Image source: Intel.
As if the driverless car market couldn't get any more crowded, Intel , Mobileye , and BMW announced last week that the companies are working together to bring a fully autonomous car platform to market by 2021.
The companies are specifically targeting the fleet market, likely because most of the initial growth in driverless cars is expected to come from this automotive segment (along with farming and mining vehicles), according to McKinsey&Company. The three plan to have a working platform prototype inBMW's iNext modelsoon and release a test product for automakers some time next year.
Intel CEO Brian Krzanich said in apress release:
The open platform will allow for varying levels of automation, from Level 3 to (eventually) Level 5, which means the vehicles will be able to drive themselves around without a driver in the car. It's worth mentioning that the U.S. currently doesn't allow Level 5 automation on public roads, even for testing.
The ambitions for both Mobileye and Intel are pretty clear, here. They want to be at the forefront of a new, open driverless car platform so hardware sales will increase. But they'll face plenty of competition.
Intel and Mobileye's strategy and competition
Intel will, of course, power the brains behind this new, and so far nameless, platform. The company said it'll use its Atom and Xeon processors for the platform, and will also integrate its cloud platform and machine learning systems.
Intel says its processors will be used to compute the data-heavy environments like urban driving, where there's lots of data points to calculate. The company claims its processors can efficiently handle a huge amount of data without losing performance.
Intel is looking to the automative segment of the broader Internet of Things market to boost its revenues. In Q1, the company posted $651 million in IoT revenue,but it faces stiff competition from graphics processing unit-makerNVIDIA . The company's Tesla GPUs are used in its Drive PX 2 supercomputers, which are favored by 80 automakers and Tier 1 suppliers.
NVIDIA earns about 8.6% of its total revenue from its automotive segment, which includes GPUs for in-car infotainment systems, but the company has made the automotive market a clear focus lately. NVIDIA recently released a new cloud-based supercomputer called DGX-1, which the company will use in tandem with Drive PX 2 to process driverless car data in the cloud.
For its part, Mobileye will provide its EyeQ 5 system-on-a-chip for the new platform, along with machine learning algorithms and other sensing hardware. Mobileye is already a growing leader in semi-autonomous systems, and its technology is used by 90% of automakers, as well as key semi-autonomous players like Tesla.
Both Mobileye and Intel will face competition from NXP Semiconductors N.V. as well. NXP is now the largest supplier of processors to carmakers after its deal with Freescale Semiconductor closed earlier this year. NXP earns about 36% of its total revenue from the automotive market, and its chips account for about 14.5% of all in-car processors.
NXP also just released its own off-the-shelf driverless car solution for automakers, called BlueBox. The company says automakers can implement BlueBox in nearly any new vehicle to bring semi-autonomous systems to market quickly.
Investor takeaway BMW's place in this mix appears to be the least consequential. It's not uncommon for automakers to work with technology companies to develop autonomous features, but in the long term, automakers will end up using whichever technology is best, or build a system on multiple technologies from several companies. BMW may be working with Mobileye and Intel now, but it's in no way married to either.
The platform is a big deal for Intel, though. Intel is looking for new ventures to drive profits, and driverless cars are part of that. Still, I wouldn't bet on the company's ability to take other semiconductors on in the automotive space just yet.
Intel clearly has extensive processor experience, but NVIDIA's GPUs are quickly becoming a standard in machine learning, and NXPI is already cornering the processor market as well.
I think Mobileye has a lot to gain from the deal because it gives the company more experience in being part of a major driverless platform (as opposed to selling hardware). Tesla is already a key customer for Mobileye, as are 90% of automakers, but integrating the company's hardware into a fleet platform should help ensure that this small company plays a key role in autonomous technology going forward.
I wouldn't buy or sell Intel or Mobileye simply based on this recent news, but I think both companies are putting themselves in a good position to benefit from this $42 billion driverless car market.
The article BMW, Intel, and Mobileye Are Making a Big Bet on Driverless Cars originally appeared on Fool.com.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia, NXP Semiconductors, and Tesla Motors. The Motley Fool recommends BMW and Intel. 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.
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