TECHnalysis Research Blog Extra

August 19, 2016
Intel Focuses on Automotive

By Bob O'Donnell

The day after their IDF developer event, Intel held an Investor Day that focused on the company’s efforts in the automotive industry, particularly around autonomous driving. To date, Intel has been fairly quiet about their efforts, but it’s clear that approach is changing. And frankly, for good reason. The company mentioned that they’ve done over $1 billion in revenues in automotive-related efforts over the past 12 months.

The company’s approach focuses on a complete end-to-end perspective—from the car to the cloud in this case—and highlights what they see as opportunities for software and silicon in the car, through 5G connectivity in the networks, and into more silicon as well as machine learning and deep learning applications in the data center. In some ways, it’s similar to how the company thinking about a whole range of large vertical opportunities, such as some of their work in medical research, which they used as an example during their various presentations.

One of the fascinating parts of the connected car opportunity is that it pulls together a number of key technological developments into a single story. From sensor fusion, through high-end multi-core computing, to increasingly sophisticated graphics, to multiple types of radio connectivity and network connections, and into cloud computing with artificial intelligence and deep learning, connected cars are a technologist’s dream. Of course, this explains why Intel and so many other tech companies have been so focused on the automotive market of late—it’s the cool place to be.

But that doesn’t mean it doesn’t have challenges. Right now, the semiconductor bill-of-materials is about $500 per car, which sounds decent at first, until you realize that average new car prices are in the $25,000-$30,000 range, making silicon components still just a small part of the puzzle. Over time, as more autonomous capabilities are added, the revenues per car are expected to increase, though the actual number of components is expected to consolidate to a lower number. So, the potential opportunity is to get a piece of those more expensive parts, instead of battling it out for the roughly 150 $2-$3 parts that currently sit inside today’s cars.

It was clear from the Intel event that there’s still a great deal of work to be done by component makers, Tier 1 suppliers and automotive OEMs to reach the goal of fully autonomous cars. Watching how it develops and how computing and other tech vendors jockey for position, is going to make for some great observing for some time to come.

Here's a link to the column: https://techpinions.com/unpacked-for-friday-august-18-2016/46875

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.