (I published the map for Above Avalon members back in April - you can view the map here). It is very close to "Medusa" and "Corvinus." Both Medusa and Corvinus are buildings being used by Apple for heavy-duty manufacturing. Medusa sounds something similar to SpaceX's factory, while Corvinus has a mechanical penthouse and interior gantry crane system. The web of Project Titan buildings around the Santa Clara/Sunnyvale/San Jose area represent the clearest sign of Apple looking to design its own car.
Dodge Caravans. When it comes to the fleet of Apple-leased Dodge Caravans, my suspicion has been growing in recent months that something more is going on with those vehicles. Apple's official stance is that the vans are being driven "to collect data which will be used to improve Apple Maps." While that can mean pretty much anything, most people assumed it was for recreating a version of Google Street View for Apple Maps.
However, I have been noticing something weird with these Dodge Caravans and the locations that they frequent. Apple discloses on its website where the vans will be driven in two week increments. The vans have never been to Connecticut. However, the vans very frequently visit much more rural areas such as Kansas, Idaho, South Dakota, and Wyoming. In addition, there are states where these vans are found all the time - such as Louisiana and Nevada (and we are talking pretty extensive coverage in those states). If the goal is to capture business fronts and other items on busy roads for a version of Street View, spending a lot of time in Wyoming and skipping Connecticut is odd. In addition, focusing on a few states, while ignoring other states is weird. It got me thinking.
If you look at the states that have enacted autonomous vehicle legislation, I see some overlap with the areas where these Dodge Caravans most frequently visit. Nevada and Louisiana allow autonomous vehicles, two states where these vans are routinely found. I suspect the Dodge Caravans are being used to collect data for autonomous driving. Specifically, they are collecting additional data in states where Apple will be able to test autonomous vehicles. This explains why they have never come to Connecticut (autonomous vehicles are not allowed), but spend all of their time in other states. The Dodge Caravans will end up being Apple's way of establishing a test fleet of self-driving cars tasked with improving the company's machine learning capabilities for autonomous driving.
Initial Sales Target. There has not been any reporting in the press when it comes to Apple's thought process about car production volume. When I first came across the "an initial 500,000 sales annually" figure in the Autocar, I simply nodded my head. It's not outlandish. The thing to keep in mind about Apple and cars is if the company decides to enter the auto industry, they are going to aim to have millions of cars on the road. Apple wants to change the industry. It still may be a small percentage when looking at overall car sales, but Apple would not go through all of this only to have 100,000 high-end cars on the road. To put that 500,000 cars per year number in perspective, Tesla is currently building around 100,000 cars per year. The BMW i3 and i8 had sales of 30,000 per year.
Berlin R&D Lab. The claim that Apple set up a small R&D lab in Berlin with the goal of poaching HERE maps executives is intriguing. It would fit with what Apple has done in Canada, trying to recreate the initial QNX team employee by employee. Apple's focus on mapping is an obvious clue of interest in autonomous driving, which is quickly shaping up to be a core technology that must be owned if Apple has any interest in the auto industry.
The Autocar piece serves as the latest piece of evidence that can be used to form a mosaic for Project Titan. Along those lines, the NYT published its own report about Project Titan, with a noticeable different tone.
The Project Titan "Reboot"
The New York Times made waves late last week with a scathing report on Apple's electric car plans. The article's byline included Daisuke Wakabayashi. If that name sounds familiar, Dai was the former Apple reporter for the WSJ, and he was one of the better connected reporters in terms of Project Titan.
With the headline "Apple Is Said to Be Rethinking Strategy on Self-Driving Cars," the NYT began:
"Apple is rethinking what it plans to do about self-driving cars, just as other big tech companies appear ready to plow ahead with competing efforts.
In a retrenchment of one of its most ambitious initiatives, Apple has shuttered parts of its self-driving car project and laid off dozens of employees, according to three people briefed on the move who were not allowed to speak about it publicly.
The job cuts are the latest sign of trouble with Apple's car initiative. The company had added resources to the project - code-named Titan - over the last two years, but it has struggled to make progress."
The NYT also said that Apple employees were told Project Titan is currently undergoing a "reboot" as the emphasis is no longer on designing and producing an automobile. Instead, Apple is focused on building technology for an autonomous car.
I don't want to spend too much time going over the specifics of Dai's reporting (he had a pretty decent track record at the WSJ), and there is no reason to doubt the details from his report. However, I don't think the NYT has a complete grasp on Project Titan and what is really going on behind the scenes.
The first step in figuring out what is happening is to recall that Bloomberg actually reported the crux of the NYT's report six weeks ago. The key aspect that we learned from Bloomberg was that Apple had formed three teams within Project Titan: software, sensors, and hardware. Each is led by a veteran Apple product manager. This new structure is likely linked to Bob Mansfield taking over as head of Project Titan. Before this new structure, there was more of one giant free-for-all with Steve Zadesky at the helm.
The combination of a new, proven leader in Mansfield and a more structured operational framework has led to change within Project Titan. I don't think that is up for debate. This would represent the driver behind the Bloomberg and NYT articles as well as news of layoffs hitting Project Titan. The NYT did not disclose which part of Project Titan experienced those layouts, or if it was more spread out.
However, I think people are making a big mistake in assuming that Apple has made these Project Titan changes because it no longer wants to design its own car. I actually think it's the opposite.
The new structure ultimately creates an environment where three different tracks can exist so that problems or delays with one may not necessarily derail the other initiatives. Technically speaking, you could say this new structure makes it easier for Apple to come up with autonomous driving technology without an accompanying car. That opinion seems to be held by Bloomberg and the NYT judging by their reports. However, it would be incorrect to assume Apple's ultimate goal no longer involves designing its own a car (more on this down below).
Instead, I see similarities between this new Project Titan structure and how the iPhone was developed. Apple had three groups for iPhone development: industrial design (led by Jony), engineering (led by Tony Fadell), and software (led by Scott Forstall). Each was positioned on its own track with varying degrees of success/failure along the way. There are key differences as well. Apple has been looking outside for Project Titan talent whereas that practice was not used for iPhone development. It is not a surprise that Apple has had to look outside for Project Titan - cars and transportation aren't exactly Apple's strong suit.
Two other points about the NYT article.
1) The article says that Apple employees were told of a Project Titan "reboot." I suspect there are very few people on the Project Titan team that are aware of the full extent of Project Titan. This is by design in an effort to maintain secrecy. Look back at iPhone development. The ID group didn't see iPhone software during development, and the software folks didn't see iPhone designs. The same philosophy likely applies for Project Titan. So when I hear reports saying Project Titan team members were told of Project Titan strategy, I'm a bit skeptical. They may be told of changes to their own group, but I doubt Apple is going around to everyone involved with Project Titan and discussing overall strategy.
2) And talk about burying the lede. In the last paragraph of its report, the NYT included a very brief mention that Apple is now testing fully autonomous vehicles on closed roads. That corroborates Autocar's story that Apple is already testing autonomous technology at GoMentum station in California.
Project Titan Is a Platform
The Bloomberg and NYT articles indirectly address a very important point that I have been making about Project Titan. I don't think we should look at Project Titan as just one product, but rather a platform.
The NYT article made it seem like Project Titan was formed in order for Apple to build its own self-driving car. I have a hard time believing that, especially since previous reports had indicated that autonomous driving was not planned for early Apple Car versions.
Instead, Apple is building a transportation platform. On top of that platform, you will have certain technologies such as autonomous driving, augmented reality, etc. The implication here is that Apple will indeed hit roadblocks with certain initiatives, some of which may result in layoffs. I expect we will hear about those very quickly in the press.
This concept of developing a platform, and not necessarily a product, is new for Apple. I attribute much of that due to the sheer ambition found with transportation. We aren't just talking about launching a watch into an environment where some of the core technologies and services powering that watch were already in existence. With Project Titan, Apple needs to develop a range of new technologies and services. We haven't even gotten to the area that would require the most innovation: manufacturing and production.
The idea of Project Titan being a platform instead of a single product is the reason why I have been so confident that Apple will design and ship its own car. News of Project Titan now being structured along three pillars (software, hardware, sensors) - the hardware group being led by D.J. Novotney who managed iPod, iPhone, and iPad development - with Bob Mansfield overseeing the entire project - serves as evidence of this transportation platform taking shape. Apple isn't spending $10B of R&D per year to simply develop autonomous driving software for legacy auto. Apple is building its own transportation platform.
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