Weekly Tech Update: An Unlikely Car Company
Welcome to The Macro Mail’s Tech Newsletter. Every week we highlight stories from three technology subsectors and provide insights into their implications. Today’s focus is on Automotive, Defense and Social Media.
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AUTOMOTIVE: An Unlikely Car Company
Apple, the world’s most profitable smartphone manufacturer, has announced plans to launch a self-driving electric car by 2024. No details about the final product have been revealed, although it has allegedly been in development since 2014 and will contain a range of progressive and exciting technology. Apple controls almost 23.7% of the global smartphone market; evidence of their brand popularity and disruptive powers.
They will be entering a crowded market with extremely high entry costs. Apple has become a byword for modern technology, slick design and high retail prices, meaning the car will likely be competing with luxury electric offerings from Tesla, the BMW i-line and Jaguar.
The “monocell battery” will be key to the Apple car’s success. They hope to reduce the prohibitively high cost of electric vehicle batteries and improve range, durability and charging speeds.
If Apple succeeds in significantly extending the driving range, they will address the biggest barrier to mass-adoption. One survey in 2019 found that over 40% of respondents were unwilling to buy an electric car due to concerns over limited range.
Meanwhile, Apple has continued to diversify by releasing a pair of over-ear headphones under their Airpod brand. Priced at $549, they manage to stand out in a crowded market according to reviewers. It is hoped that this will follow in the success of the wireless in-ear Airpods, which sold 60 million units in 2019.
According to Tesla CEO Elon Musk, Apple had the opportunity to buyout the electric car company at $60 billion in 2017, but Apple refused talks whilst seemingly shelving their own autonomous car project the same year. Today, Tesla is worth over ten times that amount, a valuation supported by hopes that their electric battery and driver-assisting technologies will revolutionize the automotive market.
AEROSPACE: Lockheed’s New Deal
Lockheed Martin has signed a $4.4 billion acquisition of Aerojet Rocketdyne Holdings, an American rocket and missile propulsion manufacturer. By integrating this key player in their supply chain, Lockheed hopes to increase their competitiveness in hypersonics, missile defense and space.
Aerojet has 60 years’ experience manufacturing rocket propulsion technology, helping on the Apollo program and building the main engines for the original U.S. Space Shuttle.
Lockheed is already responsible for 33% of Aerojet’s sales. A further 10% comes from United Launch Alliance, a spaceship launch provider which is 50% owned by Lockheed.
The deal was masterminded by Jim Taiclet, who became CEO of Lockheed Martin in June 2020.
During his 17-year tenure as CEO of the retail investment trust American Tower, Taiclet was highly reputed for his deal-making. He oversaw a series of mergers that grew American Tower’s market capitalization from $2 billion to over $100 billion.
Taiclet began his career in the U.S. Air Force, where he flew 5,000 miles in a Lockheed-made C-141B Starlifter. He has emphasized the importance of AI to analyze feedback data to improve Lockheed’s products, which include combat aircraft, missile control and space systems.
The losers from this deal are competitors Boeing and Raytheon Technology, who relied on Aerojet’s propulsion systems for their own space and hypersonics projects. It is currently unclear whether they will issue a legal challenge against the acquisition.
In 2019, Lockheed identified five technologies that would steer the company’s future: AI, Hypersonic Technologies, Quantum Computing, Directed Energy and Multi Domain Operations. The Aerojet acquisition represents a back-to-basics approach of reducing costs and streamlining manufacturing. It will be important to see whether Taiclet now steers the company towards investments in new technology or continues to focus on the business fundamentals.
SOCIAL MEDIA: Google in India
A new round of fundraising from two Indian tech unicorns has seen Google invest into Indian social media infrastructure.
VerSe Innovation raised over $100 million in a recent fundraising including Google, Microsoft and Alphawave. The company runs the successful news app Dailyhunt. New funding will be used to grow their short-video app Josh.
Josh is built on the model of TikTok, which in June commanded 85-90% of time spent on short-form social media in India. On June 29th, 59 Chinese apps including TikTok were banned in India, leading to a huge opportunity for domestic companies to fill the social media void.
Josh (which has 36 million daily active users) competes in the short-video space with MX TakaTak (10 million) and Roposo (1.6 million).
Glance, a news media and gaming app launched by mobile advertising company InMobi, has raised $145 million from Google and Mithril Capital, an existing investor.
Glance owns Roposo, putting it in direct competition with VerSe’s Josh.
Their main source of profit is providing media through their app, which has 115 million daily users. Instead of showing conventional ads, they use AI to direct branded content for each user.
Google Vice President Caesar Sengupta wrote that “in the last two years alone, 100 million new internet users have come online from rural India.” With the Chinese government increasingly blocking foreign investment into its own tech industry, India has huge potential for rapid growth. India’s richest man, Mukesh Amabani, has added $37.3 billion to his telecoms fortune this year as COVID-19 distancing measures have boosted India’s need for internet connectivity. However, only 40% of Indians have internet access compared with over 85% in the U.S. This number will have to increase if Indian social media firms want to compete with their Chinese and American counterparts.
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