This Could Be Apple’s Greatest Accomplishment
In an interview with CNBC last month, Tim Cook — CEO of Apple, the first American company ever to cross $1 trillion in value — said something interesting, if not surprising.
“I believe if you zoom out into the future, and you look back, and you ask the question, ‘What was Apple’s greatest contribution to mankind?’ It will be about health.”
In other words, Cook believes that Apple’s most important accomplishment will not be our collective addiction to small screens like the iPhone and iPad, but its currently-unestablished contribution to healthcare.
He’s not the only person excited about the potential of that contribution. Last year, outlets from Computer World to Vox to Healthcare Innovation issued reports hinting that Apple’s first serious step into the healthcare space was imminent — and, indeed, potentially historic.
They were likely right, as Cook indicated last month. But I believe this contribution is, by and large, a missed opportunity.
Apple should not be investing in the disruption of healthcare, but in something even more audacious.
Apple should invest in the battle against climate change.
Why? For one thing, as a hardware company that takes swipes at its competitors’ practices of processing customer data for profit, Apple is not terribly well-positioned to disrupt the healthcare industry — at least not without using their big data in ways that will break their privacy promises to customers. And healthcare is generally not conducive to or encouraging of serious innovation; improvements to the way healthcare is delivered in America is often celebrated, but most of the breakthroughs in life extension and basic disease happened decades ago around maternal health and helping children live long and healthy lives.
For the clean energy industry, however, the opposite is true. Never has momentum for innovation been greater. This is something I’ve seen first hand as co-founder and president of Generate Capital, an investment platform that builds and finances infrastructure assets in the renewable energy, technology, and sustainability sectors. Our industry has been shifting hundreds of billions of dollars into clean energy over the past twenty years. If Apple were to involve their employees and ingenuity meaningfully in this space, they would have the wind at their back — literally.
Furthermore, the skills required to to ramp new technologies at scale and economies which further the fight against climate change align directly with those Apple already possesses, such as manufacturing excellence, bold creative thinking, and supreme supply-chain efficiency.
It’s tough to think of a major modern technology company better positioned than Apple to scale and bring cost reduction to game-changing climate solutions.
There are several innovations Apple could set their sights towards. If actualized, they would stand out collectively in hindsight as the company’s most important achievement, bar none.
1. Clean Electricity
In 2018, Apple announced to the world that, moving forward, all its various global facilities — including retail stores, data facilities, and production plants — would be powered entirely by clean energy. That equals 1,400 megawatts of wind, biogas fuel cells, and solar power plants in total.
Although unprecedented, this move is simply the latest by Apple to meaningfully reduce their carbon footprint. Consider, for example, how they lowered the average amount of energy required to run their hardware products from 23.2 kWh/year in 2008 to 7.2 kWh/year in 2017. While it’s a staggering reduction, it actually evidences a capacity on Apple’s part to do something even more impressive: be the first company to power 100% of both its devices and its manufacturing facilities with green energy.
All it would take is another 10,000 megawatts of solar, something Apple could do in the next 12 months from a less than one-year payback by simply shifting the taxes they paid in 2018.
Seeing as how Apple exited 2018 with more than two billion devices running iOS around the world, committing themselves to clean electricity would cement their standing in history — not just as a great company, but as a great champion of the planet.
Immediate Investment: $10B @ 10% rate of return
Annual Opportunity: $10B per year
2. Smart Homes
The average American household consumes an immense amount of energy each month.
That rate of consumption can be reduced, however, by way of smart-home technology, which enables users to control thermostats, security systems, electricity loads, and many other features from a touch of — you guessed it — an iPhone.
Apple could enable energy savings at scale by building smart-home technology on the back of its current HomePod. This would have the added benefit of helping the average homeowner reduce their monthly home expenses, perhaps by as much as 50%. American homeowners have seen sharp prices increases for home security, cable TV, electricity, natural gas, water, and other costs.
The physical upgrade of American homes would cost about $5,000 per home. Apple could negotiate better prices for all of those services, as they did for music downloads when they launched iTunes. They could negotiate better prices not just through scale, but by building new zero-emission energy farms to give customers access without the middlemen.
For the planet and consumers alike, that would be historic.
Immediate Investment: $10B @ 20% rate of return
Annual Opportunity: $10B per year
3. Transportation
As is the case with energy at home, Americans spend a ton of money each year on transportation — an annual average of $9,000 per vehicle, according to AAA.
This is due to the auto industry’s lack of business model innovation and dependence on dealers, whose profits come almost entirely from auto repairs.
The only auto company that is innovating to solve drivers’ problems in this regard? Tesla.
For example, when Munro and Associates tore apart a Tesla Model 3, they found an advanced electric motor design that uses powerful magnets to generate more power than most electric vehicles — even though efficient motors have been around for over 100 years. It’s why, ultimately, Tesla will become the largest luxury-car seller in the U.S. in 2019.
But Tesla is not without fault or error. In fact, Munro found evidence of mistakes which ended up costing the company an extra $2,000 per $30,000 car. It seems fair to suggest that the company could benefit from a partner who specializes in production efficiency.
Enter: Apple.
Tim Cook may not be a radical innovator, but he would know how to help Tesla reach best-in-class manufacturing and supply chain integration.
That’s why Apple should buy Tesla.
While it might seem like a long shot, and while it might not technically be an innovation, the move would further cement the company’s status as a leader in the fight for environmental sustainability.
Immediate Investment: $70B @ Funding Secured at $420/Share
Annual Opportunity: $10B of Battery Financing in Partnership with Leasing Company
4. Rural Electrification
Apple is well-positioned to help the billions of people around the world who lack access to reliable, affordable electricity.
Many people have mobile phones, but they also have to pay about 40 times the average global electricity cost to charge them — usually with a diesel generator. These are people who, on account of a lack of access to electricity, end up deforesting their communities for firewood and dying younger due to smoke inhalation.
Now, there are over 100 companies across the world bringing solar power and microgrids to these populations, with annual revenues of over $100 million per year. I’m not suggesting Apple compete with these businesses, they should simply help them.
Greenlight Planet, for example, raised a $60 million round in 2018. Apple could redesign components, streamline their supply chain, reduce their manufacturing costs, and provide essential trade credit. The entire microgenerator industry for rural electrification is running at a $2 billion annual run rate and providing essential services to another 10 million households per year.
Call it part of a rural electrification manufacturing fund to help customers buy more iPhone connectivity.
Immediate Investment: $1B @ 20% Rate of Return
Annual Opportunity: $1B of Microfinance Aggregation
Will Apple follow all this advice? Maybe not. Will they continue head-first into healthcare instead? Probably.
If they did decide to redirect their resources towards combating climate change, thanks to their strengths as a company and the market forces playing in their favor, the impact would be truly historic and would actually be remembered as one of the world’s greatest achievements.
