Apple building a self-driving car? Here's why it doesn't make sense

Apple may be running out of ideas. It reinvented the smartphone, the tablet, and most recently the wearable. What next, a car? A smart TV would make more sense first.

(Image via CNET)

Apple is said to be in talks with automotive experts and suppliers with the aim of building a self-driving car, a report said Saturday.

Reuters, citing a single source familiar with the talks, said the company "is exploring how to make an entire vehicle," a step away from designing just its software or individual parts which it does already.

The Wall Street Journal also confirmed the existence of the program, codenamed "Titan."

Apple first forayed into the automotive world when it introduced CarPlay. Available on just a handful of new cars in 2014, the dashboard-based system allows you to use your iPhone while you're on the road. But if the story is to be believed, now the company wants to go a few steps further.

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But the move might be in response to Google's recent drive (excuse the pun) to get an autonomous vehicle on the road.

Other than petty rivalry, it just doesn't add up. A self-driving car? It's the only time you'll hear me say, "a television would make a lot more sense."

The profit margins on a car must be wild -- particularly luxury cars that can have a profit margin of as much as 15 percent. Apple's products are already in the high-end range. The company sells its products for a premium, and it reaps the rewards short-term. The buying cycle on an iPhone is roughly every 12 months to 18 months. (It depends wildly on a phone contract, but it's why every first quarter after the December holiday period sales are almost always record-breaking.) iPads are typically longer-term, which is why after the initial sales peak there has been a dip in sales.

When's the last time you bought a car? Maybe every five, or ten years? How is Apple going to guarantee a steady and stable revenue stream from a car?

At least with a television, you could have that if you play your cards right. In fact, Apple already has that with its Apple TV set-top box. A television though could be more than the set-top box. More power, more applications, and more functions for the end-user -- it could be a smart TV for the ages (just with less listening in on your conversations).

But at least Apple TV pays for itself. It's an e-commerce platform for the living room. Want to watch a movie? You can stream it from your couch. There's no reason why a television, which ends up in the same buying cycle as a car -- every five years or so -- can't be monetized like a set-top box.

Apple's biggest headache will be how to monetize automation beyond a software offering. Right now, the car constantly taps a person's wallet in fuel costs (that could change with electric power, however), repairs, and check-ups. It's a money drain on the user.

Self-driving cars may be the future. And the rivalry with Google must be killing Apple, knowing a Silicon Valley-based search engine is kicking it to the curb in this area.

But until the crucial element of how Apple (and others) can make money long-term from a car, it's a wasted business endeavor.