Pay attention to Apple

Pay attention to Apple

Apple is on the move. Earlier this year, Apple was reported to have nearly $178 billion in cash reserves. As noted in a CNN report, this would be enough to buy companies like Disney, Amazon or IBM at their current market value. Any company, but especially a tech company, that sits on a large pile of cash without investing in growth is asking for trouble.

While this may have been a defensive move to offset an uncertain economy or increased competition, it would appear that Apple has now decided to make a move with some of that money. Last month, Apple announced it would spend almost €1.7 billion to power its European data centers with renewable energy. Apple has positioned itself as a company concerned with environmental issues, and it has supported renewable development in the past. So this doesn’t seem like anything more than a cost control issue: Apple’s investment allows it to stop purchasing energy from outside sources and even potentially sell back excess energy created.

But another news report is suggesting there may be more to the loosening of the purse strings than just cost control. At around the same time, it was reported that Apple was trying to steal away engineers from Tesla for its own electric vehicle project. Some reports indicated Apple was willing to offer a $250,000 signing bonus and a 60% bump in salary to Tesla engineers who came to Apple. And even more recently, there were reports of Apple shareholders suggesting an outright purchase of Tesla itself.

So what does this mean? It means Apple believes in the electric car. Obviously, Apple has been on the cutting edge of technology since its inception, and for the most part, the company’s gotten it right. It has the cash reserves, regular income stream and potential borrowing power (if needed) to invest heavily in the design and infrastructure for such vehicles. And while this is mostly bad news for GM and Ford, it’s more of a mixed blessing for electric utilities and players in the connected home space. Apple’s strong support for electric vehicles, along with infrastructure investment, could make electric vehicles a more realistic option for a growing number of households.

For a utility, this could mean the growth of home charging stations, and in turn, increasing electricity sales. On the flip side, Apple’s dedication to renewables indicates that, at some point along the line, some of the infrastructure investment would eventually be in the form of renewables, such as large solar arrays. Potentially, Apple could sell the energy to fuel its electric cars, causing even more load contraction for typical utilities. And, of course, if Apple figures out a way to produce and power your iCar, it will also figure out a way for that move to be just one building block in a broader connected home strategy. We imagine Apple will likely position itself as the coolest connected home platform out there, giving Google, Comcast, ADT, Vivint, Lowe’s and others a run for their money. Seem a little farfetched? Maybe … much of this is conjecture at this point. But remember how farfetched it seemed 20 years ago to have a phone in your pocket. And when was the last time you used a payphone?

 

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Posted on

April 1, 2015

About the Author

Jim Lyza

Jim is a former contributor to Shelton Insights.

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