What’s Going On? Is Intel Crazy?
Why did Intel acquire Mobileye and Moovit? What a chip maker has to do with automotive industry? Well, as a former Intel employee, I vowed not to tell you. So, see ya… Joking, here is the reasoning behind.
This article covers the reasons behind Intel’s latest acquisitions, as well describe the future challenges and threats standing on its path. Will this legendary hardware God stay with us forever or will it end up like Nokia or Xerox?
Short History Lesson (How Intel Rose to Glory)
In 1968, the strongest computer company in the world was IBM. They built the computer that was used in factories. It was a room-sized machine, and took ages to calculate a simple calculation. Intel, founded by three highly reputable geniuses, who had an amazing entrepreneurial spirit and great division of tasks between them, basically invented the wheel in the computing world with the transistor and the internal CPU memory. By 1974 Intel already owned 90% of the memory market, producing chips to any manufacturer. That development was key in the development of the personal computer (PC…) by IBM, which together with a new company called Microsoft (who contributed the operation system), these three are responsible for the mass-production of PCs in 1981. Read here for more history.
The Big Mistake (Missing Smartphones)
In the 90s, when personal phones started with Nokia and later Palm Pilot, Intel imagined that these devices will be used for content consumption, while the PCs will remain the main content creation tool. Therefore the strongest chips should be developed for the latter. Intel decided not to create a chip for smartphone. By 2007 Intel already understood that huge mistake, when iPhone came out and took over the world of personal devices. Apple was followed by Qualcomm, Android, Google, Samsung and other nowadays giants who have seized that opportunity much better than Intel.
Who Competes with Intel?
Intel is in the semiconductor and micro-processor industry. Its competition arrives from other such suppliers, as: AMD, Nvidia, Qualcomm, Samsung, Texas Instruments, and few others.
In Search for New Opportunities
The rise of smaller devices (phones and wearables), in parallel to the strengthening of standard CPU, have reduced the demand for new PCs (when did you buy your last PC…?). Intel had to find new ways to invent itself, and create new reason-to-buy for their products and would justify their strong powerful CPU.
They invested in several directions in parallel hoping to find that use case. I actually joined Intel through one of those acquisitions in 2013, when they acquired Omek Interactive. We were experts for creating body tracking and hand tracking from a 3D depth sensor. That technology is still used today in Intel RealSense, Microsoft’s Kinect sensor, Microsoft Hololens and not a few autonomous robots and other products.
During that research period Intel also acquired Telmap (2011), a navigator application. That acquisition eventually failed, but the data stayed inside Intel.
So Why Mobileye and Automotive?
But acquiring a company in the scale of Mobileye is nothing like acquiring an early stage startup. Mobileye was a 15 billion-dollar acquisition, which marked the end of the searching era. 2017 marks the point where Intel stepped into the automotive industry. Intel has shut down all the other directions in order to focus on that one direction.
“Vehicles with a mind of a Robot will take us everywhere”
Isaac Asimov, 1964
Intel shares the ancient vision laid by Isaac Asimov, where autonomous cars drive us anywhere we please. For those transporting pods to operate efficiently, fast and safely, a LOT of data is to be transferred. We need technical data about the performance of the car, information gathered on the near surrounding of the car at every given moment, data on the path and destination of the car, etc.
Its not only the amount of data, and it’s speed of processing. We also need high level of internet connectivity: weather control, traffic control, traffic lights, etc.
I hope now it is much more understandable why autonomous driving became so important to Intel. The plan is to produce the chips that would sit inside the cars, as well as the ones that will drive the huge data centers that would be so critical in managing this entire community of PCs to communicate effectively. This explains also the huge investment of Intel in the Big Data and AI industry.
What is Moovit Acquisition?
Earlier this month, Intel Mobileye acquired Moovit for another 1 billion dollar. Both are Israeli companies, which makes me particularly proud. But probably not many of you familiar with Moovit. Well, Moovit is a software provider for public transportation, similar to Waze, Google Maps, and other data aggregators in that area, with a clear focus on public transportation.
According to the vision we spoke about, the autonomous cars play a role of public transportation, and the knowledge of controlling a fleet of cars is important there.
Ah, and also Moovit has a data source of 800 million users and 6 billion data points. That’s a lot of meaningful data.
The autonomous car as a reality in the streets of Jerusalem, January 2020
Dangers, Challenges and Threats
But not all is pink. When Intel decided to move into the automotive industry, it also acquired new competition. Google, Tesla, Amazon, Lyft, Uber, Didi, as well as the rest of the traditional car industry and its suppliers — think and imagine the exact same future…
“With new industry comes new competition…”
Intel is a strong chip manufacturer, but competing in the automotive industry it does not have the knowledge nor the experience. But remember, Intel has already made their irreversible choice…
Both software and hardware companies are trying to make alliances with car manufacturers. Everyone saw what happened with Tesla since its foundation in 2004 (read here a review I wrote for Tesla). Other tech companies want a piece of that pie. It is one thing to supply a technology solution to the automotive market, and actually become a manufacturer, like Tesla did.
Amazon, for example, chose to be a supplier, and it already supplies Alexa to not a few car companies (although these days they are receiving some back fire). Google obviously has its power with the world mapping.
And where is Intel?
Intel is a giant. An old-fashioned one. Old-fashioned giants are hard to change direction and innovate. This is actually why I have so much appreciation to that company after my 4 years serving them. They have made some very harsh decisions in the past decade. But, even with all that good spirit, Intel has over 120,000 employees today worldwide. That ship must have a good direction, otherwise…
Intel has invested a lot. They have a lot at stakes here. Autonomous automotive industry can be their way to glory, or to become their final blow after the smartphone one.
“Path to Glory, or Final Blow: Intel is still replaceable”
To succeed, Intel must make their product offering a necessary. An automatic selection by others. The ONLY choice. The Delta Model describes this situation as a Locked System. At the moment, Intel is still replaceable by its traditional competitors: AMD, Nvidia, Qualcomm, NXP. Remember that data centers are key part of its target, and AMD managed to “steal” some clients lately from Intel. We don’t think about Intel like we do about Google, Microsoft, Facebook, Amazon. Intel is strong, but not in the big league.
Intel needs to play their strategy game. Linking industries together was one smart move. Linking Mobileye product with an insurance discount was an even smarter one. Now the question is what do they want to become: a tech supplier or a car manufacturer?
“Set a locked system with cross-industry product offering; Partner with the suppliers of the automotive industries; and Prepare the right data center partnership”
Intel wisely chose the route of a tech supplier (as seen from Mobileye’s website). This is what this company knows to be, and did well so far in the computing world.
Next step is to select partners. Any manufacturer would probably be happy to partner with Intel. Volkswagen, BMW, FCA, Daimler, Toyota, Nissan, General Motors, Ford, Hyundai — Intel targets them all, not one.
In order to force any autonomous vehicle manufacturer to use Intel’s tech, Intel needs to reach the automotive industry’s tech suppliers, like: Bosch and Siemens.
The second task for Intel to work on is the data centers and connectivity. Elon Musk has lately created a link between SpaceX and Tesla, which threatens to take down the entire communication industry, as we know it today.
These tasks are not easy, and Intel has a long way to do, beating down their semi-conductor competitors as well as gaining control in the automotive industry. But I am sure Intel knows why they chose the automotive sector, and I wish them a lot of success in their path.