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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
‘Hyper-concentration’ of jobs occurring in Toronto’s downtown, report says
December 3, 2018 | The Globe and Mail | by JEFF GRAY TORONTO CITY HALL REPORTER.

A fundamental economic shift is “hyper-concentrating” new knowledge-economy jobs in Toronto’s downtown as traditional manufacturing employment evaporates across much of southern Ontario, a new report warns, and the trend has major ramifications for public transit and land-use planning......lopsided job growth is a permanent change, not a cyclical pattern. It warns Toronto’s transit system will be placed under further strain. The report also argues smaller communities outside the city should seek to attract the jobs of the future, rather than cling to dying industries.....Overall, the number of jobs in the region has grown. But from 2006 to 2016, Toronto’s downtown gained 67,000 of what the study calls “core” jobs, or jobs that bring income into the region and drive growth, as opposed to jobs such as those in retail that largely serve local residents. Many of those downtown jobs are “knowledge-based,” in industries such as finance or technology or “higher-order business services” such as accounting or law, which tend to cluster together......“It’s not this kind of gentle evolution towards the knowledge economy that’s we’ve seen previously. This is a definite shift.” The GM news appears tailor-made to illustrate that shift. While closing the Oshawa plant, the company has pointed to its new investment in Markham – one of a handful of suburban centres for knowledge jobs identified in the report – where GM plans to hire 700 engineers to work on its designs for driverless cars. GM has also announced plans for an “urban innovation lab” on the east side of central Toronto.....Dr. Blais’s report suggests the Toronto region should look to plan for a “second downtown,” which would need good transit to attract knowledge-intensive jobs.....Richard Florida .....said the numbers demonstrate the clustering of knowledge jobs means places outside Toronto’s downtown core, such as Oshawa, will inevitably become “more of a bedroom community than an economic generator.”
downtown_core  GM  Jeff_Gray  knowledge_economy  manufacturers  Oshawa  public_transit  Toronto  layoffs  Golden_Horseshoe  land_uses  hyper-concentrations 
december 2018 by jerryking
Three Hard Lessons the Internet Is Teaching Traditional Stores
April 23, 2017 | WSJ | By Christopher Mims.
Legacy retailers have to put their mountains of purchasing data to work to create the kind of personalization and automation shoppers are getting online
(1) Data Is King
When I asked Target, Walgreens and grocery chain Giant Food about loyalty programs and the fate of customers’ purchasing data—which is the in-store equivalent of your web browsing history—they all declined to comment. ...Data has been a vital part of Amazon’s retail revolution, just as it was with Netflix ’s media revolution and Google and Facebook ’s advertising revolution. For brick-and-mortar retailers, purchasing data doesn’t just help them compete with online adversaries; it has also become an alternate revenue source when profit margins are razor-thin. ....Physical retailers must catch up to online retailers in collecting rich data without making it feel so intrusive. Why, exactly, does my grocery store need my phone number?

(2) Personalization + Automation = Profits
Personalization and Automation = Profits
There’s a debate in the auto industry: Can Tesla get good at making cars faster than Ford, General Motors and Toyota can get good at making self-driving electric vehicles? The same applies to retail: Can physical retailers build intimate digital relationships with their customers—and use that data to update their stores—faster than online-first retailers can learn how to lease property, handle inventory and manage retail workers? [the great game ]

Online retailers know what’s popular, and how customers who like one item tend to like certain others. So Amazon’s physical bookstores can put out fewer books with more prominently displayed covers. Bonobos doesn’t even sell clothes in its stores, which it calls “guideshops.” Instead, customers go there to try clothes on, and their selections are delivered through the company’s existing e-commerce system.

Amazon’s upcoming Go convenience stores, selling groceries and meal kits, don’t require cashiers. That’s the sort of automation that could position Amazon to reap margins—or slash prices—to a degree unprecedented for retailers in traditionally low-margin categories like food and packaged goods.

While online retailers are accustomed to updating inventory and prices by the hour, physical retailers simply don’t have the data or the systems to keep up, and tend to buy and stock on cycles as long as a year, says George Faigen, a retail consultant at Oliver Wyman. Some legacy retailers are getting around this by teaming up with online players.

Target stocks men’s shaving supplies from not one but two online upstarts, Harry’s and Bevel. Target has said that, as a result, more customers are coming in to buy razors, increasing the sales of every brand on that aisle—even good old Gillette. Retailers have long relied on manufacturers to drive customers to stores by marketing their goods and even managing in-store displays. The difference is this: In the past, new brands had to persuade store buyers to dole out precious shelf space; now the brands can prove themselves online first.

(3) Legacy Tech Won’t Cut It

Perhaps the biggest challenge for existing retailers, says Euromonitor’s Ms. Grant, is finding the money to transition to this hybrid online-offline model. While Target has announced it will spend $7 billion over the next three years to revamp its stores, investors fled the stock in February after Target reported 2017 profits might be 25% less than expected.

When Warby Parker, the online eyeglasses retailer, set out to launch stores across the U.S., the company looked for in-store sales software that could integrate with its existing e-commerce systems. It couldn’t find a system up to the task, so it built one from scratch.

These kinds of systems allow salespeople to know what customers have bought both online and off, and what they might be nudged toward on that day. “We call it the ‘point of everything’ system,” says David Gilboa, co-founder and co-chief executive.

Having this much customer knowledge available instantly is critical, but it’s precisely what existing retailers struggle with, Mr. Faigen says.

Even Amazon is experiencing brick-and-mortar difficulties. In March, The Wall Street Journal reported that the Go stores would be delayed because of kinks in the point-of-sale software system.

Andy Katz-Mayfield, co-founder and co-chief executive of Harry’s, is skeptical that traditional retailers like Wal-Mart can make the leap, even if they invest heavily in technology.

The problem, he says, is that selling online isn’t just about taking orders through a website. Companies that succeed are good at selling direct to consumers—building technology from the ground up, integrating teams skilled at navigating online marketing’s ever-shifting terrain and managing the experience through fulfillment and delivery, Mr. Katz-Mayfield says.

That e-commerce startups are so confident about their own future doesn’t mean they are right about the fate of traditional retailers, however.

A report from Merrill Lynch argues Wal-Mart is embarking on a period of 20% to 30% growth for its e-commerce business. A spokesman for the company said that in addition to acquisitions, the company is focused on growing its e-commerce business organically.

It isn’t hard to picture today’s e-commerce companies becoming brick-and-mortar retailers. It’s harder to bet on traditional retailers becoming as tech savvy as their e-competition.[the great game]
lessons_learned  bricks-and-mortar  retailers  curation  personalization  e-commerce  shopping_malls  automation  privacy  Warby_Parker  Amazon_Go  data  data_driven  think_threes  Bonobos  Amazon  legacy_tech  omnichannel  Harry’s  Bevel  loyalty_management  low-margin  legacy_players  digital_first  Tesla  Ford  GM  Toyota  automobile  electric_cars  point-of-sale  physical_world  contra-Amazon  brands  shelf_space  the_great_game  cyberphysical  cashierless  Christopher_Mims  in-store  digital_savvy 
april 2017 by jerryking
Twilight of the Brands
FEBRUARY 17 & 24, 2014 | - The New Yorker | BY JAMES SUROWIECKI.

It’s a truism of business-book thinking that a company’s brand is its “most important asset,” more valuable than technology or patents or manufacturing prowess. But brands have never been more fragile. The reason is simple: consumers are supremely well informed and far more likely to investigate the real value of products than to rely on logos. “Absolute Value,” a new book by Itamar Simonson, a marketing professor at Stanford, and Emanuel Rosen, a former software executive, shows that, historically, the rise of brands was a response to an information-poor environment. When consumers had to rely on advertisements and their past experience with a company, brands served as proxies for quality; if a car was made by G.M., or a ketchup by Heinz, you assumed that it was pretty good. It was hard to figure out if a new product from an unfamiliar company was reliable or not, so brand loyalty was a way of reducing risk. As recently as the nineteen-eighties, nearly four-fifths of American car buyers stayed loyal to a brand.

Today, consumers can read reams of research about whatever they want to buy. This started back with Consumer Reports, which did objective studies of products, and with J. D. Power’s quality rankings, which revealed what ordinary customers thought of the cars they’d bought. But what’s really weakened the power of brands is the Internet, which has given ordinary consumers easy access to expert reviews, user reviews, and detailed product data, in an array of categories.
James_Surowiecki  brands  Lululemon  books  GM  Heinz  customer_loyalty  J.D._Power  Consumer_Reports  new  Achilles’_heel  decline  information-poor  information-rich  fragility 
february 2016 by jerryking
How Not to Stay on Top - NYTimes.com
By JOE NOCERA
Published: August 19, 2013

Was BlackBerry’s fall from grace inevitable? When you look at the history of dominant companies — starting with General Motors — it is easy enough to conclude yes. There are companies that occasionally manage to reinvent themselves. They are nimble and ruthless, willing to disrupt their own business model because they can sense a threat on the horizon. But they’re the exception.

Wang Laboratories is the rule. And so is BlackBerry.

Wang went from an 80% market share in word-processing among the top 2,000 corporations to bankruptcy in about a decade, and BlackBerry of course went from inventing the cellphone and wireless email category, and utterly dominating it, to a a shadow of its former self today, with a “for sale” sign on outside corporate headquarters and a 2.7% global smartphone market share. What happened?

To rudely condense history, IBM’s PC happened to Wang and the iPhone happened to BlackBerry. At a somewhat more nuanced level, however, what happened to both Wang and BlackBerry is that when the storm clouds appeared they did not take their competitors seriously, they failed to understood what their customers wanted on the new landscape, and finally and most unforgivably they thought they knew what was best for their customers better than the customers themselves. More specifically, both firms thought their core customers were mistaken—wrong—to express a preference for the new, inferior arrival.
competitive_landscape  Wang_Labs  BlackBerry  blindsided  RIM  disruption  reinvention  failure  GM  IBM  iPhone  market_share  disproportionality  nimbleness 
september 2013 by jerryking
What to Do Before Disaster Strikes - WSJ.com
September 27, 2005 | WSJ | By GEORGE ANDERS.

What's missing is a systematic way of approaching corporate self-defense. Each potential calamity is treated in isolation....Sheffi believes that companies need to start by cataloging what could go wrong. General Motors Corp., for example, has created "vulnerability maps" that identify more than 100 hazards, ranging from wind damage to embezzlement. Such maps make it easier for managers to focus on areas of greatest risk or gravest peril. He implies that normal budgeting -- which matches the cost of doing something against the risk-adjusted cost of doing nothing -- can determine which battles against vulnerability are worth fighting....Mr. Sheffi nods approvingly at some ingenious ways to mobilize for trouble before it arrives. Federal Express Corp., he says, puts two empty planes in the air each night, just so they can swoop into any airport with a grounded plane and take over delivery services as fast as possible. Wall Street firms have recently added similar redundancy with multiple data centers, so that a New York City crisis won't imperil their record-keeping.

Intel Corp. (post-Heathrow) gets a thumbs-up, too, for finding a sly way of outwitting airport thieves. It couldn't control every aspect of security in transit -- but it could change its box design. Rather than boast about "Intel inside," the company switched to drab, unmarked packaging that gave no hint of $6 million cargoes. The name for this approach: "Security through obscurity." (jk: security consciousness)
disaster_preparedness  risk-management  book_reviews  mapping  security_&_intelligence  redundancies  vulnerabilities  rate-limiting_steps  business-continuity  thinking_tragically  obscurity  cost_of_inaction  base_rates  isolated  GM  Fedex  Intel  risk-adjusted  self-defense  Wall_Street  high-risk  budgeting  disasters  beforemath  risks  George_Anders  catastrophes  natural_calamities  systematic_approaches  security_consciousness  record-keeping  hazards 
may 2012 by jerryking
Remember Microsoft? - NYTimes.com
June 10, 2011Technology upends companies in different
ways. It allows new firms to deliver better products and services in a
more efficient way; it also creates new goods and services for consumers
to want. Eastman Kodak, the fifth-biggest company in the S.& P. 500
in 1975, was almost destroyed by digital cameras and is no longer in
the index. General Motors, fifth biggest in 1985, was hobbled by rivals
that could make more fuel efficient cars. Microsoft still rules the PC
desktop. But that will matter less and less as users migrate to tablets
and more computing takes place in “the cloud.”
There is another lesson in Microsoft’s long slide. It is about how far
corporate behemoths will go to stop technology that threatens their
dominance
Microsoft  David_Einhorn  capitalism  creative_destruction  technology  Kodak  cloud_computing  GM  digital_cameras 
june 2011 by jerryking
For innovation success, do not follow the money
07-Nov-2005 | Financial Times | By Michael Schrage "There is
no correlation between the percentage of net revenue spent on R&D
and the innovative capabilities of an organisation – none,"...Just ask
General Motors. No company in the world has spent more on R&D over
the past 25 years. Yet, somehow, GM's market share has
declined....R&D productivity – not R&D investment – is the real
challenge for global innovation. Innovation is not what innovators
innovate, it is what customers actually adopt. Productivity here is not
measured in patents granted but in new customers won and existing
customers profitably retained...A successful innovation policy is a
competition policy where companies see innovation as a cost-effective
investment to differentiate themselves profitably. If a 1 % R&D
intensity buys market leadership, more power to them; if 15 % is what it
takes to keep up with the competition and satisfy customers, that is
fine, too.
Michael_Schrage  innovation  R&D  productivity  measurements  metrics  ROI  customer_acquisition  correlations  customer_adoption  customer_profitability  GM  decline  competition_policy  innovation_policies 
october 2010 by jerryking
Paul Ingrassia: The Lessons of the GM Bankruptcy - WSJ.com
JUNE 1, 2010 | Wall Street Journal | by PAUL INGRASSIA.
Everybody knew it was ridiculous and unsustainable to pay UAW workers
not to work.
boards_&_directors_&_governance  automotive_industry  GM  Ford_Motor_Co.  moral_hazards  bailouts  unions  UAW 
june 2010 by jerryking
The Meaning of Nummi - WSJ.com
OCTOBER 6, 2009 | Wall Street Journal | by HOLMAN W. JENKINS,
JR. "Toyota is...doing away with [an] auto factory, ...landmark joint
venture (JV) between Toyota and GM until GM bailed this year amid its
bankruptcy ordeal. Nummi, short for New United Motor Manufacturing Inc.
and born in 1984, was heralded as a way to introduce GM to
Japanese-style "lean production" while introducing Toyota to the doughty
U.S. auto worker....Nummi was a political operation from day one.
Toyota at the time had no U.S. production and had just been slammed by a
protectionist "voluntary" quota on cars imported from Japan. The plant
also helped it end-run Washington's 25% duty in imported pickups. In
return, the JV was designed to help GM off the wicket of its unwise
promise to pay wages and benefits to workers even when it had no jobs
for them."
automotive_industry  Holman_Jenkins  Toyota  GM  joint_ventures 
october 2009 by jerryking
Why GM survives but Nortel doesn't
Tuesday, June 23, 2009| Globe & Mail | DEREK DECLOET
Nortel  restructurings  R&D  GM 
june 2009 by jerryking
How GM Lost Its Way - WSJ.com
* JUNE 3, 2009 | Wall Street Journal | By PAUL INGRASSIA. Timid management and coddled workers couldn't compete with Toyota.
automotive_industry  GM 
june 2009 by jerryking
GM's Woe Has Tills Ringing in Singapore
19-Apr-2006 Financial Times article by Anonymous sources on the
windfall opportunities GM's decline has presented for a Global Crossing unit in Montreal to which handle logistics for its conference calls.
opportunistic  GM  Global_Crossing  Singapore  windfalls  decline 
february 2009 by jerryking

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