Apple's secret car project is much bigger than people think. Of course it had to cut 200 jobs.
- Apple confirmed this week that its car project had reassigned or laid off 200 workers.
- This isn't a sign that Apple is cutting costs because of weak financial results.
- Instead, it suggests that Apple is refocusing its automotive work, which was much larger than most observers thought.
Apple has cut over 200 people from Project Titan, its famous bid to create a self-driving car, CNBC reported on Thursday.
While this sounds like a huge number of people, it doesn't mean Apple's car ambitions are over nor does it mean Apple is frantically cutting costs ahead of what's expected to be Apple's worst earnings report in years next week.
What it means is that Project Titan just got a little too big. It needed to slim down.
Project Titan was significantly larger than many outside the company expected. Information that emerged through a case with a former Titan employee who was arrested by the FBI said that 2,700 Apple employees had access to Titan databases and that 5,000 were "disclosed" on the project, which means they had official permission to know about it.
Apple, in a surprising move, confirmed that some restructuring is happening in its auto division. Here's Apple's statement to CNBC:
"We have an incredibly talented team working on autonomous systems and associated technologies at Apple. As the team focuses their work on several key areas for 2019, some groups are being moved to projects in other parts of the company, where they will support machine learning and other initiatives, across all of Apple. We continue to believe there is a huge opportunity with autonomous systems, that Apple has unique capabilities to contribute, and that this is the most ambitious machine learning project ever."
Apple has not fired the majority of those employees. Apple has not filed a worker adjustment or retraining notification (WARN) notice in California, an employment department representatives confirmed to Business Insider on Thursday.
WARN notices are required in California whenever a company lays off 50 people within a 30-day period, although they can be gamed.
It's entirely possible that most of the employees Apple laid off didn't work in California, but what's more likely is that Apple is rearranging its groups. After all, it costs a lot of money to hire experts in fields like machine learning and battery technology, and it doesn't make sense for Apple to put them on the street so they can get snapped up by competitors like Waymo or Tesla.
So while early reports about this restructuring tied the move to issues inside of Apple related to Apple's expected iPhone sales shortfall, which prompted CEO Tim Cook to say internally that Apple planned to slow hiring, it really has much more to do with the car project specifically.
After all, Apple spent $14 billion on research and development in 2018, according to an SEC filing. Firing 200 people is not going to slim Apple down to fighting weight, and besides, Apple is likely to report record earnings-per-share next week even after its revenue was over $5 billion short of its own expectations.
The reality is that there is not going to be a self-driving car takeover in the next few years, as was the hope in the heady days of 2014 when Project Titan got off the ground. Waymo, the leader in autonomous cars, has had issues with its technology in tests in Arizona. Tesla CEO Elon Musk predicted a fully-autonomous Tesla by 2018, and he hasn't revisited his prediction as the date flew by.
Many of Apple's car employees likely worked on parts of the project that may have been time-consuming tasks, like time-intensive cleaning of geographic information systems (GIS) data to make self-driving car maps better.
It's also important to note that when Project Titan was started, the goal was reportedly to build a full Apple car, and in the years since, it's been scaled back to focus on the software that powers autonomous cars, instead of the full end-to-end designed experience that Apple is famous for. The most visible fruit of Apple's car project so far has been a self-driving shuttle to bring employees from one part of Silicon Valley to the other, The New York Times reported.
Cars aren't Apple's only special project. It's working on health and augmented reality glasses in its labs at the same time - and there aren't rumors of cuts there yet. It's logical to interpret this week's news as less related to Apple's recent financial woes and more the result of an emerging reality for self-driving cars: Full autonomy might be years away, and it's unlikely to be here in 2020, as Apple was shooting for.
As Cook said at Apple's shareholder's meeting in 2016, "it's going to be Christmas Eve for a while."