Thursday, January 31, 2013

DRIVERLESS CARS COULD BE THE BIG THING THAT VAULTS GOOGLE OVER APPLE

Apple (AAPL) may not be the most valuable over company in the world anymore, but it’s still by far the most valuable tech company, as its market cap of around $416 billion easily tops Google’s (GOOG) $248 billion valuation and Microsoft’s (MSFT) $233 billion valuation. Over at Forbes, Chunka Mui makes an interesting case that Google’s investment in driverless car technology will be an absolute goldmine for the company in the coming years that could even vault it past its rivals in Cupertino.

“The driverless car has broad implications for society, for the economy and for individual businesses,” he writes. “Just in the U.S., the car puts up for grab some $2 trillion a year in revenue and even more market cap. It creates business opportunities that dwarf Google’s current search-based business and unleashes existential challenges to market leaders across numerous industries, including car makers, auto insurers, energy companies and others that share in car-related revenue.”

Why does Mui think driverless cars are going to be such an enormous hit? A significant part of it is safety. Car accidents cause almost 34,000 deaths and 240,000 hospitalizations every year. If Google’s self-driving cars can prevent the vast majority of these accidents, as Google claims they can, then we’re talking about a technology that can literally save thousands of lives. And what’s more, Mui notes that “even if Google is way off” in its safety estimates, “the improvement in safety will be startling.” And if driving becomes significantly safer, that means auto insurance will become vastly cheaper as well, which will certainly be a major incentive for consumers to throw down cash for driverless cars in the future.

Mother Jones’ Kevin Drum also thinks that driverless cars could be revolutionary for American transportation, and not just for safety reasons. From a marketing perspective. Drum thinks car companies will be able to pitch driverless cars as the best way to have a stress-free commute — after all, who wouldn’t rather be playing Angry Birds on their smartphone or tablet instead of paying attention to the road? Drum also thinks that driverless cars will reduce the need for car ownership since they’ll make carpooling vastly more efficient.

“I think that genuine self-driving cars will be available within a decade and that they’ll be big game changers,” he writes. “When you’re not actually driving a car yourself, for example, you don’t care much about how powerful it is. So you’ll be happy to chug along in a super-efficient car, reading a book or playing on your phone. You’ll be more willing to share a car, since automated systems will be able to quickly put together carpools with guaranteed maximums on wait time. And of course, driverless cars will be fundamentally more fuel-efficient since computers can drive cars better than humans can.”

While driverless cars still have a lot of hurdles to go through before they become everyday technology, their appeal is plain to see for anyone who’s ever been stuck behind traffic during their morning commute in the wake of a major accident. And if Google positions itself to take advantage of this major shift in technology over the next decade, it could easily become the most valuable company in the entire world.

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