What are the implications of tech giants such as Apple and Google entering the transportation industry?
The fastest development time for a new car engineering program is three years. Most vehicle development, from planning vehicle features to finalizing production level design, take four years to develop. But automakers have shortened that schedule in recent years, so that they can offer new vehicles more frequently in highly competitive markets such as the United States and China.
Three years is also the estimated time that Larry Burns, a former GM Chief Technology Officer who consulting for Google’s driverless car project, said that Google’s technology could be ready, according to the Christian Science Monitor. Google shared that it has logged more than one million miles on its test vehicles.
Meanwhile, Apple has been reportedly hiring top management with heavy speculation of its role in an autonomous vehicle market.
Both companies recognize the need to strengthen their response to the high volume of networked machines that will be part of the marketplace over the next several years. That starts in many ways with strengthening its physical image to consumers, such as Google’s acquisition of Nest, for example.
The interest in introducing autonomous vehicle offers new levels of possibilities, much of which are due to design differences. Autonomous vehicles offer opportunities to reduce the mechanical complexity of cars a great deal. Eliminating the internal combustion engine and a transmission as we know it means eliminating moving parts. That fact also changes the knowledge and capital required to design and build cars, which, in turn, may change who can build them and how they get built. Enter Google and Apple.
Google and Apple have the most success potential among tech firm, but not just because of their success with multiple tech products. Opportunity lies in a shift in auto-industry dynamics from providing a vehicle to providing a subsystem. Contract manufacturers exist for creating modular systems and components of vehicles, a legacy of the Big Three spinning off subcomponent operations to raise profits. In fact, microfactories are expected to demonstrate the potential zenith of the fragmentation - Divergent Microfactories featured in my post Building Products for an IOT World is an example.
But the entry of large well capitalized companies such as Apple and Google will shift the industry further. Outsourcing dynamics in smartphone manufacturing today can be leveraged to a degree. Smartphone manufacturing effectively outsourcing manufacturing scale to many place across the world, adding their own software, brand, marketing and distribution with much lower capital requirements. Advanced tech in autonomous vehicles could fit within this structure.
Google and Apple have some advantages for certain components, particularly with interior. Branding interior component is already accepted among consumers, such as stereo systems. That branding has lead to Google Android Auto, Apple Car Play and Microsoft’s alignment with Ford vis the mySync infotainment system.
The experience with software and electronic suppliers means Google and Apple know how to work with their supply base. But that experience is with devices smaller than engineered machinery such as a car. That difference may be obvious, but it introduces subtle ways in which these companies can encounter challenges for engineering and servicing an autonomous vehicle. Vehicle ultimately have to be engineered to produce the product consumers want. That engineering touches a number of milestones that tech companies do not fully appreciate.
Another concern is with managing driver behavior. Autonomous vehicles will alter how people drive their vehicles, and choose how to service them. Google and Apple has a track record of working with tech savvy individuals online, but drivers are not always tech savvy. They may not spend time online looking for way to drive in the same way as they would learning about an Apple watch or a Chromebook.
That means Google and Apple must establish a new services to communicate how to use autonomous vehicles, should they decide to build one. Even if either company partners with the traditional automakers in manufacturing an autonomous car, Google and Apple will have to provide more offline means to educate the customer in using autonomous vehicle. That may mean expansion of a physical presence.
It is here where Apple, with its retail store chain, has an advantage over Google. It has a presence where customers can go to learn about Apple products. Microsoft, with its announcement of a flagship store in New York, is playing catch up. Google does not have significant retail presence in comparison. Moreover, Tesla, with its stores in malls across the country, has challenged conventional notions of the appearance of an automobile dealer.
Already there is some debate about how an autonomous vehicles should be used. For example, reports exist of Tesla owners abusing the self-drive feature that was recently downloaded into their Model S vehicles. Moreover, there's some debate even about the safety of autonomous vehicles. The central premise of autonomous vehicles is that they eliminate the most influential factor in transportation safety - the driver. Burns believes that more than 3,000 lives a year could be saved. But Fortune notes a recent study that is doubting that claim that autonomous vehicles can significantly decrease auto-related deaths.
Overall, Google and Apple will have an opportunity to build their company's fervor in a way unique position in the IoT space. Driving on the open road is a prized pastime, particularly among American consumers. People like the perceived freedom that driving brings. When either company firmly establishes a foothold in autonomous vehicles, they will certainly become part of that tradition’s future.