Horace Dediu on the potential to disrupt the automotive industry:
Executives at car companies have suddenly had to answer questions about potential entrants into their business. This is a big change. I don’t recall a time when this was necessary for over 30 years. For decades the questions have been about labor relations, health care costs, regulation, recalls and competition from other car makers. To ask questions about facing challengers posing existential questions must seem terribly impertinent.
For this reason, Bob Lutz, in his dismissal of Apple’s entry is not alone. The industry, with a century of history and has seen little disruption in the classic sense. I wrote a long piece on the fundamentals of the industry titled “The Entrant’s Guide to the Automobile Industry” which explained why this industry has been so resistant to disruptive change. At best a massive effort over multiple decades usually leads in a small shift in market share.
However, one should read that post as a thinly veiled threat. Just because disruption seems hard does not mean it isn’t possible. Indeed, the better you understand the industry the more easily you can observe its vulnerability and the more rigid the industry seems the more vulnerable it may be to dramatic change.
The formula for successful entry is the same for all industries: compete asymmetrically. This means introduce products which change the basis of competition and deter competitive responses by making your goals dissimilar from those of the incumbents. This is classic “ju-jitsu” of disruptive competition.
Here’s how it would work.
Apple has succeeded in disrupting:
- the music industry
- the (smart)phone industry
- the PC (and post-PC) industry
And while the Apple Watch is still very young they’re beginning to chip away at the watch industry.
Why would anyone think it’s not possible they eat up the automotive industry too?
Apple’s success in any new industry is far from guaranteed but to count them out seems extremely short-sighted.