Cupertino, CA (4/1/06)
On the 30th anniversary of the founding of Apple computer, the company unleashed a bombshell on the financial markets with the announcement that the company had inked an agreement to purchase General Motor's troubled Delphi unit. Delphi makes car radios for the entire GM product line, and also manufactures a wide variety of other automotive parts and accessories.
Delphi declared bankruptcy yesterday in Federal court, clearing the way for its new owner to fire the entire union employee base. Apple Computer also announced that beginning in 2007, every GM car would have a built in iPod dock as well as an option to have a full Macintosh computer. Apple noted that with many new cars sporting a 7" color LCD panel that displays a variety of information, including maps and even a movie player, adding a computer just makes sense.
Steve Jobs, the CEO of Apple, said, "This is the next evolution in the automobile. As carmakers add more and more electronic features to cars, it is actually cheaper just to add a full blown computer to the car rather than write custom software for each feature." Apple's top executive went on to explain that WiFi networking would be fully integrated. "When you park you car next to your house, you can immediately download a full set of iTunes music, television shows, and movies to your car. This is what our customers have been telling us they wanted."
Jobs went on to describe a family preparing for a long trip. "OS X is already multitasking, so in a family car with the optional headrest LCD panels for the backseat, Dad could be using the Mac's Garmin-enabled GPS software to find the shortest route to DisneyWorld, Mom can be listening to her favorite Josh Groban CD, and the kids in the back seat can be playing Nanosaur II--all using a single Mac with OS X's great ease of use."
Although some analysts at the announcement were initially stunned, they broke into excited chatter once they realized that with millions of Macs being installed into GM cars, Apple's computer market share could triple over the next couple of years. One analyst seemed to "get it." "Apple's marketshare has increased substantially since the introduction of the iPod, and the "iPod halo" really has sold a lot of computers for the company. This is completely logical. Car buyers who might never have taken a second look at a Macintosh computer for the home or office will discover what a terrific system it is in their car, and this will lead to more desktop and laptop Mac sales." Another analyst said the wireless networking and fully integrated iTunes support was "brilliant."
With the typical Jobs flourish of, "...oh, and just one more thing..." the CEO also announced that Apple had purchased 10% of GM's stock, using a small portion of the computer company's huge cash hoard, which is estimated to be near $10 billion. Jobs went on to say that Apple is now GM's single biggest stockholder, and that Apple will be lending GM its vaunted Apple industrial design group to help the beleaguered car manufacturer introduce more style into the line up. Apple's chief designer, Jonathan Ive, walked out from behind a curtain at this point with a set of posters promoting the iCar, a new concept car for GM designed to appeal to the 18 to 25 age group, which is a demographic that GM has had trouble selling to for many years.
The iCar looks eerily like a Volkswagen "bug," with styling reminiscent of the very first iMacs: bright colors, extensive use of plastic trim, and a low price tag to appeal to first time car buyers. One poster even evoked a past Volkswagen advertising campaign where VW sold cars with a mountain bike strapped to the roof. The mock-up ad showed an iCar with a PowerMac computer strapped to the roof. Although Ive explained the ad was really just "a little April Fool's joke," he went on to say that Apple and GM had already had discussions about bundling desktop and laptop computers into the purchase of a GM car, with the extra cost built into the car loan.
Analysts predicted that these announcements would be a welcome boost for GM's stock price, which has lost substantial value over the past several months.