Intel yesterday announced they completed their tender offer for all the outstanding shares of Mobileye. Based in Jerusalem, Israel, Mobileye has effectively developed a nerve center for how driverless cars operate via their sensors and camera technologies. Completing this acquisition puts Intel squarely in one of the “driver’s seats” for driverless cars, estimated to become a $70B industry by 2030. This begs the question: what does the acquisition of Mobileye tell us about the impact on Intel’s Advanced Driver Assisted Systems (ADAS) strategy and impact on the market?
- Intel has bet big on the market and is now a serious player. In my experience, the best acquisitions are done when two companies come together to solve a problem neither can solve on their own. This is a classic example of that. Intel did not inherently have the heritage, pedigree, relationships, nor the software to deliver an end-to-end solution for self-driving vehicles. This acquisition propels Intel to one of the top spots of a nascent but growing industry. Furthermore, by having Mobileye’s CEO, Amnon Shashua, report directly to Intel CEO Brian (“BK”) Krzanich, Intel is demonstrating its commitment to this space. Moreover, Intel has made several adjustments to their business to move away from its sole dependence on PCs and servers. By moving investments to the Internet of Things (which includes automotive), Intel has seen solid growth >15% YoY. Continued investment will further establish Intel as a leader in this space.
- Intel and Mobileye will force the market to drive faster than it wanted to. The $15.3B acquisition of Mobileye has been criticized by some as too expensive by today’s standards, especially with a revenue number of $358M in 2016. However, I believe this acquisition will be cheap compared to future purchases as the market grows. The combination of the two companies showcase an Intel end-to-end ecosystem from in-car compute (sensors & meters), connectivity (LTE or 5G), through the LTE or 5G network, and back to the datacenter/cloud. This will no doubt create an industry force and compelling solution for their joint customers. Many of Intel’s competitors are delivering single chip solutions that integrate chip-to-sensor functionality for autonomous vehicles and for certain classes of customers who roll their own end-to-end solutions, that is OK. For many customers, however, with this acquisition, competitors must now find a way, likely with partnerships, to provide an end-to-end solution that comprehends the datacenter, car, and the network. My main question with Intel’s strategy is how it will address the increasing decentralization of networks that IoT is driving, versus the traditional centralized focus nearly all network admins and organizations deploy today.
- Mobileye brings a lot to the race which will drive further technology innovation. I suspect one of the key reasons Intel bought Mobileye was for its relationship with nearly 30 car manufacturers (including multiple production programs with Audi), and the joint partnership with BMW called the “iNext” platform. The iNext platform is designed to be an open standard for enabling other manufacturers to develop, deploy, and produce driverless vehicles on the Intel, BMW, and Mobileye standard. Platforms and open standards are always interesting, but it would be great to see Intel and Mobileye open the standard even further to the open source community to truly unleash the innovation of the developer community—especially when it comes to security, privacy, analytics, and service deployment. Nearly all autonomous vehicles currently leverage a Linux operating system or Robot Operating Systems (ROS) to manage services on sensors, meters, and other entertainment services. This creates a compelling platform for innovation and technology advancement. Imagine a tire sensor having the ability to call roadside service when you get a flat tire, your onboard navigation system connecting to a service that finds a parking space downtown, or your car automatically connecting you with a mechanic when your check engine light turns on. These are just some of the possibilities.
As my colleague, Karl Freund said, “By acquiring Mobileye, Intel hopes that the combination of vision and brains will make it a leader in this fast growing market. And that certainly seems like a sound strategy.” I couldn’t agree more. The combination of the two companies provides a solid solution for driving the exploding autonomous (or ADAS) market.
The self-driving industry is early-on and while one could argue Intel has taken the pole position in the “end to end” race, there are different races going on. I believe the combination of the two companies puts Intel as one of the companies at the front of the pack for now and NVIDIA, Qualcomm + NXP, and Xilinx will all be fighting hard for their “piece of the pie” in this market. This market is attracting a lot of competition and that’s a good thing. I anticipate more consolidation coming soon—contact me directly for my specific predictions. Intel has, and will remain a force to be reckoned with; I expect it to make more strategic moves to shore up its position and leadership in this exciting and emerging marketplace.