Horace Dediu of Aympco is an astute strategist. Yesterday he published notes about the structure of the auto industry prompted by rumors that Apple may be readying on an automobile for production as early as 2020, just five years from now.
Read the whole (and brief!) post and you’ll be smarter about the industry than most commentators. Here’s a brief quotation on the political significance of the auto industry and why that might matter for anyone seeking to disrupt it:
The Auto Industry is significant. With gross revenues of over $2 trillion, production of over 66 million vehicles and growing it seems to be a big, juicy target. It employs 9 million people directly and 50 million indirectly and politically it must rank among the top three industries worthy of government subsidy (or interference). Indeed, in many countries–the US included–government interference makes it practically impossible for a producer to go out of business, no matter how poorly it’s managed or how untenable the market conditions.
But this might be the tell-tale sign that danger lurks. Theory suggests that incumbents going out of business is an essential indicator of industry health. Without their exit, entrants are never allowed to bring disruptive ideas to bear and innovation simply stops. Is this interference with mortality the only indication of entrant obstacles? Are things about to change? Is there pressure for innovation? Can we spot other indications of a crisis in this industry?