Google Auto – Greek gift

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Automakers should be wary of Google’s autonomous gift.

• The most significant event at the Detroit Auto show this week was the offer from Google to the car makers of an easy route to autonomous vehicles.
• Following on from its rumoured venture with Ford, Google is actively seeking partners in the automotive industry to deploy its autonomous driving technology.
• Although the auto makers are all working on creating this technology in house, I do not see them having the expertise, processes or the experience to come up with a viable solution in the medium term.
• By contrast Google has the map and the essential deep learning technology to bring this technology to market within a reasonable time frame.
• Furthermore, of all the solutions that are currently being developed, I think that Google’s is by far the most advanced and is likely to be first to hit the market.
• Google also has vast resources to invest in this meaning that it can ensure that it works a perfectly from launch.
• Auto makers are in a difficult position as they are still struggling with the concepts of software and consequently are very far behind in understanding what is happening to their industry.
• Consequently, when Google shows up with what looks like the answer to many of their problems, it is difficult to resist but resist they must.
• There are two reasons for this:
  • First. Although everyone is targeting 2020 for the technology to be ready, I do not expect that the regulatory and legal framework to be in place much before 2030 (see here).
  • This means that time to market is actually not that important which gives the automakers much more time to hire or acquire the right talent to build their own autonomous solutions.
  • Second. I see this as a Trojan horse for Google to disrupt the automotive industry and turn automakers from brands into Android handsets on wheels.
  • At the beginning, autonomous vehicles will only be a fraction of the market but they are almost certain to become the mainstream in the long-term.
  • Consequently, allowing Google into the vehicle, even just for autonomous vehicles is very dangerous for the long-term outlook for any car maker.
• Google’s aim in life is categorise all internet traffic and make money by selling targeting advertising based on what it learns.
• It already does this to great effect on the PC, phone and tablet and the auto is just another device from which Google hopes to collect data.
• If it can commoditise the car market, then cars will become much cheaper meaning greater penetration of vehicles, more journeys made and more data collected by Google.
• It has already done this to great effect in Android devices and here, it has managed to take the vast majority of the profit pool for itself.
• I think that it aims to replicate this strategy in the automobile meaning that car makers need to treat its advances with great caution.
• With even the growth of smartphone users beginning to slow, Google needs to look to other avenues to find high growth in the long-term.
• This is where its interests in the smart home, health and the automobile are all coming from.
• Automakers need to ensure that it is they that have the relationship with the user and not Apple, Google or anyone else.
• They days of forgetting about the car when it leaves the showroom are over and the future of the auto industry depends on them realising and acting on that fact.
• I think that they have more time to act then the tech industry thinks, but failure will not be pretty.