Porsche Is Repeating The Mistake That Caused Microsoft, Blackberry, Palm, and Nokia To Fail

Porsche's decision not to use artificial sounds and shifting on their electric cars is similar to what Palm and Microsoft did, allowing Apple to take the Smartphone market from them.

There is an old saying that “people who don’ t learn from history are destined to repeat it.” And this happens a lot in my business. Companies not only repeat the mistakes other companies have made, but way to often, they also repeat their own mistakes because the people in power when those mistakes were made are either no longer there or are no longer in a place of power. 

One mistake that Porsche is remaking is not realizing that what you are making isn’t hitting the mark, that there is a better way to approach the market, and that doing what you’ve always done in the past just isn’t working. And Porsche appears to be in trouble, as Hyundai passes the company in EV sales and takes awards that might have gone to Porche in the past. 

I think Porsche's mistake is similar to the mistake the Smartphone vendors made with Apple, with Hyundai playing Apple this time around.

The iPhone Mistake

Back in the early 2000s, the iPod was king, and both Microsoft and Palm explored doing blended phone/MP3 as internal teams argued that this was where Apple was vulnerable. But both CEOs looked at the proposals and scoffed, saying that Smartphones were for business, not for fun. Steve Jobs recognized the risk that such a device might pose to his iPod dominance and moved aggressively on a blended device and, on the second try, created the iPhone Smartphone and services that were designed to make for a fun device. Every existing Smartphone company was outspoken about how stupid this was until iPhone sales went vertical. Then they tried, too late, to copy the device, and once the dust had settled, Palm was gone; Blackberry was a software company focused on security with no phones, Nokia was on life support, and Microsoft was out of the Smartphone business.

So it wasn’t that the companies didn’t see the opportunity first. Both Microsoft and Palm had internal groups that had developed iPhone-like proposals well before the iPhone ever existed. But Senior management was so wrapped up in the past that they couldn’t see the opportunity they were missing. Steve Jobs, upon learning of these efforts, went full speed ahead on the iPhone because he recognized both the risk and the opportunity.

Porsche vs. Hyundai

A similar event is happening between Porsche and Hyundai. Electric cars are strong on gas savings, and straight-line performance, and the designs are getting better, but people lament that they aren’t as fun as gas cars. They miss shifting and engines that can roar. Now, we’ve had companies like BMW with their i8 introduce engine sounds in the past, and we’ve had cars like the Jaguar F-Type that uniquely configured their exhaust systems for optimal sound. So, the industry knows that people like to hear engine noise; it's just that this technology, initially, wasn’t very good and sounded fake.

In addition, and this is particularly true of German car companies, there is the position that form should fit function and that fake should be avoided. Granted, they will occasionally put vents on cars that don’t actually work and make other cosmetic choices that don’t do much for the car's performance, but those are mostly exceptions to their rule that form must follow function.

But much like most of us don’t buy and use SUVs to go offroad, most people that buy Porsche cars don’t drive on the track either, they get a Porsche to show off, and to have fun with, these aren’t work cars. So when Hyundai brought out the Ioniq 5 N, which won Electric Car of the Year from Car and Driver, which had a decent engine-emulating sound feature and a realistic floor shifter, Porsche, like the Smartphone companies with the iPhone, indicated they weren’t going to do that because when the shift feature was enabled it would likely slow the car down as it does with thy Hyundai ignoring the fact that nearly everyone that drives the Ioniq 5 N has indicated it is the most fun electric car they’d ever driven.  People are even finding it to be more fun than Tesla cars.

Wrapping Up:

I worked for and with IBM for just short of half a century, and one of the most important things I learned from Thomas Watson Jr. (through Sam Palmisano) was that to survive (at the time, IBM had been around for over 100 years), you needed to be willing to change everything but who you are. Products, focus, and whatever needed to be changed were fair game in the effort to survive and flourish. But I’ve also learned that most companies don’t do that, they wrap themselves with historic policies and immovable positions based on conditions that no longer exist and then the market pivots and they go out of business. We saw that at scale when the iPhone came out.

Well Hyundai with the Ioniq 5 N has created an automotive iPhone, like the initial iPhone, it isn’t yet perfect but it is good enough to excite the market and Hyundai did pass Porsche in terms of EV electric car sales, and they don’t appear to be in economic distress.  So, I think Porsche’s position is that they aren’t making their electric cars as fun as Hyundai did, and that decision will have the same result as the Smartphone companies earned when they didn’t see the iPhone as a threat.

In other words, I expect this decision to end badly for Porsche.

Rob Enderle is a technology analyst covering automotive technology and battery developments at Torque News. You can learn more about Rob on Wikipedia, and follow his articles on Forbes, on X, and LinkedIn.