Google's Self-Driving Car is More Than a Toy
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Google (NASDAQ: GOOG) is working with different car manufacturers on developing vehicles that can drive themselves without any human driver at all. On March of this year the company published in YouTube a fantastic video featuring a blind man riding a driverless car, and showing some of the benefits this extraordinary technology could bring to people around the world. The demonstration seemed to go smoothly, and the car even took its passenger to buy some tacos on the way.
This is one of the many technologies in which Google is working and investing resources, investors should not expect any short term revenues or profits from these kinds of projects, but discarding their long term potential could be a very expensive mistake.
Of course the company has devoted resources to endeavors that didn´t bear their fruits in the past, that´s an unavoidable risk in the world of high technology, and it will most likely happen again in the future. Other projects like YouTube, Chrome and Android, took many years to show their true economic potential, though.
The main thing to consider right now is if these projects, which at first sight may sound like crazy experiments, have a true value from a long term point of view, and many automakers seem to believe that self-driving cars and all the information they require will play a big part of the future of automobiles.
According to the Economist:
Ford’s chairman, Bill Ford, said carmakers needed to press ahead with autonomous vehicles. He is convinced that they will ease traffic jams. And the same sorts of automation that can squeeze more cars on to the roads can also cut accidents (themselves a big cause of congestion).
Ford (NYSE: F) has launched products like the new B-Max minivan which incorporate features to basically drive themselves in busy traffic, maintaining a safe distance and keeping in lane without human intervention. Ford seems to be moving in the right direction by understanding that information technologies will become a deep asset for automakers in the future.
The company has been very successful with its SYNC communications and entertainment system, which allows users to coordinate phone calls, text messages, radio stations and GPS via voice recognition technology. Ford is incorporating new functionalities to SYNC in the near future, like access to Twitter and Facebook.
German automakers like BMW and Volkswagen are also working on self-driving technologies; we can read on Technology Review:
Both BMW and Volkswagen are among the companies already demonstrating cars that drive themselves. In 2010, Volkswagen sent a driverless Audi TTS up Pike's Peak at close to race speeds. Like similar vehicles from Google, these automated vehicles use some combination of GPS, radar, lasers, ultrasonic sensors, and optical cameras to create a constantly updated, 360-degree model of the surrounding environment, which an in-car computer can use to navigate.
"Driverless" technology will initially require a driver. And it will creep into everyday use much as airbags did: first as an expensive option in luxury cars, but eventually as a safety feature required by governments. "The evolutionary approach is from comfort systems to safety systems to automatic driving," says Jürgen Leohold, executive director for research at Volkswagen Group in Wolfsburg, Germany.
Information and connectivity are going to be a huge factor in the car industry; there are enormous improvements to be made when it comes to traffic information, directions, communications and even entertainment. Google understands this concept and is investing in technologies that are ahead of their time when it comes to commercial viability, but have a strategic importance for years to come.
Google´s business model consists mostly of providing free services like search, Gmail, Android etc. and monetizing them via advertising. There is some interesting potential in services related to the auto industry and the products Google is developing. Searching for a nice restaurant to eat something on the road, or simply receiving some information about the places as we see them through the car window is an interesting idea.
The company also has a very big ecosystem of integrated products, so owning an important part of the technologies in the vehicles of the future makes a lot of sense when it comes to promoting the rest of the services. Google Music is still a relatively young product for example, and integrating it into cars has some clear advantages.
As driving becomes more automatic, drivers will have more time and attention to devote to different activities and even before it does, passengers who are not at the wheel could surely enjoy some time in YouTube or simply surfing the web with Google Chrome. The possibilities are rally endless once this technology becomes a customary part of the transportation industry.
Google´s self-driving car may look like nothing more than a fabulous toy nowadays, some analysts and investors have criticized Google for employing so many resources in projects like this one which don´t have a clear business application currently. Looking at the technology from a long term perspective however, it could become something really big for Google and its shareholders.
Motley Fool newsletter services recommend Ford, and Google. The Motley Fool owns shares of Ford, and Google. acardenal owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.