The full-time performance by an automated driving system of all aspects of the dynamic driving task under all roadway and environmental conditions that can be managed by a human driver.
However, the most interesting part of the story is the fact which very few people know: the two companies have been working together on self-driving tech for past eight years. Since an official partnership between Intel and Waymo has just been disclosed, I find it important to evaluate possible implications of such a collaboration.
Intel gets better exposure to the market
First of all, the fact that Intel can power such an advanced technology is very promising for the company’s revenues, as the market size of self-driving solutions is expected to become huge in the coming years. Thus, Intel revealed the study which finds that “autonomous driving technology will enable a new Passenger Economy worth US$7 trillion in 2050.” This will include industries such as transportation, freight delivery, hospitality, service delivery of all kinds, and much more. Therefore, any incremental percent of market share will bring substantial gains for any player involved in the field.
Collaborating with Waymo, Intel clearly increases the chances to gain a significant market share. This is because Alphabet’s self-driving car company seems to be well-positioned regarding the expansion of its operations, evident by partnerships with such companies as Avis (CAR), which is a leading vehicle rental operator with a fleet of 600,000 vehicles, and Lyft (Private:LYFT), the main competitor of Uber (Private:UBER). Moreover, Waymo already started offering rides in its self-driving minivan to people in Arizona, which is claimed to be an “early rider program.” This shows Waymo’s technology is likely to be close to final stages in terms of market readiness.
The acquisition of Mobileye is justified
The partnership with Waymo also justifies (at least to some extent) the fact that Intel acquired Mobileye for hefty $15 billion. The Israel-based company is described as follows:
Mobileye is the leading supplier of software that enables Advanced Driver Assist Systems (ADAS), with more than 25 automaker partners including some of the world’s largest. Beyond ADAS, our technology has rapidly evolved to also support the three pillars of Autonomous Driving – Sensing, Mapping, and Driving Policy.
As I discussed earlier, the market for autonomous driving solutions is likely to grow rapidly and reach enormous size, and, therefore, Intel clearly wanted to ensure it is well-prepared for the transition of the auto industry. And since Intel started collaborating with Waymo long before it acquired Mobileye, it seems that the chipmaker had solid experience in the field of autonomous driving when it was reviewing possible M&A targets. As a result, the price tag of $15 billion paid for Mobileye is likely to be more than justified, especially in light of Waymo’s bright prospects.
Intel will possess an enormous amount of data
In addition to the previous points, it should be noted Intel is likely to possess a huge amount of data needed to deploy a viable self-driving solution, thanks to the project with Waymo. This is because “Waymo cars with Intel technology inside have already processed more self-driving car miles than any other autonomous fleet on U.S. roads.” The number is claimed to be near the level of 3 million miles of “real-world driving.” Therefore, even if the chipmaker was not given access to all the data, some part of it provides a decent competitive advantage over peers.
Collecting data is one of the most important stages of developing a self-driving solution, as the accuracy of a system increases with the amount of data processed by a neural network. As a result, there is a high chance Intel’s own solution that it develops with Mobileye will gain from the partnership with Waymo in terms of accuracy. More about how the technology works can be found in my article on self-driving.
The list of Intel’s partners is likely to grow
Finally, it is more probable automakers will choose Intel as a partner for their self-driving solutions because of the company’s partnership with Waymo. First of all, this is because the self-driving company is still associated with Google, even though it was formally spun off at the end of 2016. As a result, the reputation gains are clear for Intel.
Moreover, as I already mentioned, the amount of data possessed by Intel is likely to put the corporation into a solid position regarding experience in the field. Hence, eight years is a long period for such kind of technology as autonomous driving. This also means we can expect the company will develop a chip specifically tailored to support processing data from self-driving systems, just like Nvidia (NVDA) designed special cards for cryptocurrency mining. It is stated by Waymo:
Waymo has been using Intel products since 2009. For our latest vehicle, our engineers worked with Intel from the design stage to integrate some of Intel’s most-advanced processors and other technology into our own platform.
As a result, I find it likely more corporations from the tech and traditional automotive industries will turn to Intel in order to power their self-driving systems.
It is also worth mentioning the list of Intel’s partners now includes such players as Delphi Automotive (DLPH) and BMW (OTCPK:BMWYY), and the companies already announced their plans for future collaborations. Mobileye website provides the following information:
We have achieved a partnership to develop production-ready Fully Autonomous Vehicles with BMW and Intel, with production launch planned for 2021, and another partnership with the Tier-1 supplier Delphi for a “turnkey” system to be productized starting from 2019 with customer OEMs.
Final words
As the market for the self-driving tech expands, more players like Nvidia, Baidu (BIDU), Microsoft (MSFT), Delphi, Magna (MGA), and many others try to get involved in the field. Therefore, it is crucial for the companies to gain competitive advantages in order to stand out.
When it comes to Intel, it seems that the corporation takes the auto market seriously and the fact that the chipmaker has been working with Waymo for the past eight years should be very beneficial for the company. Moreover, better exposure to the auto market should not only justify the price paid for Mobileye but also provide a further boost to Intel’s revenues.
My assessment of the company with a detailed DCF analysis can be found in my previous article about Intel here.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
http://ift.tt/2fziINo
0 Response to "What Working With Waymo Means For Intel And Its Self-Driving Technology - Seeking Alpha"
Post a Comment