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Waymo Just Got Into the Sensor Business

By Danny Vena – Updated Apr 12, 2019 at 2:17PM

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The self-driving car company just found another way to generate additional revenue.

Waymo, the self-driving car segment of Google parent Alphabet (GOOGL 4.61%) (GOOG 4.42%), is widely considered to be the leader in autonomous driving technology. The moonshot project that began in 2009 is now in the earliest stages of monetization, having just rolled out its commercial ride-hailing business in December.

The company figured out early on that existing off-the-shelf products weren't sufficient to its needs, so Waymo set out to develop a line of sensors from scratch. Those efforts not only propelled Waymo to the lead in self-driving technology, it's now planning to sell those sensors to a variety of industry partners outside the realm of autonomous cars -- and it could represent a huge opportunity.

A Chrysler Pacifica minivan outfitted with Waymo self-driving sensors.

Image source: Waymo.

A logical next step

In a blog post, Waymo introduced the Laser Bear Honeycomb device, which it called "a best-in-class perimeter sensor," and bears the same technology that's used on its autonomous vehicles. The sensor boasts a vertical field of view (FOV) of 95 degrees, as well as a horizontal FOV of 360 degrees. Rather than detecting only the first object in its path, the device can also detect "multiple returns per pulse." For example, the laser can see not only the leaves on a branch, but the underlying tree branch itself. It also has a minimum range of zero, so it can detect obstructions immediately in front of the sensor. 

Now Waymo is making the device available to "select partners" in the fields of robotics, security, and agricultural technology -- in the hopes that they "can achieve their own technological breakthroughs." Waymo believes that by taking this step, it will spur growth applications outside of self-driving cars. Additionally, as production of these sensors ramps up, Waymo can achieve additional economies of scale, reducing the cost to produce each one.

Check out the latest earnings call transcript for Alphabet.

How Waymo got there

Waymo's original self-driving car prototype leveraged a system called LiDAR (light detection and ranging), which uses pulsing laser light to measure distance and create extremely accurate 3D maps of the area around a car. Existing systems were expensive, however, costing a whopping $75,000, which would have made scaling the technology difficult. Waymo sought to develop a more cost-effective solution in-house. Waymo built a line of self-driving sensors from the ground up in collaboration with its software experts who were deeply integrated with the artificial intelligence (AI) that formed the brain of the self-driving system. 

In early 2017, Waymo revealed that it had developed its own set of sensors for use on its cars. This included a short-range LiDAR to detect items in close proximity to the vehicle, as well as a first-of-its-kind long-range system that could detect an object the size of a football helmet from two full football fields away.  

Waymo said that by designing its own system, it not only gained improved reliability, but it was also able to reduce the cost by more than 90% -- to less than $7,500.

A LiDAR sensor and text that reads laser bear honeycomb by Waymo.

Image source: Waymo.

How low can you go?

Waymo hasn't announced any plans to supply its sensors to companies in the auto industry, and it's currently working to expand the commercial ride-hailing service, which is operating in four suburbs outside Phoenix. There are several hundred riders currently signed up for the service. The company is also in the midst of a nationwide expansion, after having completed more than 10 million miles on public roads and nearly 7 billion simulated miles.

Making the sensors more affordable will enable Waymo to scale its driverless ride-hailing business faster, getting more cars on the roads more quickly. Creating additional markets for the technology will expedite the process while generating additional revenue for Waymo.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.

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