Isegoria

Cringely asks, What would happen if Steve Jobs were put in charge of any of the Big Three car companies? Well, first he’d kill any unprofitable product lines. Then he’d really shake things up:

He’d look at the car market and conclude a number of things: 1) it’s a no-brainer to embrace dramatic design (no boring cars); 2) performance sells, and; 3) safety and fuel economy are co-equal secondary goals. So Steve’s goal for his car company would be to make a limited line of vehicles that were dramatically styled with visibly different technologies from the competitors and were uniformly 20+ percent safer and 20+ percent more fuel-efficient.
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But embracing these ideas requires the companies do something else that Jobs came to embrace with Apple’s products — stop building most of their own cars.
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In this scenario, Chrysler becomes a design, marketing, sales, and service organization. What’s wrong with that? They can change products more often and more completely because of their dramatically lower investment in production capital. They can pit their various suppliers against each other more effectively than could a surviving car manufacturer. It’s what Steve would do.

And Steve would also embrace one dramatic new technology, whether it is electric, hydrogen, natural gas, whatever, but he’d do it in a very Steveian fashion, which is to say exactly the way he did the iPod and iTunes. That is, he’d sell you the car and then sell you whatever is required to fill up the car. This has always been a barrier for the car companies because they couldn’t imagine themselves in the business of running electric/hydrogen/LPG stations, while Steve would imagine his company making a profit running just those stations.

Steve would take an existing operation that already had an ideal geographic distribution like McDonald’s restaurants. He buy McDonald’s or seduce the company into a deal. Then he’d embrace a propulsion technology like advanced electric capacitors — batteries that could be recharged in less than a minute — and put charging stations on the drive-through lanes. By the time the electric models were ready for sale he’d have 12,000 charging stations in place to serve them. Would you like fries with that charge?

Cringely believes that the key to saving Detroit is getting car buyers to think like bicycle buyers and to buy something more like his airplane:

I didn’t build my DA-2A, but I am rebuilding it right now and know it intimately. My Davis is an all-aluminum two-seater with an 85-horsepower engine. The engine was built in 1946, the plane in 1982, and the whole thing cost under $4,000 at the time, though today I have more than that invested in the instrument panel alone. The plane weighs 625 lbs. empty, 1125 lbs. loaded, has a top speed of 140 miles per hour and can travel about 600 miles on its 24-gallon fuel tank.

Why can’t I buy a car like that?

Imagine if we took the basic design parameters of my DA-2A and applied them to a modern automobile. The new design would have to carry two people and luggage, have an empty weight of no more than 625 lbs. and use an 85-horsepower engine. With a loaded weight of 1125 lbs., the car would have a power-to-weight ratio comparable to a Chevy Corvette and be just as quick — probably even faster than the airplane’s 140 mph. Driven only 20 percent over posted speed limits as God intended, the car would easily get 50+ miles per gallon.

Who wouldn’t want to buy one?

At the heart of manufacturing is the simple concept of buying raw materials in volume at a low price per pound and selling manufactured products at retail for a high price per pound. The eventual retail price per pound is determined by the marketplace and ideally it ought to be high enough for the manufacturer to make a profit. The very light weight of our DA-2A car analog suggests that it ought to be inexpensive to buy, but maybe all that means is we have to look beyond the car industry to bicycles.

Car buyers and bicycle buyers approach retail pricing from completely different directions. Car buyers, whether they think about it this way or not, traditionally try to buy cars that cost the least on a per-pound basis. Do some research on the Internet and you’ll see that luxury cars, whether we are talking about a Cadillac SUV or a big Mercedes sedan, tend to cost about $10 per pound; mid-range cars cost about $6 per pound; and economy cars cost about $4 per pound. Manufacturers prefer luxury cars because, given the same profit margins, they make vastly more gross profit on a fancy car than they do on an entry-level car. This pricing bias is part of what is working against Detroit right now.

Bicycles are different. Bicycle buyers, whether they are conscious of their behavior or not, try to pay the MOST per pound rather than the least. A lighter bike is always a better bike and a more expensive bike. Cheap bikes from Wal-Mart tend to cost about $2 per pound, nice bikes from a bike shop cost about $20 per pound, and top-of-the-line racing bikes cost about $200 per pound which, interestingly, is about the same per-pound cost as a top-of-the-line Ferrari or Aston-Martin.

So the trick to turning around the U.S. auto industry is to make car buyers adopt the values of bicycle buyers, which implies the willingness to pay $20 per pound of final product. The way to achieve that goal is by building cars that are both affordable at $20 per pound and EXCITING TO DRIVE.

Under this formula, the car version of my DA-2A would cost $12,500, making it broadly affordable. Yet with 6061 aluminum alloy selling in volume for around $1.60 per pound, there ought to be plenty of profit in there for the companies.

Stuart Cohen says that the open-source business model is broken:

Open-source code is generally great code, not requiring much support. So open-source companies that rely on support and service alone are not long for this world. The traditional open-source business model that relies solely on support and service revenue streams is failing to meet the expectations of investors.

Kerry A. Dolan of Forbes calls them Solar Bubbles — 8-foot shiny plastic balloons with solar cells inside:

Eric Cummings, the brainy scientist who dreamed up the balloon idea, dismisses flat solar panels as expensive to install and difficult to deploy. The curvature of his balloon concentrates more sunlight onto fewer photovoltaic cells. He envisions vast farms of his 1-kilowatt balloons strung on wires and producing gigawatts of power.

Cummings has no deals yet with a utility, but his company, Cool Earth Solar, raised $21 million from Quercus Trust, a Los Angeles private equity firm, and other investors to build a 1.5 megawatt installation in California’s Central Valley. Construction of a test project in a field of brown weeds across the street from its offices is just beginning. “This is scalable in a way that dwarfs other options,” he boasts. “The goal is to be the 100% solution” to the energy crisis.

Cool Earth Chief Executive Robert Lamkin, who previously oversaw the development and construction of power plants at Calpine and managed plants at Mirant, says rather boldly that next year the company will have its costs down to $1 per watt, installed—at which point it can compete with natural gas and beat other kinds of solar technologies. Typical photovoltaic panels on rooftops cost up to $8 per watt installed. Solar thermal power, which concentrates heat to make steam, is aiming for $4 per watt. (These costs are all in terms of peak watts. Nights and clouds included, solar’s average cost per watt is four times as much.)
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Concentrating the reflected light into a receiver produces 300 to 400 times as much electricity out of each solar cell as a system without a concentrator, the company claims. A water-cooled jacket on the back side of the receiver keeps it from overheating. The balloon can add or bleed air to maintain its shape.

Cool Earth’s balloons can last five years but are so cheap it plans to replace them once a year. Or more frequently. It has yet to test against BB guns.