Silicon Valley is dead - long live Silicon Valley ...

Original author: Mike Hoefflinger
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Who am i?

I arrived in Silicon Valley (CD) at about the same time that we were first transferred to a “distant, distant galaxy”. Started with a Byte store, 48KB Apple II +, automatic dialers and 300 baud modems. He worked in CD 25 years. And now it is interesting there as never before.

Silicon Valley, a consumer product

We will establish evolutionary cycles in order to better understand the unsurpassed creative self-destruction of CD.


CD version 0.1 (alpha, 1956-1977, no consumers). Strictly speaking, CD began with the founding of Shockley Semiconductor, from which Fairchild came out a year later, and in 1968, Intel. But I consider this period as a 20-year alpha version, because then they did not have any consumers.

KD 1.0 (personal, 1977-1992, tens of millions of consumers). The appearance of the twins Apple II and Atari VCS / 2600 in 1977 (both Steve Wozniak and Steve Jobs were at the source) introduced the CD into the minds of consumers as a supplier of useful and eye-catching machines.

KD 2.0 (in contact, 1992-2007, hundreds of millions of consumers). In 1992, America Online for Windows (and next year, Mosaic Internet browser) marked the beginning of this cycle. It includes the rise of user internet, and with it the emergence of Amazon for shopping and Google for search.

KD 3.0 (mobile, 2007-2022, billions of consumers). Representing the iPhone as “it's an iPod, a phone and an Internet communicator” has introduced us into the cycle that we are now in. And, whatever exciting it may be ...

Mobile devices not well advertised

Smartphones (and, in a sense, tablets) are not only the most valuable information devices for the current generation (and more personalized than the Internet on the desktop), or even for several generations (they are more complex, global, affordable and often used than TV).

Prediction : mobile devices will remain the most valuable information devices.

A powerful device with a screen that is in your pocket all day and connected to everyone and everything they need is indistinguishable from magic. It represents more than the sum of all the best parts of all previous information devices. The depth of the press, the mobility of the radio, the emotions of television, the determination of digital technology ...

They improve our social life, as well as the economic and political aspects of life. And the three most valuable services are Google (organizes billions of pieces of information), Facebook (billions of people) and Amazon (billions of things).

If the end of CD version 3.0 is similar to 1.0 and 2.0, we still have about 7 years left.

Prediction: From the communications present with us, we will move on to the communications present on us. The world will be not only in our pockets and palms, but also on our wrists and noses.

Accessories that help us feel our connectedness with the world every second (wearable gadgets like Apple Watch) or more deeply (virtuality like Oculus Rift, Samsung Gear VR or Google Cardboard and augmented reality like Microsoft Hololens or Google Magic Leap). Like other technologies, these accessories will take big steps in their third generation, so be prepared to feel the increased connectivity starting in 2019. Yes, mobile devices, their services and accessories are what the third version of CD is most famous for. But we won’t end it until it comes ...

True mobility

At the turn of CD 4.0 (around 2022), people get the opportunity to be in touch anywhere. But the distances separating us have not been innovated for a hundred years. We will not be truly mobile (by definition, “able to move freely and easily”) until cars get all the advantages of computing power and communication systems. It could begin, like two of the three previous CD cycles (Apple II and iPhone), with a beautiful integrated system authored by Apple.

Prediction : Apple will introduce an unmanned vehicle.

Despite Apple struggling with everyone else supported by Google on the smartphone field, Apple will go against its competitors using the robomobile platform developed by Google. And all the rest - Tesla, Mercedes, and others, will take on the role that Samsung plays for Google in the field of smartphones.

Movement in an unexpected direction

In connection with the above predictions, three questions arise.

1. Why Apple (and not Google, Tesla, BMW, Mercedes, etc.)?

Although Apple will have to catch up, especially in the areas of production of mechanisms and batteries, they have a design, system integration, market coverage, a powerful supply chain, a lot of money, a brand and advantages in entering the market. Although traditional car companies like Mercedes, Volkswagen Group or BMW have dozens and hundreds of their CD specialists working on robotic vehicles, these numbers are overshadowed by the capabilities of Apple (or Google), where rumored to have thousands of people working on it. At the same time, Apple / Google should not each time apply for permission and resources to the home office in Stuttgart, Wolfsburg, Munich, Detroit or Tokyo.

2. Why is the final product (such as iPhone) and not a platform (such as CarPlay)?

The terrifying failures that followed when Apple allowed others to make products for end consumers based on their technology (remember the Mac clones and MOTO ROKR E1) taught Cupertino not to do such things anymore - they haven't done it for ten years now.

3. Why the year 2022, if Google already has robomobiles today?

The key moment in robotic vehicles is the door-to-door delivery of the user by 100% without his participation, including technically difficult trips along ordinary streets in residential quarters. Even Google and Tesla do not promise us 100% unmanned vehicles before 2020. And knowing how such things are done in CD, we are free to throw them a couple of years.

And even with all this argumentation, there are three serious reasons for Apple not to get stuck in the development of vehicles:

1) A new type and a new scale for production. Apple has worked on reducing gadgets over the past 20 years. Why would they suddenly decide to stamp square meters of steel?

2) Margin percentage is lower than usual. Even BMW has a corporate margin of 10%. For an office like Apple, which is used to a margin of around 50%, this is cruel.

3) The need for new retail sites and infrastructure. The traditional sale of a car (even without the need for lineup support) will require serious investment in real estate. Although, you can imagine that they will show cars in existing stores, and for a test drive, bring them directly to the address.

But in the end, the benefits outweigh:

  • Improving the quality of life of people. Apple will not miss the opportunity to bring people together, reducing the psychological and physical distraction of driving a car to zero.
  • Saving the lives of people. 90% of accidents occur due to people's mistakes (1.2 million people die in the world every year and 20 million get injured. From 45% to 60% of deaths occur in accidents where only one car was involved - this is the most suitable case for replacing cars with robomobiles). If Apple creates a product that opposes the most common cause of death among people 15 to 29 years old, eliminating accidents caused by drunk drivers (30% of the total number of accidents) and accidents caused by driver distraction (18% of all accidents) , it will be the coolest thing that we saw before, and will be surpassed only when Apple invents teleportation in the year 2122.
  • This will lead to strong business growth - even a business like Apple. Profit from a piece can be up to $ 2500 (this is like 10% from a car worth $ 30,000 at BMW), despite the fact that the market is estimated at 40 million units a year in the world. And they will do with the products of Lexus, BMW, Mercedes, Audi and Acura (each of which sells from 1.3 million to 1.8 million cars a year) the same as their phones did with Blackberry, Nokia and Motorola. Selling at 2 million units a year, they can receive an annual income of about $ 50 billion, of which $ 5 billion will be a margin.
  • Johnny Ive, the chief designer of the company, will be interested in going to work for the next ten years (the “irony” tag)

What Apple Car Can Be

Prediction: Apple will start with a standalone electric two-door car for trips up to 150 miles away. You will need to build a breakthrough platform and make it available to premium users who buy their first car. It can be followed by a sedan capable of traveling long distances, or even a crossover.

Imagine that the windshield of a robomobile is added to the right.

If Apple uses the technology of variable transparency of the windshield in its car, combines it with integrated LCD displays or projectors, then the robomobile will simply turn into the largest screen in the family of their devices. Distances will be measured not in kilometers, but in the number of films watched by Pixar or episodes of the 9th season of the Silicon Valley series from HBO.

KD 4.0 - winners and losers

Apple (product), Google (platform), Facebook (time and location of people) and Uber (control over car traffic and “transportation as a service” when robotsi start joining the company) can seriously win.

Lexus, BMW, Mercedes, Audi and Acura (and maybe even Honda, Toyota and Ford) may lose at least a third of their total market, because it may happen that only one company gets the opportunity to produce cars for Google’s platform.

Right on time

The feeling of true mobility will befall us at the very moment when Silicon Valley will turn 50 in 2027. But don’t worry. You don’t have to bring your children to this party - Apple Car will do it for you.

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