For anyone seriously involved in innovation, it’s stunning to realize that the industry learned nothing from early 2000’s Nokia. Regarding the car industry, people still think of it as a hardware business. It’s all about the car, the engine, the brakes, the dashboard, the performance, the security, the comfort. We barely register that vehicles are now being hacked into, that accidents happen because of dozens of millions of lines of code that make a modern suburban vehicle today, or that mapping, geolocalization, and communications are now indispensable.
Now consider the autonomous vehicle market and cut through the wishful thinking debates: it’s not a new market growing in a new envelope. It’s a replacement market, trying to push in a shrinking envelope. It’s probably the key reason why the autonomous car is currently thought as the CD was, for the magnetic tape. It seems only to be a pretense to make current customers renew what they already have, pay more for it, and become even more locked in with the industry.
The slight problem that no-one wants to look in the eye is that the autonomous car brings nothing to customers. Not even more eco-friendliness and probably not security in the foreseeable future (and by the way let’s see how the first thousands of kilometers outside of the gentle, sunny and dry Californian weather work out).
When mobile phones appeared, they were pretty much in the same spot. They were thought at first to be an upgrade from land lines, managed as a premium product by the telecom operators, and were not bringing any tremendous added value to anyone outside of key executives circles.
Then many things happened, and slowly the market started to appear.
Eventually, this market hit critical mass, and network effects transformed it into a wildfire, and here we are today spending a significant part of our life plugged to our mobile.
But during all this time, every phone manufacturer was stuck in a hardware paradigm: how do we make the sexiest phone? How do we offer the most functionalities, the cheapest mobile, the most elegant one, etc.? The best player at that game was Nokia, introducing every six months ground-breaking technical innovation, such as the first camera on a phone, the first data connection, then lo and behold, the first mobile internet connection.
They died a shameful death being number one at selling mobiles on the planet, not making money, and being ignored everywhere except in Africa and India as sturdy commodity products.
The now well-understood drama of Nokia was to be the best at what wasn’t that important for the market: the product itself, missing the key element: the underlying platform that operates the product, connects people together and opens up the market to exponential growth.
With the autonomous car, history repeats itself perfectly, and car manufacturers are the new Nokia.
As it is a car is everything but just a piece of hardware. For what it’s worth as a comparable, there are more lines of codes in a modern car than in Facebook backend:
This will probably double or triple in just a few years from now…
It’s early 2016, and the car is already under a perfect storm of network effects, meshing together communications, mapping, weather, photos, video, music, payment, shopping, social experience and more. There is no shadow of a doubt that the one building the most pervasive platform will own this market.
How many car manufacturers are working on the underlying transportation platform? Or to be fair, how many of them have a real platform culture and corresponding key assets?
The thing also is that such a platform may or may not be for consumers first.
Dream all you want, but it’s doubtful that by 2020 laws and regulations will bend to adapt the autonomous vehicle for Main Street. Among the many problems that will stop that, there are probably two that will predominate:
- Fatal accidents caused by the irreducible 0.001% blind sight of autonomous vehicles would be much less socially acceptable than drivers killing themselves or each other. As bad as they are, we are used to the latter. And in a culture that thinks that total security can be achieved we won’t react like the proverbial Homo Economicus: even if the road death toll falls 50%, we’ll reject “the horror” of machines killing people. And then who are we going to blame? The car manufacturer? The non-driver using the car? The city?
- Even before we get there, we won’t switch off overnight the car as we know it. What will happen when we have 20% of autonomous vehicles on the street? Who’s going to give them way when they have priority, knowing that no matter what they will let you pass for security sake? How bad will be the impact of autonomous cars driving around in cities, while the rest of the traffic will react in oh-so-slightly different ways?
So in all probability, if you want to predict the future of the autonomous vehicle, you should probably look more into trucks isolated on dedicated highways lanes. We were promised video games with our kids while the family drives around all by itself, we’ll get freight convoys reinventing train logistics with dirt cheap infrastructure and real-time supply chain management.
Then ask the question again: who’s working on that?
Just like with Nokia all other again, it’s not a Toyota, GM or BMW that will lead this market. And if we were still in the early 2000s, it could have been an IBM or a SAP stealing away the autonomous vehicle market.
But we’re now in 2016, and there’s a huge difference: the platforms are already there, powerful, sitting on mountains of cash and very active.
In 2011, when NOKIA’s CEO, Stephen ELOP, addressed his teams in the now famous “burning platform” memo, he wrote:
The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.
If you’re now on the board of any car manufacturer, you could probably change iPhone for Tesla, Android to… Google car, and resend the memo Monday morning to your teams.
Except that, hey, you don’t even have a platform yet.