Apple, Google Go Home
For some marketers the operative mantra is go big or go home. It looks like Apple and Google are both taking a harder look at the automotive industry and have decided to go home.
The media is rife with reports of Apple hemorrhaging automotive engineers while senior executives on Google's automated driving team have been skipping off to more intriguing or lucrative or less problematic ventures. The problem: The inability to locate the high volume, high revenue pony in the pile of high cost development, regulatory redtape and loathsome liability that constitutes the automotive industry.
The first hint of trouble was Google’s decision to jump out of the car insurance business nearly as soon as it jumped in. Google Compare Auto Insurance entered the market in 2012 in the United Kingdom, an attractive market for insurers because of the existence of a single regulator for a large homogeneous marketplace.
Google followed the UK launch with a U.S. launch late last year in California, but the morass of state-by-state regulatory hurdles and slow-footed insurance partners sent Google to the exits in both the U.S. and U.K. It was clear to those involved that the slow path to a profitable and eventually dominant enterprise in the car insurance market was intolerable in the context of internal expectations of high growth and a rapid ramp.
Shift gears to self-driving cars and both Google and Apple are confronting extreme technical challenges, prying eyes, Federal and state regulatory oversight and increasing competition from incumbents. Swizzle into this cocktail of conflict an ill-defined marketplace where mobility as a service is already being adequately served by cheap ride-hailing services and increasingly driverless public transportation – and the market prospects dim rapidly.
Ford is in the midst of convincing its own investors of the volume market prospects for driverless cars as its stock swoons in the midst of its own aggressive self-driving car announcements and investments. So if you are big and taking on the self-driving car opportunity, you have everything to lose and it’s pure risk. If you are a tiny start-up – like Otto (to which Anthony Lewandowski decamped from the Google self-driving car team) or Cruise Automation, it’s all opportunity and upside.
Google and Apple are not prepared to suffer the blowback in the manner of Tesla Motors Chairman and CEO Elon Musk should anyone lose their life or be severely injured in a Google or Apple self-driving car. Those crusty old car companies are actually better equipped to establish the standards and safety protocols and withstand the liability exposure of self-driving technology.
But the more fundamental challenge is the reality that a self-driving car is not likely to be owned, which means getting into the transportation business – the public transportation business. That's a very different market from mobile devices and downloading content and selling cloud services. Apple and Google likely both perceive opportunities from enabling the systems, services and software that bring these applications to life – but would rather not take responsibility for creating and selling the hardware.
So, if you can’t go big, you go home. Or, if you currently work for Apple’s or Google’s self-driving car programs, you polish up that resume. It’s time to turn all that hard work into a real opportunity outside of those organizations. Your path to a profitable exit will be far shorter on the outside than by remaining inside these two large, newly-timid organizations. Investors are waiting and whatever you create will be your own.
Roger C. Lanctot is Associate Director in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here: https://www.strategyanalytics.com/access-services/automotive#.VuGdXfkrKUk
Software Development | Creating Innovative Solutions
8 年Well all this rush has been and will go on for years now, but a concentration on self driving cars can be seen clearly. To be honest I'm not in the favour of these cars. Because they will follow the smart rules not the person in other cars. To make it work perfectly you have to make every transportation in this world Self driving which seemingly is impossible for now. Unless you create a pure artificial intelligence that is. And obviously a great loss in Jobs.. Companies should be improving life matters which are difficult. Not making the easy eaiset.. It's just a profit game for them..
AI & Machine Learning Consulting
8 年Google arguably has pioneered the self driving car industry and spent on the order of $1B on it so far. Speaking as a former Googler myself, I'd just point out that it would be unwise to assume they'll give up on this anytime soon. Despite the choppy waters Google's way is to take the time to figure out how to play into the market and the technology stack (and how to partner with Auto mfgs, Tier 1 suppliers, etc) -- even if the revenue is 5 years away. They are uniquely financially positioned to do that (in contrast to Otto and other startups that are funded by VCs needing quicker returns). Also, see the flight of execs like Lewandowski and Urmson as part of th process of the project maturing out of X and into the "core" Google organization. They will always bring in other top notch execs to replace those who depart. (Just look at Android.)
Career Transition Coaching | Job Coaching | Executive Coaching | Managers Coaching | Career Coaching | Networking Expert |
8 年There are different ways to go Big. Part of their goal is already attended: today a strong expectation exists in the market for the autonomous car, and 99% of people do not even know what level 1, 2...5 are. They just want this car ! And Car-makers will fight to give it. This need directly comes from the disruption generated by Google initiative. Automotive is changing and it will never be as before. Google will not go home: they go to be still more powerful by letting others working for them !
Chief Commercial Officer at Thatcham Research
8 年Having been in Silicon Valley the past week or so, one does not get the sense that the "we must manufacture an autonomous vehicle" (the unit itself) is top on the list of priorities. I am reminded though of a statement I believe William Ford Jr made a year or so ago at ITS World Congress. Mr Ford painted the picture of a group of companies (Auto-manufacturer, Internet/telco, software routing/realtime optimisation, traffic data, fleet operator....) all come together to develop under one umbrella and then to offer, a "public/private" mobility service that has within it autonomous vehicles (both large and small, logistics and people carrying). Why focus on trying to re-invent the wheel.. When it is the complementary and 'wrap around technologies/software' / comms/virtual network... that are the new shine things to be developed. The "old school" companies with the most to be concerned about are the roadside hardware manufacturers and maybe the public transport operators.
Sr. Director, Capgemini Engineering (Automotive)
8 年To my sense, Google and Apple have focused on ‘user experience’ in their products to realize high growth and rapid ramp in their businesses. I expect them to do the same with cars. Give a ‘user experience’. How you navigate, communicate, spend time, … Further, where OEMs typically charge for updates (maps, etc.), the picture could be so different with Google and Apple continuously updating the user experience without any direct charge to the user. Carplay and Android Auto are in that direction. Who knows, they might bring their own car to give that complete user experience. Eventually, cars will go driverless. Their current efforts will not go in vain. Rather, it should be helping them build an engine which could eventually be leveraged similar to ‘search’. Google and Apple are here to stay and do expect disruption in the automotive industry :)