* (50 minutes per day x 240 days) / 60 minutes per hour *R.A. How long are American commutes? The Economist. Oct 16. 2011 The average American spends 200 hours* commuting Aligns with technology (Maps, Search, Places, Wallet, Traffic Analytics) First mover advantage Represents the future of automotive Safer and more efficient $8B in potential revenue in DaaS
Industry Today 5-year Outlook 10-year Outlook Conclusion
Automotive Telematics Today 3G (Limited) Connectivity Adaptive Cruise Control Self Parking Proprietary internally developed software Limited Navigation
Today ECUs, Airbags, ABS, Engine Control & Monitoring OBDII Interface UI (Skinnable GUI + NUI) Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc. Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc. GPS & Google Maps AndroidAndroid 3 rd Party Apps Car OS SubsystemsSubsystems Systems Control e.g. headrests, climate control Systems Control e.g. headrests, climate control
Tomorrow ECUs, Airbags, ABS, Engine Control & Monitoring Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc. Facebook, Pandora, Yelp, Park Droid, Gas Buddy, etc. 3 rd Party Apps SubsystemsSubsystems OBDII Interface UI (Skinnable GUI + NUI) GPS & Google Maps Systems Control e.g. climate control Systems Control e.g. climate control Predictive Analytics Battery Optimization Tightly integrated gCar platform Driverless Systems Google Car OS Android
How will Google Crack the Market? By leveraging unique existing capabilities to add value to the existing market. No infrastructure overhead for auto makers Predictive systems to optimize battery efficiency Improved driving analytics and behavioral data, stored on the Google cloud System-level phone integration, remote start & other systems controls Free OS lowers system design and future maintenance costs Additional functionality to drivers via the Android UI
Market penetration Ad Revenue Data on Driver Behavior Network Effects for Android Telematics gCar Platform Consumers Car Manufacturer Short term: Mimic smart-phone strategy through free, open-OS, designed to create customer lock-in Phone integration Apps Car Efficiency Subsidized Software Predictive Modeling Driving behavior analytics Differentiator (Customizable GUI, customizable Android Market Place for each manufacturer)
What is a Car on the Cloud? Cloud Computing gives consumers access to: Optimized car settings Software updates (maps) Computationally intensive tasks (voice commands) Offloads expensive computer elements Big Data analytics on driving data for researchers, policy makers, insurance companies and city planners …..Most importantly, it represents a path to driverless cars. The Cloud is Key
Introducing Driverless Cars, powered by Google How do we get there? Legislation already in place in Nevada to allow driverless cars Marketing and PR blitz to introduce driverless cars into the US Vegas, powered by Google -- Free cab service between casinos
Necessary Strategic Partnerships PartnerGoogle PartnerPartner Google Car Manufacturers New products & revenue streams Access to their cars Cellular providers$Data connection Content Providers New placement for content More content to monetize w/ ads Local Governments Dramatically reduce road congestion Legislative help Utility Companies Analytical data, capacitance $, access to their networks for future products
40% revenue sharing agreement with auto manufacturers Remaining will be split between cellular data providers, and Google Driverless Cars, powered by Google rolled out nationally as legislation allows Platform for future capabilities: mesh networked cars (motes), data collection for insurance companies (monetization potential), OnStar like systems, etc. Unique Value Proposition Ancillary data services revenue and advertising revenues kept solely by Google Driverless as a Service (DaaS) for $50/month
Microsoft Sync, represents a potential threat and could leverage into a driverless solutions Apple has more than enough cash to enter this market Car manufacturers may want to develop own system internally to retain control Existing subsystem and controls companies have relationships with auto manufacturers that may be difficult to challenge Reliant on communication standards being set between OS and ECUs Competitive Challenges
Policy: State legislation for driverless cars Consumer Privacy: Assurance and controls to protect consumers anonymity, unless opted-in Security: Encrypted data connection to servers to transmit sensitive data Safety and Liability: Legal liability will need to be established in case of accident Suppliers: Potential for supplier backlash as Google moves down the stack Additional Risks
Adjacent Vertical - V2G (Vehicle to Grid) What is V2G? V2G or Vehicle to Grid is a method of storing and supplying electricity from electric vehicles (EVs) directly to the grid/utility. How does it work? Dr. Jasna Tomic of CALSTART reports that utilities will pay $15 to $55 per MWh for electricity supplied for frequency regulation, but the utility does not want to deal with 100,000 car drivers. The utility wants one aggregator in the middle to provide the power.
V2G (cont) Why Should Google Enter the V2G market? Charging analytics will work seamlessly with Android enabled electric vehicles and cloud computing infrastructure Expands and strengthens Google as a Platform in automotive Fits strategically with Google smart grid initiatives Has FERC approval to buy and sell electricity in wholesale markets Positive five year NPV of $2.5B How Should Google Enter the V2G market? Partner with Charging Station manufacturers and infrastructure providers.
Unique opportunity to capture value in $85B US Auto market In the short term, Google needs to replicate the success of the mobile market to become the core OS of every vehicle. This will allow it to capture short term revenues from advertising and data analytics, but more importantly will provide a framework for future driverless car enhancements. In the long term, Googles success depends on the adoption of driverless vehicles. In addition to earlier revenue models, Google will capture additional value by creating a Driverless as a Service (DaaS) subscription model. This will allow Google to capture revenues in excess of $8B per year after ten years for an NPV of $14B. Additionally, market entry into the automotive market will allow Google to enter new markets such as EV charging and demand response with yearly revenues in excess of $1B. Additional data monetization strategies are plentiful once Googles core Car OS is widespread. Conclusions