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Robotaxis: can automakers catch up with Google in driverless cars?
January 31, 2019 | Financial Times | by Patrick McGee.

A new network of small tech companies could allow the car industry to compete with Waymo.

The automotive industry is among the most capital-intensive in the world: If the economy sours, assets turn into liabilities overnight as factories churning out thousands of cars begin to haemorrhage cash. So when toxic mortgage securities blew up in 2008, causing a recession, banks performed terribly — but carmakers fared even worse.

That is what makes auto consultants at Bain so worried. They fear that carmakers are about to be hit with a one-two punch: first, they project a US recession in the next 12 to 18 months. Then, increasing numbers of baby boomers will retire, causing a structural decline so big that, they warn, US car sales could shrink from more than 17m last year to just 11.5m by 2025 — the same level seen in 2008-09, which caused GM and Chrysler to go bankrupt and Ford to suffer a $14.6bn loss.....But there is hope. If carmakers play their cards right, they could be saved by what GM has called “the biggest business opportunity since the internet”. The potential saviour is the rise of shared, driverless “robotaxis”, which Bain expects to become mainstream in some large cities in six to eight years. This new market, virtually non-existent today, promises to be huge. ... Intel projects a “passenger economy” worth $7tn by 2050....Car brands typically earn $2,000 from a vehicle sale. That is just $0.01 per km over the lifetime of a vehicle, whereas for robotaxis “the potential is 20 to 25 cents per km”,...To realise this potential the industry will need to update its entire business model. The challenge for carmakers is to gain the expertise in self-driving algorithms, in-car entertainment, streaming services and fleet management for ride-hailing that will be central to this new era......Luckily, there has been an explosion of small companies developing the skills and technologies that carmakers can make use of. .......Waymo, the Alphabet self-driving unit that began as a Google project, is widely seen as the leader in this new landscape....it has built a commanding lead since its founding in 2009. And with at least 600 of its vehicles driving more than 25,000 miles a day, it is perfecting its algorithms in a way that could blindside the competition. Last year UBS projected that Waymo “will dominate” the operating systems for autonomous vehicles, taking “60 per cent of the total projected revenue pool in 2030”.......The threat of Waymo is not that it will build better cars. It has no need to. Instead it is ordering vehicles from Chrysler and Jaguar — effectively turning them into suppliers — and then fitting them out with self-driving software and hardware built in-house. But its potential goes beyond superior self-driving capabilities. Once robotaxis are mainstream, Alphabet can collect data from Google Maps and Search, entertain with YouTube and the Play Store, offer advice through Google Home smart speakers and use its software knowhow to manage fleets. Aside from the vehicle itself, Waymo is a vertically-integrated “closed system”........Carmakers are responding by partnering up like never before and making big investments to acquire new expertise. Volkswagen has linked up with Ford, while arch-rivals BMW and Mercedes have pooled their mobility efforts. In 2016 GM paid $500m for a stake in Lyft, the ride-hailing group, and it spent more than $1bn to buy Cruise, a self-driving company.......These deals, however, are merely the tip of the iceberg. Beneath the car brands, an entire ecosystem of niche companies has spurred into existence. Known as the “data value chain”, these groups specialise in the software, sensors, data processing and navigation needed to make autonomous cars a reality. None has the willpower, resources or vision to take on Waymo. Instead, they are forming clusters, exercising “swarm intelligence” to independently work towards the same collective goal of creating a safe, driverless experience......The implications of this ecosystem are profound. It suggests the carmakers can catch the likes of Waymo up without being the best-in-class in the new technologies. They merely need to be competent enough to know who is best — and then partner with them.
Alphabet  automotive_industry  automobile  autonomous_vehicles  Bain  blindsided  capital-intensity  GM  Google  large_markets  partnerships  supply_chains  Waymo 
january 2019 by jerryking
Waymo’s driverless taxis are not free of labour costs
December 10, 2018 | Financial Times | Ashley Nunes.

After years of work, Waymo — Alphabet’s self-driving subsidiary — has finally unveiled its driverless taxi service. Dubbed Waymo One, it is available to locals in some Arizona suburbs. ....Competitors including Ford, General Motors and Mercedes hold similar aspirations. All three are expected to launch robotaxi services. For now, Waymo is leading and equity analysts are cheering.....A bigger problem for Waymo is its pricing. The company says fares are competitive with ride-hailing apps Uber and Lyft. However, they are lossmaking enterprises that rely on investors to subsidise fares. Self-driving technology is expected to change this by eliminating the cost of human drivers. But there is a problem. Waymo’s driverless cars arguably use even more human capital than the manned set-up employed by Uber and Lyft.

First, there is the safety driver. Every Waymo robotaxi has one. The company says these individuals, “supervise vehicles for riders’ comfort and convenience”. Additional support personnel are also on hand to answer rider queries — things like: “What if I want to change my destination during the trip?” There is also the fleet response team — a dedicated group of Waymo engineers whose job is to solve vexing road problems, such as what to do when a lane is blocked.
Alphabet  automotive_industry  autonomous_vehicles  Google  taxis  Waymo 
december 2018 by jerryking
What the Tax Bill Fails to Address: Technology’s Tsunami -
DEC. 20, 2017 | The New York Times | Farhad Manjoo.

Manjoo posits that the Republican tax bill is the wrong fix for the wrong problem, given how tech is altering society and the economy....The bill (the parachute) does little to address the tech-abetted wave of economic displacement (the tsunami) that may be looming just off the horizon. And it also seems to intensify some of the structural problems in the tech business, including its increasing domination by five giants — Apple, Amazon, Microsoft, Facebook and Alphabet, Google’s parent company — which own some of the world’s most important economic platforms.....some in Silicon Valley think the giants misplayed their hand in the legislation. In pursuing short-term tax advantages, they missed a chance to advocate policies that might have more broadly benefited many of their customers — and improved their images, too......This gets back to that looming tsunami. Though many of the economy’s structural problems predate the last decade’s rise of the tech behemoths, the innovations that Silicon Valley has been working on — things like e-commerce, cloud storage, artificial intelligence and the general digitization of everything and everyone around you — are some of the central protagonists in the economic story of our age.

Among other economic concerns, these innovations are implicated in the rise of inequality; the expanding premium on education and skills; the decimation and dislocation of retail jobs; the rising urban-rural divide, and spiking housing costs in cities; and the rise of the “gig” economy of contract workers who drive Ubers and rent out their spare bedrooms on Airbnb....technology is changing work in a few ways. First, it’s altering the type of work that people do — for instance, creating a boom in e-commerce warehouse jobs in large metro areas while reducing opportunities for retail workers in rural areas. Technology has also created more uncertainty around when people work and how much they’ll get paid.
Farhad_Manjoo  preparation  job_loss  job_displacement  Silicon_Valley  tax_codes  corporate_concentration  platforms  income_inequality  short-sightedness  e-commerce  cloud_computing  artificial_intelligence  gig_economy  precarious  automation  uncertainty  universal_basic_income  digitalization  Apple  Amazon  Netflix  Microsoft  Facebook  Alphabet  Google  inconsistent_incomes  Big_Tech  FAANG 
december 2017 by jerryking
Can the Tech Giants Be Stopped? -
July 14, 2017 | WSJ | By Jonathan Taplin.

Google, Facebook, Amazon and other tech behemoths are transforming the U.S. economy and labor market, with scant public debate or scrutiny. Changing course won’t be easy....."we are rushing ahead into the AI universe with almost no political or policy debate about its implications. Digital technology has become critical to the personal and economic well-being of everyone on the planet, but decisions about how it is designed, operated and developed have never been voted on by anyone. Those decisions are largely made by executives and engineers at Google, Facebook, Amazon and other leading tech companies, and imposed on the rest of us with very little regulatory scrutiny. It is time for that to change.

Who will win the AI race? The companies that are already in the forefront: Google, Facebook and Amazon. As AI venture capitalist Kai-Fu Lee recently wrote in the New York Times , “A.I. is an industry in which strength begets strength: The more data you have, the better your product; the better your product, the more data you can collect; the more data you can collect, the more talent you can attract; the more talent you can attract, the better your product.”".....How did we get here? I would date the rise of the digital monopolies to August 2004, when Google raised $1.9 billion in its initial public offering......This shift has brought about a massive reallocation of revenue, with economic value moving from the creators of content to the owners of monopoly platforms. Since 2000, revenues for recorded music in the U.S. have fallen from almost $20 billion a year to less than $8 billion, according to the Recording Industry Association of America. U.S. newspaper ad revenue fell from $65.8 billion in 2000 to $23.6 billion in 2013 (the last year for which data are available). Though book publishing revenues have remained flat, this is mostly because increased children’s book sales have made up for the declining return on adult titles.....The precipitous decline in revenue for content creators has nothing to do with changing consumer preferences for their content. People are not reading less news, listening to less music, reading fewer books or watching fewer movies and TV shows. The massive growth in revenue for the digital monopolies has resulted in the massive loss of revenue for the creators of content. The two are inextricably linked......In the third quarter of 2016, companies owned by Facebook or Google took 90% of all new digital ad revenue. ....The history of Silicon Valley itself offers some guidance here. The astonishing technological revolution of the past half-century would never have occurred without the impetus of three seminal antitrust prosecutions. ....The clear historical lesson, which is waiting to be rediscovered in our own day, is that antitrust action has often served not to constrain innovation but to promote it.
Apple  Alphabet  Big_Tech  Google  Amazon  Microsoft  Facebook  artificial_intelligence  privacy  antitrust  Silicon_Valley  content  platforms  virtuous_cycles  content_creators  public_discourse  oligopolies  oversight  value_migration  regulation  innovation  seminal  no_oversight  imperceptible_threats  FAANG  backlash  Kai-Fu_Lee 
july 2017 by jerryking
Conglomerates Didn’t Die. They Look Like Amazon. - The New York Times
Andrew Ross Sorkin
DEALBOOK JUNE 19, 2017

Amazon's purchase of Whole Foods re-opens the debate about conglomerates which supposed to be dead, a relic of a bygone era of corporate America as investors supposedly want smaller, nimbler, more focused companies......Amazon is just one of several digital-economy conglomerates. Alphabet, the parent company of Google, is another. Facebook is quickly becoming a conglomerate, too...... today’s tech-enabled conglomerates, are spending, and often losing, tens of billions of dollars annually on all sorts of projects and acquisitions that may or may not turn out to be successful. But investors are seemingly willing to give these new behemoths a free pass in the name of growth and innovation — until they aren’t.

If there is any lesson from the last breed of industrial conglomerates, it is that there is a natural life cycle to most of them....When it comes to Amazon (or Alphabet, or any of the new conglomerates), the question is whether there is something fundamentally different about these businesses given their grounding in digital information — especially as they expand into complex brick-and-mortar operations like upscale supermarkets.

In an age of big data and artificial intelligence, are businesses that look disparate really similar? And can one company’s leadership really oversee so many different businesses? When does it become too big to manage?...a recent article in the Yale Law Journal made a compelling case that Amazon has built perhaps the ultimate economic mousetrap — one impervious to the natural life cycle of a conglomerate, but one that might ultimately prove to be anticompetitive.

The author, Lina M. Khan, a Yale Law student who has written about antitrust law and competition policy, argued that Amazon had created a “platform market” and can use its size and scale to subsidize its entrance into new businesses through predatory pricing.....The economics of platform markets create incentives for a company to pursue growth over profits,.....Amazon’s role as both a distributor and cloud provider for many of its competitors gives it an unfair advantage. “This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors,”.....Jeff Bezos, is clear. The man who is assembling the 21st century’s most fearsome new conglomerate once explained his view of competition this way: “Your margin is my opportunity.”
conglomerates  Andrew_Sorkin  Jeff_Bezos  Amazon  GE  Jeff_Immelt  unfair_advantages  Whole_Foods  Silicon_Valley  digital_economy  Alphabet  Facebook  lessons_learned  Yale  Charles_Munger  antitrust  competition  Berkshire_Hathaway  platforms  predatory_practices  diversification  FTC  margins  staying_hungry  life_cycle  Lina_Khan  competition_policy 
june 2017 by jerryking
Google vs. Uber: How One Engineer Sparked a War - WSJ
By Jack Nicas and Tim Higgins
Updated May 23, 2017

Anthony Levandowski started outside tech companies while working for Google, which alleges he took driverless-car secrets to a competitor.....Google parent Alphabet Inc. and Uber are embroiled in a legal fight over driverless-car technology, with Mr. Levandowski playing a starring role. The two firms, along with several other companies, are locked in a race to automate cars, a contest that could affect the future of transportation......Google’s approach [i.e. encouraging entrepreneurship amongst employees] helps it create new businesses, it also can spark disagreements between the company and its employees over who owns certain technology......Alphabet accuses Mr. Levandowski of stealing its trade secrets around driverless-car technology and bringing it to Uber, which he joined as its head of its driverless-car project last year after earning more than $120 million at Google. Alphabet has filed two arbitration claims against Mr. Levandowski and is suing Uber for allegedly conspiring with him.....
Google  Uber  automotive_industry  autonomous_vehicles  litigation  conflicts_of_interest  side_hustles  employment_contracts  intellectual_property  noncompete_agreements  start_ups  talent  Alphabet  trade_secrets  entrepreneurship  engineering 
may 2017 by jerryking
Universities’ AI Talent Poached by Tech Giants - WSJ
By DANIELA HERNANDEZ and RACHAEL KING
Nov. 24, 2016

Researchers warn that tech companies are draining universities of the scientists responsible for cultivating the next generation of researchers and who contribute to solving pressing problems in fields ranging from astronomy to environmental science to physics.

The share of newly minted U.S. computer-science Ph.D.s taking industry jobs has risen to 57% from 38% over the last decade, according to data from the National Science Foundation. Though the number of Ph.D.s in the field has grown, the proportion staying in academia has hit “a historic low,” according to the Computing Research Association, an industry group.

Such moves could have a long-term impact on the number of graduates available for teaching positions because it takes three to five years to earn a doctorate in computer science. ....The squeeze is especially tight in deep learning, an AI technique that has played a crucial role in moneymaking services like online image search, language translation and ad placement,
Colleges_&_Universities  poaching  Alphabet  Google  Stanford  artificial_intelligence  Facebook  machine_learning  talent_pipelines  research  PhDs  deep_learning  war_for_talent  talent 
november 2016 by jerryking
Why Google Is Becoming Alphabet - The New Yorker
AUGUST 11, 2015
Google’s New Alphabetical Order
BY VAUHINI VARA
Alphabet  Google  diversification  conglomerates 
august 2015 by jerryking
Google’s Alphabet not your traditional conglomerate - The Globe and Mail
CARL MORTISHED
Google’s Alphabet not your traditional conglomerate
SUBSCRIBERS ONLY
LONDON — Special to The Globe and Mail
Published Wednesday, Aug. 12, 2015
Google  conglomerates  Alphabet 
august 2015 by jerryking

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