Facebook F8 – Business as usual

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Progression, but little excitement.

  • While Facebook’s announcements at its developer conference were not exactly ground-breaking, it is clear that Facebook remains extremely commercial and is very focused on fixing its weaknesses.
  • Highlights from F8 include:
    • First augmented reality: Facebook has decided to re-focus on AR in what looks like a pre-emptive strike against Snapchat.
    • This includes the launch of a new camera platform that follows up on the roll-out of camera capability to all of its apps.
    • With the camera capability now everywhere, developers will now be able to create content that can overlay the real world as seen through a smartphone camera.
    • This includes Snapchat-like photo and video annotations as well as combining the ability to map a 3D environment and place virtual objects within it.
    • The aim here is to get users to spend more time within the Facebook ecosystem thereby increasing potential for monetisation.
    • Second: Artificial Intelligence. This remains a major weakness for Facebook but it does appear to have made some progress in image recognition.
    • This makes some sense as the core competencies of its biggest AI hires are in this area.
    • Facebook showed AI that was capable of advanced object recognition as well as the tracking of moving objects through video.
    • This was complimented by progress on making Facebook M (digital assistant) smarter as well as improving the quality of the bots that it offers to companies to communicate with their clients.
    • AI remains essential to Facebook’s long-term growth as it is sitting upon a mountain of data but still is not in a position to really make the most of the insights and automation that it can provide.
    • Third: Gaming. A lot of progress has been made in developing game play within Messenger.
    • Rich game play is now enabled with real time and turn by turn games making up the majority of the line-up.
    • There are now 45 games available for play within Messenger and with the gaming tab be enabled within the app imminently.
    • I think that this is a crucial step forward as gaming remains the largest segment of Digital Life and in developed markets, there is still no dominant player.
    • Fourth Chat extensions: This enables developers to bring their services directly into chat sessions.
    • Spotify is the best example where users can search Spotify for a track and then post that track as well as play a sample all within the chat.
    • Apple Music will also be coming to the platform later in 2017.
    • Fifth Monetisation: Behind all of the new announcements is a single-minded determination to drive more traffic onto the platform.
    • This can be seen everywhere from the desire to enrich mundane events to encourage sharing to enticing users to spend more time on the platform.
    • Data richness and time spent are two key elements when it comes to understanding user activity and being able to earn revenues from it.
    • This is not a subject that was directly addressed anywhere but one can see the hand of the cash register in everything that Facebook does.
  • Facebook revealed nothing that was really ground breaking but instead spent time addressing its weaknesses as well as ensuring that rivals are not able to steal its user engagement.
  • I am still quite cautious with regards to Facebook’s outlook for this year as I don’t think that either its video offering or its gaming offering are mature enough to bring the company back to high growth in 2017.
  • This combined with requirement to really improve its AI to compete on a level playing field with Google, Microsoft, Apple and Amazon leads me to still prefer Baidu, Tencnet and Microsoft.

 

Samsung – Fall before the first

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Bixby falls even before its first hurdle.

  • Samsung’s delay in the roll-out of Bixby is a strong indication of just how far behind Samsung is when it comes to artificial intelligence reinforcing my view that the investment case still lives and dies with hardware.
  • Despite much fanfare at the launch of the Galaxy s8 just a few weeks ago, it turns out that Bixby’s functionality at launch will be greatly curtailed as Samsung can’t get it to work properly.
  • Some of the features such as Vision, Home and Reminder will be available but the key piece that ties it all together which is Bixby Voice will not be available in US until later in the spring.
  • The reason for the delay is that the voice recognition system in English is not nearly good enough and substantially lags behind Bixby’s performance in Korean.
  • This is a significant blunder on Samsung’s part as:
    • First: it appears that Samsung has put more effort into making Bixby work in Korean than English.
    • I think that this was not a very sensible choice as the vast majority of Samsung Galaxy s8 devices will sell to users for whom Korean is not a language they speak.
    • Second: it is a sure indicator of just how far behind Samsung is compared to everyone else when it comes to developing intelligent services.
    • RFM research (see here) has identified three stages of voice recognition of which the first and by far the most simple is the accurate conversion of voice to text.
    • Almost everyone, even Facebook, has pretty much cleared this hurdle but it appears that Bixby has not.
  • Digital assistants face a critical chicken and egg problem.
  • This is that to improve, they need data but if they are no good, no one will use them thereby depriving them of the data they need to get better.
  • At this rate, users will try Bixby once or twice and quickly give up preferring instead to use touch based input and other digital assistants.
  • To make matters even more difficult, Bixby will be competing on its own device with the best in class Google Assistant which will be set by default and will sit on the home button.
  • The net result is that I see the Galaxy s8 competing on the basis of its superb screen, high quality camera and best in class components that together will enhance the Digital Life services provided by others.
  • I do not expect users to pay much attention to any of Samsung’s software innovations as I see them as either not useful (Samsung Dex) or not good enough (Bixby).
  • This leaves Samsung exactly where I left it as a vendor of commodity hardware that makes excellent returns by out shipping its nearest rivals by more than 2 units to 1.
  • As long as it can maintain that gap, I have no fear for its profitability or its outlook but Huawei is keen to capitalise on Samsung’s woes and remains a constant threat.
  • Samsung’s brand has also taken a hit as a result of the Note 7 disaster, leaving the Galaxy s8 as the first real test of how much damage has been done.
  • This combined with the recent very strong rally, is why I still don’t want to get involved.
  • I prefer Tencent, Baidu and Microsoft.

Spotify – Crown jewels

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Spotify keeps the crown jewels to itself.

  • In striking a deal with Universal, Spotify has traded much better than I thought it would giving the label two concessions that I think will end up being pretty worthless.
  • Spotify has signed a licence with Universal that has three main aspects:
    • First: Universal artists will have the option to release their music to premium users only for two weeks before it is available to all users.
    • Second: It looks like Spotify will cut the share that pays to Universal from 55% to 52%.
    • Third: Spotify will provide Universal with the data that its music generates thereby enabling the label and its artists to gain better insights into how its music is being consumed.
  • On the surface, it looks like two of these points benefit the labels but when I take into consideration how the music industry is evolving, I think the winner from this deal is Spotify.
  • This is because Spotify has managed to increase its gross margins on Universal music by 300bp and has cleared one major hurdle towards its road to an IPO.
  • Sony and Warner are the two remaining hurdles which, now that a precedent has been set, may be easier to overcome.
  • That is what Spotify has gained from this deal but what has it given up in return?
  • Not much in my opinion.
    • First: I do not think that delaying releases to the free tier for two weeks will have much, if any, impact on the appeal of the free tier.
    • I have long believed that the free tier is far more valuable to Spotify than anyone thinks that it is (see here) and I think that its desire to protect the user experience of this segment has been a major sticking point in striking a new deal with the labels.
    • Time shifting media releases is how music and films have been released for years but I think that this is changing.
    • Spotify knows what it users listen to and what they like and I think that in the future, users will be increasingly made aware of new music when the streaming services recommend them rather than when the artist or label releases them.
    • Hence, many users might not even notice a two-week delay meaning that Spotify has received something for nothing.
    • Second: Spotify is giving Universal access to its fire hose of data but I have doubts whether it will be able to make much sense of it.
    • This is because it will only have access to the data which is just a raw material.
    • To make something useful out of it, trained algorithms are required to parse that data and draw meaningful conclusions from it.
    • These algorithms are Spotify’s crown jewels and I am pretty sure that they will be staying safely under lock and key.
    • After all, they are the reason why Spotify’s service is better than Apple’s and are the key to its ability to eventually replace the labels entirely (see here).
    • Furthermore, Universal will only have access to its own data which compared to the entire catalog that Spotify has, is a small subset.
    • Hence, even if it could make sense of the data, it wont be able to draw many meaningful conclusions from it as it will be looking at an incomplete picture of user activity.
  • The net result is that I think Spotify has dealt much better than I thought it would as I was concerned that the pressure to make it to IPO in 2017 would force it to give too much away to the labels (see here).
  • In fact, I think that the reverse has happened putting Spotify in a good position to IPO without having to give much, if anything, away.

 

Samsung – Still in the box

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Bezels break the box but Bixby stays inside.

  • While Samsung is bursting out of the box in pushing the limits of screen real estate, its voyage into the increasingly crucial user experience shows that it remains boxed in by smarter and better alternatives.
  • Samsung finally launched the Samsung Galaxy s8 / s8+ whose main features include:
    • First: A big improvement in screen real estate with the home button now being under the glass as well as improvements in colour, contrast and brightness.
    • Second: A digital assistant called Bixby (see here) that aims to be much more than an easy way to find stuff out (see below).
    • Third: Samsung Dex which allows the Galaxy s8 to work with an external monitor, mouse and keyboard to give a desktop like experience.
    • Samsung demonstrated very basic PowerPoint editing features confirming to me that the Galaxy s8 will be capable of running the stripped-down Office apps rather than the full fat versions.
    • I still think that without full fat Office, Photoshop etc, there is not much point in this functionality as content consumption has largely already moved off form factors that use a mouse and keyboard and onto touch.
  • The net result is that Samsung is continuing to almost entirely differentiate in hardware as this device is still first and foremost a Google ecosystem device.
  • This is just one area where Bixby will run into problems as it will be the best-in-class Google Assistant that sits on the home button meaning that Bixby has a fearsome competitor even on its own flagship device.
  • To counteract this, Bixby is trying to do things a little differently but careful assessment of what Samsung demonstrated shows a service that has very little intelligence at all.
  • Bixby is a very far cry from what Viv demonstrated would be possible with its assistant prior to the Samsung acquisition, making me suspect that Viv has not proved to be nearly as clever as promised.
  • Bixby is activated with a side key (to get around the problem of Google sitting on the home button) and aims to get stuff done rather than just finding stuff out.
  • Consequently, Samsung has taught Bixby a range of skills such as screen capture and image recognition and plugged that functionality into a select number of apps.
  • By keeping the number of apps that use it limited, Samsung limits the number of possibilities that has to program further highlighting that Bixby is probably incapable doing very much outside of the box.
  • This appears to be contrary to how Viv marketed its capabilities (see here) before it was owned by Samsung, again making me wonder about the true capability of Viv / Bixby.
  • Bixby offers a series of cards (left swipe from home screen) that adjust based on usage and the time of day as the system learns what apps and services the user uses most and when.
  • This is merely clever statistics but if this proves to be a useful tool, then Samsung will achieved some much needed differentiation outside of hardware.
  • Although I have suspicions about the lack of intelligence in Bixby, I cannot be 100% certain of this opinion until I have tested it to destruction.
  • The net result is a very nice looking device that Samsung has made huge efforts to show is both high quality and extremely safe.
  • Most importantly this device is also the first real test that Samsung has had since the Note 7 disaster which is why the s8 needs to sell very well, confounding the big fall in trust that Samsung has suffered over the last 6 months (see here).
  • I think that Samsung has produced the device that it needs to cement its recovery but now it comes down to consumers, a number of whom have already switched to iOS (see here).
  • With Samsung’s share price very close to its all time high, a lot of recovery is already priced in which is why I remain a little nervous.
  • Hence, I prefer Microsoft, Tencent or Baidu.

Didi – Jam today

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Its time Didi started trying to make money.

  • With the ride hailing market in China now wide open for it, Didi has no reason to go on burning billions of dollars for the sake of growth.
  • Consequently, I cannot see a good reason for Didi to raise $6bn as it should be looking to internal cash flow to fund its investments.
  • The one exception is to have a war chest for acquisitions in order to go global, but I think that it is better to buy expensive paper with equally expensive paper rather than cash.
  • In China and across the world, ride hailing has been a bottomless black hole into which Uber and many others have poured billions of dollars in order to establish a firm grip on the ride hailing market.
  • This is because like all network businesses (see here), barriers to entry are very low meaning that competition will be brutal unless one player becomes significantly larger than all of its rivals.
  • A company in this hallowed position then becomes to the “go-to” place for the service in question and it is then that real monetisation can begin.
  • The rule of thumb that I apply here is:
  • A company that relies on the network must have at least 60% market share or be at least double the size of its nearest rival to begin really making profit.
  • Any market with more than one player will be a bottomless hole of investment as each tries to undercut the other in order to reach the hallowed status of being the “go to” market place.
  • Once there, it will have become so sticky that customers will pay a little more to access the sellers and the sellers will be willing to do exactly the same.
  • This how a network business changes from being a bottomless pit and becomes a gold mine.
  • With Uber’s ignominious withdrawal from the Chinese market (see here), I think that Didi has already reached this status and so it should now be looking seriously at monetisation rather than growth at any price.
  • For Didi, a position in autonomous driving is likely to be as important as it is for Uber (see here), but I struggle to see how it needs $6bn for this.
  • Furthermore, RFM research and historical data strongly indicates that excellence in autonomous driving and artificial intelligence is a function of time spent and data collected rather than absolute numbers of dollars invested.
  • Consequently, even if it starts today, Didi is likely to be far behind Baidu which intends to have autonomous cars on the road next year.
  • At the end of the day, the price of ride hailing in China (and elsewhere) has to rise otherwise Didi, Uber and all of the other players will never be going concerns.
  • Hence, I think that Didi should be looking at strategies of phasing in the price rises that it needs to offer its existing shareholders a decent return rather than investing right, left and centre and promising jam tomorrow.
  • Dull as it sounds, Didi is in a position to start producing jam today.

Uber – Fatal disengagement.

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Google is 5,000x better than Uber at autonomous driving.

  • Although Google is suing Uber for the alleged theft of its Lidar (key autonomy sensor) design, it does not seem to have helped Uber much as it appears to be by far the worst at autonomous driving.
  • This is still the case when one includes the regular car companies that most people have written off as having very little to offer in the new world of digital and autonomous cars.
  • The best measure of an autonomous driving solution is how often the driver has to take over to correct shortcomings in the autonomous driving software.
  • Regulations in California require those that test in the state to submit this data but typically, they all submit it in different ways (see here).
  • There are also different types of disengagement such as when the car is going to hit something (critical) or when the safety driver feels uncomfortable (ordinary).
  • Furthermore, companies test their cars in different conditions meaning that the data can really only be used as indication.
  • However, the contrasts are so stark that I think that meaningful conclusions can be drawn about how advanced the autonomous driving solutions from different players really are.
  • In order of performance the data shows:
    • No. 1 Waymo (Google) is 8x better than the number 2 with 1 disengagement every 5,128 miles driven.
    • Waymo has also driven at least 155x more miles (635,868) in the last 12 months than anyone else, meaning that it has collected more training data than all the others put together.
    • No. 2 BMW with 1 disengagement every 638 miles driven (8x worse than Waymo) but it only drove 638 miles raising questions to the validity of this data.
    • No. 3 Nissan with 1 disengagement every 146 miles and a total of 4,099 miles driven.
    • No. 4 Tesla with 1 disengagement every 3 miles with 550 miles driven but almost all of these occurred in wet road conditions.
    • I think that Tesla deliberately went out to push its system to the limit as wet conditions are known to be far more difficult for autonomous systems.
    • Hence, I do not think that is necessarily an indication of Tesla’s real position in the pecking order.
    • No. 5 Mercedes with 1 disengagement every 2 miles driven with 673 miles driven in total.
    • No. 6 Uber with 1 disengagement every 1 mile driven with a total of 20,354 miles in total.
    • Uber has just suspended its autonomous testing following a serious crash in Arizona despite the fact that it appears that the Uber vehicle was not responsible for the incident.
    • Uber has also been banned from testing in California for failing to register with the DMV.
  • This is yet another indication that the key to artificial intelligence (the heart of all autonomous driving systems) currently is the amount of time that one has been working on the algorithms as well as the amount of data collected (see here).
  • I am certain that this is why Waymo is the best because it began working on autonomous driving in 2009 (far earlier than anyone else) and in the last 2 years has driven more than 150x more miles than anyone else.
  • The fact that Uber, by quite some margin, ranks last is potentially a serious problem in the long-term.
  • This is because if the car companies have their own self driving technology (or use Google) then Uber may find itself being a middleman that is no longer required.
  • Uber currently has the advantage because it has already established itself as the market place for drivers and passengers to transact and these types of positions are extremely hard to disrupt once created.
  • This is why Uber commands the $70bn valuation that it does but unless it gets a handle on autonomous driving, this market place may become obsolete when humans stop driving cars.
  • I still think that the technology will become mature long before the market is ready to adopt it (see here) meaning that Uber should be able to pick-up a viable solution at an attractive price once 2020 deadlines are missed and funding runs out.
  • Despite this view, this is a key risk for Uber and one I would be uncomfortable with especially if I had put some money into the company at $62.5bn.

Google & Facebook – Trouble in paradise.

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Facebook will be hit much harder than Google.

  • Although it is Google that is taking most of the heat in the current boycott of its digital display advertising, it is Facebook that is likely to be hit hardest by this problem.
  • A series of global firms have pulled their advertising from YouTube is response to finding their advertisement placed in videos which are deemed to be offensive or contain extremist content.
  • This is not a new problem but has come to a head after a series of lapses on the part of YouTube have gone viral raising the ire of companies who would appear to endorsing such content.
  • The net result is that a number of multinational companies (more likely to follow) have pulled their advertising from YouTube until they are confident that Google is able to ensure that their logos and advertising only appears along aside acceptable content.
  • This is a difficult problem because YouTube is adding 400 hours of content to its website every minute and thousands of websites are added to its network on a daily basis.
  • This makes monitoring content on a proactive basis extremely difficult which is why a meaningful number of lapses have come to light.
  • Fortunately for Google, I think that the impact of this issue will be limited and short-lived as:
    • First: this issue only affects YouTube and display advertising which RFM estimates makes up just 12% of gross revenues.
    • Hence, even if this were to fall to zero, the vast majority of Google’s business would be unaffected.
    • Second: Google is the best equipped to deal with this problem compared to any of its competitors.
    • The amount of content that has to be checked on a daily basis is so vast that it can only realistically be carried out by a machine.
    • This means that AI is needed to scan uploaded content and new websites and flag any that are suspected to contain content that Google customers are likely to consider objectionable.
    • Google has the best AI available when it comes to image and video recognition as well as sentence and text recognition.
  • Hence, I think that Google should be able to fix this problem in a comparatively short period of time.
  • However, I do not have the same degree of confidence when it comes to Facebook which already has this problem but has yet to suffer a loss of businesses as a result of it.
  • I think that when this does happen at Facebook, it will be a much more serious problem as this type of advertising is a much larger part of its revenue and I do not think that Facebook has the AI to fix it.
  • RFM research (see here) has found that Facebook is far behind its global peers when it comes to AI, mainly as a result of having not worked in the field for very long.
  • This means that while it is sitting on the world’s second largest treasure trove of data, it is unable to understand what most of it is and is therefore unable to weed out content that is objectionable to its customers.
  • I think that this will take a very long time to fix compared to Google and so when this issue hits Facebook, it will hit it harder and it is likely to last longer.
  • This is just another reason for me to remain pretty cautious on Facebook which I think will see much lower than expected growth this year which is likely to take a toll on the short-term valuation.
  • I also think that Google remains fully valued and would prefer the shares of Microsoft, Tencent, Baidu and Apple for long-term value based investors.

Tencent – Brute force.

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Tencent has time as most gaming AIs are relatively simple.

  • Tencent is finally jumping into artificial intelligence (AI) and I think that it is fortunate in that it is not very difficult to create good algorithms for the vast majority of the games that Tencent offers.
  • Tencent has created AI Lab which now has more than 250 employees whose task it is be to create algorithms that create more sophisticated game opponents as well as chat bots for companies that use WeChat and QQ to talk to their customers.
  • The general impression of AI seems to be that as soon as one has created an AI group, superb, hyper-intelligent algorithms will come rolling out of the door but in reality, this is very far from the truth.
  • RFM research has found (see here) that single biggest determinate of AI excellence to date is time and those that have been doing it the longest tend to have the best AI.
  • This is why RFM has found that it is the search engines thatare the most advanced even though some of the biggest brains in the field are employed elsewhere.
  • With Tencent just getting into this field, I think it will be a very long time before it will be in a position to roll out algorithms that are capable of making its services meaningfully more intelligent.
  • In the long run this will be crucial to maintaining its dominance in the Digital Life segments where it is present as I think competition will become much tougher as the market matures.
  • The good news is that it is unlikely to prove very difficult to create algorithms that are more than good enough to play the games that it offers to a very high standard.
  • This is because most games are either based on hand eye co-ordination or can be solved by an algorithm using a brute-force approach.
  • Brute force involves evaluating every possible outcome from a given position and choosing the best one.
  • With today’s improvements in memory and processing power, this is not very difficult to achieve.
  • The highest profile exception is Go which has so many possible combinations that brute force becomes impossible.
  • This is why DeepMind’s AlphaGo was such a breakthrough, as it uses AI to work out which options should be searched much like a human would.
  • Tencent has produced an AI Go player called Jueyi which has been able to play to a very high standard but I think that the design has been copied from AlphaGo.
  • AI is a co-operative field and DeepMind has published most of its methodology and results for the creation of AlphaGo in the scientific magazine Nature.
  • Consequently, I do not view this as a good example of Tencent coming up with an innovation of its own and I think we will not be seeing hyper-intelligent AIs appearing in Tencent’s services anytime soon.
  • However, I think that Tencent has time as its core markets are still seeing steady growth and it should be reasonably easy to improve the AI opponents in its core segment: gaming.
  • I still like Tencent as there remains substantial upside should it really begin to monetise the ecosystem that it has created but it has a very long way to go before it can be considered a force in AI.

Samsung – Edge dancer pt. II

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I think Bixby will struggle against Google Assistant.

  • Samsung has launched its offensive on the digital assistant market but I think it will still be dancing around the edge of the main act on the Galaxy s8: Google Assistant.
  • Samsung has announced that its new digital assistant, Bixby will be present on the Samsung Galaxy 8 with its own dedicated key on the side of the device.
  • Bixby promises to offer:
    • First, completeness: This promises to give users complete control of enabled apps rather than the few tasks offered by other assistants.
    • Second contextual awareness: Samsung is promising that Bixby will be aware of the context within which it has been triggered, making it more relevant and useful.
    • I suspect that it will do this using the hooks in Android that Google wrote to enable Google Assistant to do the same thing.
    • Third natural language recognition: Bixby should be able to understand complex, multi-part questions as well as prompt the user to clarify the pieces that it does not understand.
  • These features are very similar to those promised by Viv, the artificial intelligence company that Samsung purchased in October 2016 which is clearly the source of this product.
  • If Bixby can truly fulfil the promises that it is making, then it will almost certainly will be better than Google Assistant.
  • However, I think that this is a very big ask given that RFM research has found that AI excellence to date has been a factor of time and data volume.
  • Viv was founded in 2012 and has no data from commercial products while Google has been crunching data for 20 years and has orders of magnitude more data than its nearest rival.
  • Consequently, I think that compared to this highly ambitious billing, Bixby is going to fall very far short of the promises that it has made.
  • Furthermore, Samsung’s delivery of Bixby is going to be hobbled by the 2014 agreement that it made with Google where it agreed not to compete in the ecosystem (see here).
  • This is why I suspect that Bixby has been relegated to a button on the side of the device whereas it will be Google Assistant that is sitting on the all-important home button.
  • As a result I think on the smartphone, Bixby will lose out to Google Assistant but on other devices it has some chance.
  • Samsung has a good portfolio of other electronic devices, which combined with its SmartThings offering, could allow Bixby to offer intelligent and intuitive control of other Samsung devices.
  • This could help Samsung to encourage greater ownership of Samsung devices across its range but again this will depend on how good Bixby really is.
  • Over 20% of all Google mobile searches are already done using voice meaning that many users are already conditioned to pressing the home button and asking as well as being used to Google’s quality of service.
  • Consequently, I think that the odds are heavily stacked against Samsung having much success with Bixby but as long as it can continue to outsell Huawei by more than 2 phones to 1, the profitability of its handset business should remain intact.
  • I still pretty cautious on Samsung as I am not convinced that the full fall-out from the Note 7 disaster has been felt in terms of market share, which is what makes the Galaxy s8 launch so important.
  • I prefer Baidu, Tencent and Microsoft.

 

Intel – Auto ambition

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Intel must break out of the mould that success has cast for it.

  • The acquisition of Mobileye by Intel highlights both Intel’s determination not to miss the next big trend as well as the concentration of Google’s competitors around HERE.
  • Intel will buy Mobileye for $15.4bn and merge it with its existing autonomous driving business to create one of the leading supplier of autonomous driving systems.
  • Intel already has a substantial effort in this space but adding Mobileye gives it a very strong position in visual sensors and most importantly, gives it direct access to 80% of the automotive market.
  • These doors were already open for Intel but I think that going in with Mobileye will ensure that the automotive industry takes it much more seriously.
  • I think that missing the boat in mobile has damaged Intel’s reputation to the point where some potential customers think that Intel has little to offer beyond chips for PCs and chips for servers.
  • In reality, this is very far from the truth but dispelling that impression is one of the most important tasks that Intel faces over the next few years.
  • The fact that Intel will soon become one of the top 4 shareholders of HERE will also help in improving its credibility in both location and automotive.
  • This is because HERE is the only realistic alternative to Google in high definition maps for autonomous driving which are now recognised as essential for a car to drive itself.
  • Even Mobileye, which early in 2016 was adamant that a HD map was not needed, has caved in and is now working with HERE to use its HD map in its systems.
  • In addition, other ecosystems such as Tencent, Baidu, Facebook and Amazon are also working with HERE for their location data, all of which will benefit Intel as it tries to break the mould that the market has set for it.
  • Mobileye represents that second largest acquisition in Intel’s history underlining the need for semiconductor companies to move into markets beyond consumer electronics and PCs.
  • This is why Qualcomm is buying NXP and why Samsung is buying Harmon.
  • Intel has now armed itself with the potential to offer an end to end solution for autonomous driving but the key to success will be how well it can execute on that offering.
  • History is not in Intel’s side but I detect a change in the way Intel thinks about its place in the world that just might allow it to break the x86 mould that history has cast for it.