Am I the only one who wonders who gets the ticket when a self-driving car breaks a driving rule? Source: Alphabet/Google.
In a 2008 interview with Charlie Rose on PBS, Warren Buffett dropped an investing gem with his "three I's" theory. In all new markets, the Oracle said, there are three types of firms: the innovators, the imitators, the and idiots. And while the context of Buffett's quote was addressing the financial crisis and how we got there, the underlying premise is applicable to most new disruptive markets and their participants.
The innovators are able to create value by bringing a new product or service to market or significantly improving upon an existing one. Next come the imitators, who are able to create value by mostly copying the innovators. Finally, you have the idiots, who follow the other two but end up embarking on a value-destructive endeavor.
These designations seem particularly appropriate when it comes to the nascent plans in Silicon Valley toward disrupting the car market. With Samsung's (NASDAQOTH: SSNLF) admission that the South Korean electronics conglomerate plans to enter the industry, who's the potential innovator, imitator, and idiot of the future tech-car industry? This is early, and subject to change, but here are the apparent "three I's" at this juncture.
Alphabet seems to be a clear leader
Alphabet (GOOG 0.21%) (GOOGL 0.41%) (nee Google) appears to be a clear leader here. The company is quite aggressive in its supposed moonshots, and this is one that may land right in investors' pockets. The company has been working on the project since 2009 and even provides reports on the progression of the program on a monthly basis, with 53 vehicles -- including 30 prototypes -- on the road as of last month.
Of course, the innovation appears to be Alphabet's autonomous technology. As of last month, the company had booked over 1 million self-driving miles since project inception. It appears the company is increasing in scope, as it's reporting 10,000 to 15,000 autonomous miles driven per week at the midpoint, good for 650,000 miles per year. It seems Alphabet will be the first to market and boast game-changing technology, but could this be due to the company's transparency on this project?
Apple is both an imitator and an innovator
It's often said that Apple (AAPL 0.01%) doesn't create products; it re-creates them. The former appears to be true in this case, but it could be due to a difference in transparency. Unlike Google's openness on this project, with a dedicated website, Apple has been mostly tight-lipped about the project, with analysts given only a trail of hires and unnamed sources with which to figure out Cupertino's plans.
In fact, major outlets The Wall Street Journal and Reuters differ as to whether the car will be autonomous or a conventionally driven electronic vehicle, with WSJ recently reporting that the car will not initially be autonomous in time for its 2019 projected ship date.
In this case, Apple may bring a product to market earlier, and Apple's always an innovator when it comes to design, but it seems the true disruption -- driverless cars -- is not on the docket initially. In the end, it seems Apple is destined to be the imitator here. But that's OK, as imitators can still do well and add value to the company's bottom line.
Samsung appears to be the idiot in this regard
It appears Samsung gets the unfortunate moniker that's left. While Alphabet already has over half a decade of car-building experience, and Apple is heavily rumored to be on track to deliver a product in three years, Samsung's recent disclosure that it will enter the space seems late ... and forced. More recently, Samsung's been faulted for copying Apple in both products and design, and this seems no different.
Of course, the devil is in the details. Reuters' report centers on the company's initial focus on in-car entertainment, satellite navigation, and autonomous-driving technologies. This approach suggests that the company is looking to pair with traditional carmakers -- perhaps its South Korean brethren Hyundai -- which could speed its development and adoption time at the expense of full control and full monetization. If some of this sounds oddly familiar, it's because it's eerily similar to the converse of its smartphone strategy, where Alphabet's Android provides the operating system for Samsung's devices.
That said, it seems the next large battle between these technology giants could be for the ultimate mobile device: the car.
