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Why the Auto Industry Is the Next Battlefield for Tech Tycoons
DATE:2017-12-14【BIG MID SMALL】 TOP:

To the leading tech companies, the auto industry is virgin ground. BI Intelligence, Business Insider’s premium research service, expects 94 million connected cars — vehicles equipped with internet access — to ship globally in 2021, and for 82 percent of all cars shipped that year to be connected. Such a feat would represent a compound annual growth rate of 35 percent from the 21 million connected cars on the roads last year. Every major tech company is looking to get a slice of the profits.

 

In the 2016 edition of her “Internet Trends” report, however, tech industry maven Mary Meeker declared that the auto industry was beginning to move toward the computerization of cars, the increasingly rapid development of more automated and secure technology, and advances in automated data collection — with the aim of turning vehicles into a new generation of computing powerhouses.

 

China has also made forays into the field. For China’s “big three” tech companies — Baidu, Alibaba, and Tencent, collectively known as “BAT” — cars are poised to become the next generation of computing centers. None of these firms want to be playing catch-up when this trend starts to gain real traction.

 

While China’s tech companies are moving toward the same general goal, they’ve adopted different approaches for getting there. Alibaba was the first of China’s big tech companies to make a foray into the auto industry: The company recently announced a new operating system strategy under a whole new brand, AliOS.


Shi Xuesong, the CEO of smart car-interface developer Banma Zhixing, has said: “In terms of car operating systems, Alibaba is already three years ahead of Google.” At a conference in July 2016, Alibaba and SAIC, a Shanghai-based auto manufacturer, announced they were partnering to develop a connected car, with a Banma-built operating system. Wang Jian, Alibaba’s former chief technology officer, used the opportunity to express his belief that equipping a car with an operating system would be akin to giving it a second engine.

 

Once cars possess the ability to independently process and analyze data, they will be able to offer features such as voice interaction, guided navigation, internet-connected music, early traffic warnings, and the ability to act as Wi-Fi hot spots. By becoming a platform for hardware innovation and other new features, these vehicles will transform the way we experience driving.

 

Baidu has consistently been a leader in artificial intelligence (AI), and its approach to cars is no exception. From early attempts such as CarLife and DuerOS, to its Project Apollo program — which seeks to develop a driverless car — Baidu’s strategic goals have remained consistent: to serve as a pioneer in the fields of both driverless car technology and data accumulation. Project Apollo has not only made inroads with major auto manufacturers, including Volkswagen, Ford, and Chery, but has also gained acceptance among wholesale parts suppliers like Bosch and Delphi Automotive, as well as chip and software developers like Intel, Microsoft, and Nvidia.

 

Meanwhile, Tencent is using its advantages in social media and content to support its move into the automotive sector. Compared to traditional onboard systems, Tencent’s “AI in Car” system offers users a portal to the company’s popular social networking apps, including WeChat and QQ, allowing them to stay connected while on the road. In terms of content, its QQ Music, Tencent News, China Literature, and Qi’e FM services draw on the company’s AI and big data technology capabilities to predict user preferences and offer them personalized content recommendations. Tencent has also invested in a number of AI-focused tech companies and has established its own artificial intelligence labs in the U.S. and China.

 

The most important arena of competition among the BAT companies remains voice capability. Voice recognition and other smart interactivity tools may be highly suited for use in cars. Due to safety concerns, however, traditional auto manufacturers have been reluctant to open up their vehicle operating systems to other organizations, and while software such as CarPlay, Android Auto, and CarLife have become increasingly commonplace over the past two years, they remain limited to offering music playback, gaming, and other forms of entertainment.

 

Any attempt to transfer smartphones’ touch controls to cars is likely to raise concerns about driver safety. When it comes to onboard operating systems, Chinese firms have taken the lead in a race with their American counterparts to develop smart features and ecosystems. Even prior to 2014, then-President Obama had already expressed a desire to see the U.S. auto industry utilize advances in big data, the internet, and AI technology to overtake its Japanese and European competitors.

 

The trend toward connected cars is even more advanced in Japan and Europe, both of which have highly developed auto industries of their own. Around half of all cars in the United Kingdom are internet-connected, and the country has pledged to make all domestically produced cars internet-capable by the year 2020. In Japan, which is facing a severe aging crisis, smart cars have attracted the attention of government and industry leaders alike.

 

In China, as BAT have all thrown themselves into the auto world, they’ve brought a sense of focus and innovation with them. This has stoked competition for talent, data, algorithms, settings, ecosystems, and venture capital. The ensuing close-quarters combat among the big three will accelerate development of connected vehicles, potentially solving some of the field’s longstanding problems.

 

 


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