Dieter Zetsche, Chairman of Daimler AG and chief executive of Mercedes-Benz Cars, has stepped up to be the next major auto executive to dismiss Apple's much rumored "Titan" car. Dr. Zetsche, a 37 year veteran of Daimler, said that Apple has no experience in cars and asked why the iPhone maker would be interested in such a low margin business.
In an interview with Motoring.com.au, Dr. Z (as he is called), said, "If there were a rumour that Mercedes or Daimler planned to start building smartphones then they (Apple) would not be sleepless at night. And the same applies to me. And this is full of respect for Apple. That is what I am saying."
Dr. Dieter Zetsche in 2009
Dr. Z is brilliant, a real brainiac, but like his compadres in the auto industry, his comments only illustrate that this industry is moribund and ripe for disruption. If you take the above statement and substitute "car" for "cellphone," you have exactly what the cellphone industry and its outside observers said about the iPhone in 2007.
There's, more, however, because Dr. Z also added some comments about the auto industry being a low margin business. This, too, was said by everyone and her brother about the cellphone industry when the iPhone was announced.
From the interview:
I don’t find any rationale (for Apple to build a car). Why (Apple) with this kind of margin would now go into this business? I think investors will hate it because they don’t like conglomerates, they want focussed management on what they understand.
Perhaps some neighbouring fields but not somewhere different. The fact you can listen to iTunes in a car doesn’t make it in itself consistent.
I don’t know their strategy and I do not know what they are doing, but I would be very surprised if that proved to be right.
Same argument, different industry. I suspect the results will be similar—perhaps not in scope when compared to the iPhone, but if Apple enters the car market in the first place, chances are the company will do well.
The auto industry seems obsessed with questioning why Apple would want to enter that market. They approach the question from the standpoint of everything they know. There are low margins, it's about steel, and the established players do little more than jockey for position.
But Apple's track record should let them know they should think differently. Rather than questioning Apple's actions based on what they know, they should be asking what Apple knows that they don't. Doing so is difficult, however, and this is apparently so even for brilliant people like Dr. Z.