Mobileye : The Future of Driverless Cars About the Company Founded in 1999 by Ammon Shashua and Ziv Aviram. Invested in by Goldman Sachs in 2007 at a $500 million valuation. Largest US IPO by an Israeli company in 2014. Products adopted by BMW, Gm and Volvo in 2007. Future development of driverless cars. Q1) What are Mobileye’s competitive advantages? What are its vulnerabilities? Founder’s come with good experience in the industry Company aims to produce low cost solutions , like using a single camera instead of costly devices like LIDAR & Radar Directly approached Tier 1 OEMS Patented technology helps gain competitive advantage over other players Focused on suit of products rather than providing segregated solutions Huge data library for training software for accuracy Vulnerabilities of Mobileye Vision Fusion system, LIDAR & RADAR tech acting as alternative to Mobileye’s system Competitors focusing on bring down prices could hurt Mobileye’s approach of using single camera to bring down cost Companies like Toyota & Mercedes focusing on developing in house technology Legal ambiguity in case of accidents and fixation of responsibility can not be determined as of now Q2) How should Shashua and Aviram handle OEM demand for lower prices? • Mobileye had a relatively focused product line that consist of a semiconductor chips, a bundle of software applications, and a simple camera and warning display. • Mobileye made two strong decisions, firstly they developed all the apps in one unit and secondly developed their own system-on-chip. • Mobileye’s monocular camera dramatically lowered the cost for an auto manufacturer compared to multi-camera system, so they positioned cameras as the primary sensing technology. • Fusion System: Mobileye also partnered with Delphi (a large tier 1 supplier) to implement LDW, collision warning and automatic warning system for the combined used of both radar and camera, as going directly with radar technology it makes their technology somewhat expensive. • Mobileye remained as Tier-2 supplier where most of its revenue came from selling chips and software to Tier-1 company, as Tier-1s have high revenues, thin margins, and huge support costs. • They strategically chose to focus on a small piece of one market with very high margins. Should they maintain a full price strategy or discount for a low-end bundle? • Non-economical and Convolution: Most of the Stereo were being phased out because of the cost and complexity involved in it. So this can prove beneficial to Mobile Eye in such a way that monocular camera lowered all the disadvantages of Stereo. • Cost Structure: The monocular camera was selling for a maximum price of $150 as compared to a maximum price of Radar sold to OEM for $200. Infact Radar was unable to respond to stationary objects. This can be an added advantage for Mobile. • Price Differentiation: Mobile Eye should charge premium for its driverless car because it’s a high-end product. • Long term contract: Mobile Eye will have exclusive safety service obligation to fulfil for OEM, an alliance with OEM. That can be taken as an ideal scenario for Mobile Eye Q3) How should Shashua and Aviram approach Google? Should they cooperate with Google or keep them at arm’s length? Advantages of Mobileye on Google • Realistic and Maretable vision to real-time problems • Works directly with automobile industry • System-on-Chip Model making their product unique in market • Positioned top in industry with best in class R&D and years of testing on OEM • Best in class products with cheaper rate • Market mover advantage with Single Camera sensor with Pedestrian Collision warning, Forward Collision warning and so on • Products available in After-market arena • Entered the market place with direct customer solution Advantages of Google on Mobileye • Bought in the idea of autonomous and driverless car in mind of public • Lead experimenter/inventor in market • Best-in-class resources at their disposal • Use of Lidar sensor • Can be the strongest competitor for Mobileye. Even though Google is Mobileye's strongest competitor, because the strategies are unclear, they should not partner with them at this time; instead, they can partner with Tesla.
