Is this the beginning of the end for Tesla - Mercedes EQC

Anteayer wrote: »

Nokia and Ericsson went back to their core business : network infrastructure. It's actually a very, very different sector. Ericsson has been around for over a hundred years and is hugely dominant in telecoms infrastructure. You've been making calls on Ericsson switching equipment all your life and so was your granny in the 1950s. Nokia absorbed Alcatel which included Bell Labs.

Both companies are anything but 'gone'.

The problem was neither were consumer product companies by origin and when the technology shifted to basically being a mobile touch screen computer, two old infrastructure companies didn't have the knowledge of user interfaces and computer technology to compete and the emphasis for handsets shifted to Silicon Valley.

Other than it contains the word phone and can make calls, a smart phone is not primarily a phone. It's very advanced computer. An iPhone has everything in common with a Mac and almost nothing in common with a Nokia 5110. It would be like comparing a PC to a 1990s VCR. They can both record television programmes but they've nothing in common beyond that one function.

In the car industry the older players are finely honed consumer oriented manufacturing outfits that are extremely good at what they do and the shift of technology is only the drive train. The fundamental of design, manufacturing, supply chain and marketing haven't changed.

Tesla would have had to have made a breakthrough like flying cars that had some element of teleportation to be compared to the dawn of the smartphone Vs the telephone.

Nokia actually had great experience with making smartphones. They had Smartphones, even touchscreen ones, far before iPhone, Symbian OS, etc. and they knew perfectly well that the future of mobile phones was portable computers, etc. and were working in that direction far before Apple.

The problem was they got caught flat footed by the introduction of the iPhone, it was very powerful and it used a very intuitive interface on a capacitive touchscreen.

They thought it looked cool, but didn't feel it was a threat. Nokia was the world leader by far, iPhones were too expensive for most people, it would take years for Apple to scale up production to match the 100's of million of mobile phones Nokia made every year. Nokia would have plenty of time to make their own touchscreen smart phone and use their massive manufacturing capacity and great brand name to crush Apple.....

Well we all know how that worked out and doesn't it sound sort of familiar?

If you ever read the great book, "The Innovators Dilemma", you'd know that all the companies who have failed to keep up with disruptive innovations over the years, all knew these disruptions were the future and were working towards their own versions, but what just too slow in changing.

The issue is that they often have massive levels of debt invested in the old technology, big factories producing the old product, they don't want to Osbourne effect their old products and investment by releasing a sexy new product too soon. Ideally they want to VERY slowly ramp up the new product, drip feeding it out, while they still sell much more of the old product.

Sound familiar?

Also their can be massive internal fights within these companies between conservatives who want to produce the old product and innovators who see the danger and want to move forward. Fighting between these groups can often slow them down by years (see BMW's boards arguments about EV's as an example).

The new companies don't have these problems, they don't have an old product to sell. They have just one very clear goal, scale up and sell as much of the new product that they can, grab as much marketshare as they can, as quickly as they can.

This is where the old companies fail, people see the new product, from the new company and decide they want that, rather the the old one and stop buying the old one much faster then the old company planned for, leaving them with massive amounts of unsold stock and old factories tooled to make the wrong product and most importantly mountains of debt that they can't repay and thus go into bankruptcy.

Working in the the tech industry, I've seen this happen over and over again. It isn't anything new.

And I have to say, I'm seeing this written all over the car industry. It is laughable how obvious it is.

I'm not saying for certain if Tesla will survive or not, but I will say I'm certain some of the traditional car companies will definitely collapse under their mountains of debt invested in old technology like diesel engines factories and being too slow to change.

And yes, some new companies will raise up to take their place. Maybe Tesla, maybe some Chinese companies, etc.

BTW It wasn't really Apple that killed Nokia, it was Google, Samsung and the other Asian companies. When Apple released the iPhone, Google was working on Android, but it was designed to compete with Blackberry. On seeing the iPhone, they knew that was the future and they quickly re-wrote it for touch screens and then their Asian partners swamped the market with Android phones at all price points. That is what really killed Nokia. Nokia could have survived Apple taking the top 15% of the market from them. But they couldn't survive losing all the other markets segments to Samsung, etc.

Nokia were simply too slow to react and they thought they were too big to fail...

And I wouldn't be surprised if we see that happen again with cars. I suspect Tesla are here to say, but like Apple they won't be the biggest company, they will just end up with a very nice marketshare. The interesting question to me, is who will be the Samsung of the EV industry, the existing company who quickly switches to EV's before the rest and ends up taking the majority of the market at lower price segments. VAG look like a possibility here, but we might get surprised by Toyota, Nissan, etc.

Anteayer wrote: »

Well, Google actually acquired Android Inc in 2005. I suspect that's what's going to happen with Tesla ultimately.

The iPhone was launched in 2007...

It really isn't the same at all. Android, Inc. never did sell any products to any consumers. They created an OS, that they tried to get other companies to buy, that was their goal.

It was late 2008 when the first Android phone was ever sold.

It is a poor comparison.

Maybe Google buying Motorola is a better comparison, but still poor. Motorola were one of the traditional companies who were too slow to react to the market changes and ended up a very bad buy for Google too.

Shefwedfan wrote: »

Tesla and Apple should not be compared.....

Both have fan boys and that is about the only comparison that should be made

And so do VAG and Nokia had.

I'm trying to point out the very real effect of disruptive changes on traditional companies.

Anteayer wrote: »

The entire comparison with the mobile phone industry is poor as the parallels don't really exist. There's a massive difference between producing relatively cheap (sub $1000 cost) electronics units in mass production that's almost printed and making cars.

It really isn't that different. Disruptive changes impact every industry. That is the point I'm making.

Sega, NEC, Compaq, HP, Toy's R Us, Motorola, Yahoo, MySpace, Kodak, AOL, Blockbuster, I could go on all day.

Even the car industry isn't immune to disruptive changes.

The US car companies nearly went under multiple times with the rise of the Japanense Companies and also recession and oil crises. The only reason they are around still because they got bailed out by the government.

VW, Audi and Porsche had to merge in order to survive. Nissan and Renault.

We will see lots more of these sort of mergers over the next few years as the disruptions of EV's, environmental restrictions and self driving hit hard.