Apple Self-Driving Car Layoffs Are a Nod to Reality

(Bloomberg Opinion) -- Project Titan, Apple Inc.'s increasingly abortive plan to build an autonomous car, doesn't seem to have the strength its name implies.

The iPhone-maker has dismissed about 200 people from the project, according to a Thursday report from CNBC. Some are being moved to projects in other parts of the company, as are other staff affected by changes at Project Titan, the report said.

Unfortunately for the employees involved, it's an unsurprising decision. Titan already underwent a major recalibration three years ago, when initial ambitions to build a full vehicle were scaled back, with the focus shifting to building the systems which would allow a car to drive autonomously. By last year, Titan had already lost hundreds of employees from the peak 1,000 staff it had around 2015, the New York Times reported at the time. Apple needed a customer willing to buy those systems, and there's no evidence it has ever found one.

As difficult and demanding a partner as Apple can sometimes prove to be, the greater issue was always likely to be that its autonomous technology wasn't up to scratch. Alphabet Inc.'s Waymo now has hundreds of cars being tested and gathering data on the streets of Arizona and Silicon Valley.

After Apple Chief Executive Officer Tim Cook warned earlier this month that sales in the three months through December would fall short of expectations, it seems as though the company is examining its internal costs more closely. He's already told subordinates to scale back the rate of hiring. If Titan isn't yet fully dead, it probably should be. It would be far more sensible to focus on bets that Apple has the better chance of winning, such as health technologies and augmented reality, both pet projects of Cook.

The move also reveals some of the cold realities of the self-driving car business. Back in 2015, as Apple and Google piled into the space, traditional carmakers started to panic. But it has become increasingly clear that the most optimistic projections of fully autonomous cars being available in 2020 were just that: exceedingly optimistic. A bevy of well-funded startups, from Cruise (now co-owned by General Motors Co., Softbank Corp.'s Vision Fund and Honda Motor Co.), to Aurora Inc. and Argo, which is backed by Ford, are steadily chipping away at the technology.

It's probably sensible for Apple to retain a core of engineers working on the problem. That ensures the company understands the technology well enough to acquire a relevant company when autonomous cars really do arrive. But it's also sensible for Cook not to sink any more cash into Titan.

To contact the editor responsible for this story: Jennifer Ryan at jryan13@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.