Your Windshield is the Next Screen that Matters to Google, Apple and Others

There are so many long-term benefits to self-driving cars, including environmental benefits, safety benefits, health benefits, family life balance benefits, geopolitical benefits and overall economic benefits. Self-driving cars will also be materially beneficial to lowering inflation as we will spend less money on gas, repairs and real estate. We can all spend much more time on education as well, which I have always believed can fix almost all of the world’s problems. Expect a software startup gold rush in the next few decades when it comes to the auto’s operating system platform and applications that run on it. This all might sound too good to be true and it is definitely a controversial topic. Read on and you will see why brilliant executives at Apple, Google and other life altering/improving companies are so focused on the windshield as the next screen that matters to you.

2+ person lanes will be replaced by self-driving car lanes. The safety benefits in the long run will be material as this will result in fewer accidents. Fewer accidents will result in less traffic. Less traffic results in less pollution; the environmental benefit will be material. From a geopolitical perspective, we can be less reliant on the oil sector, which means less money to rogue nations with militant malintent.

The economic benefits will be significant and potentially as deflationary as Amazon Web Services is today or the fall of the Berlin Wall was. We will be spending much less money on fuel and repairs. We will be spending more time working in our cars despite a shorter commute; overall economic productivity will spike. Housing will be much more affordable too as we will be able to commute to cities for work from cheaper neighborhoods as there will be fewer accidents.

Self-driving cars will be the ultimate time creator with significant socioeconomic benefits as well. We can spend more time with our family. We can spend more time exercising or sleeping; the health benefits are incredible. The result is a more balanced, wholesome and happy existence. Anybody that disagrees should spend some time driving in Los Angeles during rush hour. My gut is that the San Francisco Bay Area will be the first region to pioneer this movement given the material downtown construction occurring today with architectural masterpieces like the new 1.4 million square foot Salesforce Tower, which will be completed in the next few years which will result in some traffic issues:

We can spend more time on education. Students that need to travel from far away via bus or car to schools will have much more time to spend studying or with family. The incredible commitment of students having part time jobs or single parents traveling to and from work will see their respective qualities of life improve significantly. A more educated society means crime will be significantly reduced as well.

What about the risks? Yes there are many including safety issues in the near term. This will be resolved in the long run. Google has done a superb job of minimizing accidents with their self-driving car efforts. 94% of auto accidents are due to human error; the margin of error will be much lower in the long run once auto based software algorithms and artificial intelligence is enhanced. Google is taking a page from Salesforce’s playbook and is reporting their self-driving car incidents online at https://www.google.com/selfdrivingcar/reports/.

In the long run, taxis and couriers like FedEx will have self-driving cars. You have to believe that a disruptive company like Amazon will pioneer deliveries of perishable products like pressed juice and other food items this way as the quintessential IoT device will be the car. This form of delivery will likely be widely accepted before drone deliveries are. It’s hard not to get excited about the future; at ARTIS Ventures, we are always on the lookout for the next disruptive company. When it comes to self-driving cars, we are looking for software companies that can create the transportation platform of the future or if Google and Apple create this platform, then we would be interested in hunting for applications or infrastructure software companies that reside on this platform.

Microsoft has been the dominant platform company for most of my life with Windows. Microsoft missed out on the mobile platform over the past decade; does anybody really use Windows mobile? Expect Microsoft’s superb new CEO Satya Nadella to use part of the company’s annual $10bn+ research and development effort to look into creating an auto software platform. Under Bill Gates, Microsoft tried to do this with the Auto PC product, which, similar to Apple’s Newton, was way too early and couldn’t gain market acceptance.

Google and Apple are clearly gunning for the lead in the operating system of the future that powers the car; own the auto platform and reap the benefits of charging 30% for apps that run on the auto o/s commensurate with Apple’s iTunes store or Google Play. Apple and Google will continue to compete with Tesla for auto engineering talent which will lead to significant saber rattling between the companies in this new platform holy war.

Investors in Apple and Google would be more pleased, however, if the companies focused on developing the auto operating system and not producing or selling any hardware/autos. I am assuming their focus will be on software only and not selling a profit margin diluting auto. They should take a page from Bill Gates’ late 1980’s playbook and distribute their auto operating system to all the major auto OEM manufacturers. Back then Microsoft was basically the only o/s in town and so they could charge monopoly like prices; this is why, until recently, Microsoft had only cut the price of Windows 3 times since the 1980’s. Thank goodness Apple and Google are uber competitive with each other as we receive free operating system upgrades. In other competitive o/s markets like the video game sector, we receive free operating system upgrades on all major consoles.

The auto operating system will also be seen as a complementary companion or client device for server products like the iPhone or Android devices. Google and Apple need to defend their ecosystems by building the auto operating systems of the future. Expect Microsoft to hedge their bets by also aggressively competing in this sector which is commensurate with their video game strategy when the first Xbox was released; this was a hedge in case the Sony PlayStation turned the living room television into your primary computer monitor.

It has been 30 years since the Back to the Future movie was released. I watched it recently with my kids and was amazed how little the auto has been changed over the years. In the movie you get a glimpse of what the future will look like in 2015 with a flying car. How is it possible that the auto hasn’t seen a material life changing improvement since 1985? I am confident that in 30 years from today all cars will have a self-driving option and that in 10 years most will. Our grandchildren will remark how unproductive we must have been! Our grandchildren will say “wow you had to actually drive a car….” just like my kids saying to me today that “wow you only had 3 TV stations growing up?”

We tend to overestimate what we can accomplish in a year and we tend to underestimate what we can accomplish in a decade. In 2007 Apple reinvented the phone and Google made sure that the operating system was virtually free (competition is always great for the consumer). Expect Apple, Google and others to reinvent the auto experience with self-driving cars; my glass isn’t half full, rather it is entirely full when it comes to the material positive benefit society will experience. Your windshield is the next screen that matters to Google, Apple and others.