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    Why Apple and Google Will Dominate the Self-Driving Car Industry

    By
    Mike Elgan
    -
    October 31, 2015
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      Google Apple Cars 2

      Ken Okuyama is an automobile visionary and he fears that Apple and Google might take over the car industry. I think his fears are well-founded.

      Okuyama is a Japanese industrial designer. One of his specialties is designing cars. He designed the Ferrari F60 Enzo and the Porsche Boxster, and redesigned the Chevrolet Camaro and Corvette. He knows a thing or two about cars, especially high-performance cars.

      If Apple’s and Google’s becoming the leading car makers sounds far-fetched, then consider the five following trends in the auto industry. Yes, I know the company formerly known as Google is called Alphabet now. But until the company announces they will operate their car company under the Alphabet umbrella, let’s for the purposes of this article call it Google.

      1. Automation

      Self-driving cars are coming. Within a decade, they’ll be far safer than human-driven cars.

      A self-driving car is a computer on wheels that uses sensors to gather input from the environment, then artificial intelligence to make decisions about when to stop, when to go, how to avoid obstacles and where to turn.

      The car makers are scrambling to acquire the technology to perform this kind of computational kung fu. Companies like Google specialize in it.

      2. Computerization

      The automation attributes of a self-driving car are governed by one type of computer system. The dashboard is governed by another. A car dashboard is ultimately a user interface—a way for a human to interact with a computer, or set of computers.

      As “users” spend less time thinking about driving and more time thinking about how to alleviate their boredom while the car drives them around, the interface will evolve mainly to entertain, rather than provide information about driving.

      No company can touch Apple in the department of creating appealing user interfaces and compelling content consumption experiences.

      Certainly, the conventional car companies have demonstrated near-total incompetence in this department. Yet, in a few short years, these interfaces will be the main criteria for choosing a car.

      For evidence of that, just look at the weird design sensibilities, garish colors and the difficulty focusing on the user interfaces displayed on the in-car entertainment centers of Detroit’s current car models.

      Cars are also being packed with Internet of things devices. The brakes, climate control systems, lights, adjustable seats and fluid sensors will increasingly resemble home-automation devices and communicate with each other and the car’s occupants, and increasingly automate their operations.

      Inevitably, cars will communicate with home-automation Internet of things devices as they sit in the driveway or garage.

      They’ll auto-download podcasts, movies and other content, upload system status and automatically do things like start the engine, warm up the interior and unlock the doors based on information gathered from interior home automation appliances.

      For example, the coffee machine, shower, lights, door locks and other devices will enable the car to predict when you intend to come out and get in the car. Whatever content you were watching or listening to in the house will continue playing in the car and vice versa.

      These home-automation and Internet of things platforms will be incompatible with each other, but highly compatible internally. So if a family has embraced HomeKit or Google Brillo, they’ll be highly incentivized to choose a car that also supports Apple’s or Google’s respective platforms.

      Choosing a car will be like picking a PC. You’ll think: Well, I already have an iPhone and an iPad and an iMac. It makes sense also to buy an iCar.

      Apple CEO Tim Cook said recently at The Wall Street Journal’s WSJDLive conference that “it would seem like there will be massive change in [the automobile] industry, massive change.” He went on: “When I look at the automobile, what I see is that software becomes an increasingly important part of the car of the future.”

      Nobody can disagree with that statement. It’s clearly true. The question is: Can current car companies do a better job with software than Silicon Valley can?

      Why Apple and Google Will Dominate the Self-Driving Car Industry

      The answer is: no.

      3. Electrification

      Electric cars are vastly more efficient, environmentally friendly and even potentially more high-performance than ugly, dirty combustion engine cars.

      Companies like Apple and Google (as well as Tesla, which is also a Silicon Valley company) are expert at optimizing software and microprocessors for better battery life and more efficient use of electrical power.

      4. “Uberfication”

      Thanks to on-demand transportation services like Uber, it will increasingly become obvious to many people around the world that it’s cheaper and easier to not own a car.

      This trend will help change the psychology of using cars and what they’re all about. They’ll be increasingly viewed by both owners and non-owners as mere conveyances. The association between identity or individuality and car choice will be weakened and broken. A car is a car is a car. This leads to the final point.

      5. Commoditization

      As Okuyama so brilliantly prophesied, we’re clearly heading into a world in which there are two kinds of cars: fancy, expensive, elegantly designed cars for rich people who drive them as status symbols; and the cars for the masses: a commodity conveyance whose main appeal is low cost.

      Self-driving cars will be far safer than human-driven cars. Today, more than 30,000 people are killed in car accidents each year in the United States alone, and globally, that figure is nearly 1.3 million.

      Meanwhile, Google X’s self-driving cars have driven on public roads more than a million miles without causing a single accident. As the sales of self-driving cars spread, the cost of insurance for those with self-driving cars will go way down, while the cost for human-driven cars will go way up.

      Actually driving a car may become a luxury for well-off consumers. Eventually, owning a manually driven car will be like owning a sailboat—it will be seen as a beautiful, exotic, expensive, antiquated, skill-requiring luxury that also happens to be potentially dangerous.

      The entire automobile industry will come to resemble the smartphone industry. On the one hand, you’ll have the iPhone-like cars, which cost four times more than the average price and will inspire rabid enthusiasts who will revel in every detail of the physical product.

      On the other, you’ll have the mass market Android-like cars, where the “hardware” needs only be good enough to deliver the thrilling experience of the operating system and apps. In this analogy, the “user experience” of riding in a car will be all about the interior—the sound system, video screen, game console, etc., but not about the wheels, motor and chassis.

      And for Android fan boys: Yes, I know that some Android phones match the iPhones in sophistication, but in general, the Android platform globally is mostly about low-end phones delivering pretty good experiences.

      Apple and Google could never compete in today’s car market. I’m talking about tomorrow’s car market where everything will be different.

      All those things that will be different—automation, computerization, electrification, “uberfication” and commoditization—are advantages for Silicon Valley and disadvantages for Detroit and other car makers around the world.

      Whatever expertise and talent Apple and Google lack they can buy. In fact, they’re already doing so. Okuyama pointed out the poaching by Apple and Google of the electrical and automotive engineering talent that they want as one piece of evidence supporting his fear that these companies would eat the car industry as it exists today.

      Ultimately, it’s all about resources. And Apple and Google have more.

      In fact, the value or market capitalization of Apple alone is roughly double that of GM, Ford, Toyota, Fiat-Chrysler and Honda combined.

      Apple and Google have a strong incentive to get into the car business, too. Both companies—but especially Apple—need to keep growing. As the car user experience becomes more about content consumption than driving, Apple and Google will want to control these platforms without having to rely on other companies to allow their participation.

      So it’s time to get our heads around what Ken Okuyama is saying. Apple and Google are going to become car makers—and they’re going to dominate the industry.

      Mike Elgan

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