Mobileye Case Study

Mobileye Case Study

            The technology of self-driving cars is almost becoming a reality. These are cars with the ability to sense the surrounding environment and proceed safely with little to almost no human intervention. One of the companies spearheading this technology is Mobileye. It is important to explore the Mobileye’s role and how it is wading through the industry.

The substitute for Mobileye’s technology is a stereo camera technology as opposed to a single camera. Mobileye developed a single camera that can scan the road, identify obstacles, traffic lights, and pedestrians, among others (Yoffie 4). The substitute technology from companies such as Bosch and Autoliv involve cars fitted with two or more cameras to help in triangulation to offer greater depth (Yoffie 5). These companies argue that two cameras are more efficient than one.

Mobileye mitigated these substitutes by developing a single enhanced camera that provided added benefits. The company recognized that the stereo camera increased the cost (Yoffie 5). A monocular camera offers a significantly low cost that appeals to auto manufacturers as opposed to multi-cameras. Mobileye also noted that multi-camera systems amplified the complexity of the software, making it difficult to make improvements, and had overall poor performance based on original equipment manufacturers (OEMs) who had used them (Yoffie 5). The firm developed a vision-based system as the primary sensory that provides advanced driver assistance systems (ADAS). Other firms also work with radar or lidar technology, whereas Mobileye focuses on vision-based systems. These provide a broader vision angle and can differentiate various objects more effectively (Yoffie 6). This puts Mobileye technology at higher market value.

Mobileye has done an excellent job creating barriers to entry by positioning themselves as a Tier 2 auto supplier. Through this position, the firm has created an ADAS that combines multiple functions such as lane detection, pedestrian detection, and vehicle detection, among many other features (Yoffie 5). These features are incorporated into a complete suite of applications placed into a single unit. This means that Mobileye can work with the entire industry, which hinders new entrants. Mobileye also creates a barrier for new entrants by patenting its technology, making it difficult to penetrate the market. It takes up to 7 years for a new firm to penetrate an existing technologically advanced firm such as Mobileye (Yoffie 9). The company also keeps innovating by creating sophisticated ADAS to make it harder for new entrants. Further, Mobileye’s single-system camera is simple, and low-cost making it to endearing to consumers. These factors give the firm the ability to block new entrants.

The power of the OEMs is high. This is because, by 2000s, majority of the OEMs had started to implement some form of driver assistance systems. Most of these driver assistance systems went to the market as safety features making then attractive to the customers (Yoffie 7). Mobileye adopted some strategies to balance the power held by the OEMs. First, the company focused on lobbying OEMs to get a chance to build in its ADAS into their automobiles. For example, auto manufacturers such as Jaguar, BMW, GM, and Hyundai, among others, had inbuilt Mobileye technologies in their automobiles by 2013 (Yoffie 7). The other strategy that Mobileye employed is collaborating with Tier 1 suppliers. For instance, the firm partnered with a Japanese supplier to introduce Mobileye technology for Honda (Yoffie 7). Through these efforts, the company commands an 80% market share in vision technology.

Mobileye should decline the demand from OEMs for lower prices. Lowering the prices is likely to put into question the quality of their technology (De Toni et al. 122). The technology should also remain with the same pricing because when it comes to safety standards, the system should be flawless, regardless of the price of the car. Putting a low-quality camera even on a low-end car cannot cut it because the end product should not pose any risks to the consumer.

Mobileye should keep Google at “arms-length” because even if they have extensive resources, their plans are overambitious. While it is possible to have a functioning self-drive car, it may be unrealistic in the current road network and structure. Additionally, Google’s plan for a self-drive car is costly (De Toni et al. 123). This means it would be difficult to market the idea when the end product is extremely expensive. With more people without self-drive cars, the new car may find it difficult to operate on the roads.

Mobileye’s strategy to increase the functions of the vision system includes having more processing power. The process would help build core hardware abilities such as updating the vision software (Yoffie 11). These aspects would ensure the car can be more prepared for self-driving with better coordinating movements when it moves through intersections. Other capabilities include avoiding collisions, lighter cars, and more fuel-efficient.

Conclusion

Mobileye vision technology is at the forefront of shaping the realization of self-driving cars. The company has strategically placed itself in the industry by creating a technologically advanced vision system for many automobile manufacturers. Through its innovative ADAS system, it has managed to capture many OEMs such as GM and BMW. Companies like Google are eyeing Mobileye’s technology as a forerunner in the realization of self-driving capabilities.

References

De Toni, Deonir, et al. “Pricing strategies and levels and their impact on corporate profitability.” Revista de Administração (São Paulo) 52.2 (2017): 120-133.

Yoffie, David B. “Mobileye: The future of driverless cars.” (2015). Lecture Notes.