eran shir Follow

Founder of Nexar - Making Driving Sane

Mar 15 · 4 min read

“Data is the new Oil”

Yesterday Intel & Mobileye announced that Mobileye will be acquired
by Intel for over $15B, an announcement that made waves, given its
sheer size and importance, not just for the Israeli tech ecosystem,
where Intel is already the largest player, but also worldwide. Much of
the discussions yesterday debated the question of whether this deal is
good or bad for Israel’s Scale-Up nation, or suggested this is part of the
semiconductor
semiconductorindustry
semiconductor industryconsolidation
industry consolidation
consolidation.
consolidation

I would like to suggest a different strategic take on this deal, one that
resonates with the words Intel’s CEO, Brian Krzanich, quoted yesterday:
“Data is the New Oil”.

My bet is that when we will look at this deal a few years from now, we
will choose it as the automotive industry’s watershed moment; The mo-
ment we recognized its transition from hardware-centric to data cen-
tric; The moment it moved from being about cars with CPUs, to being
about computers with wheels. From being focused on the massive, con-
voluted, hardware components’ logistic ecosystem, to being focused on
semiconductor industry
data & intelligence. The consolidation
weight has already shifted, and this deal just
externalizes it to those that didn’t realize yet.

To understand it better, we need to understand how the OEM (i.e. the

car manufactures: GM, BMW, Ford and others) ecosystem works, and
has worked for many years. In short, an OEM car is the result of an in-
tricate, multi-level tree of suppliers and sub-suppliers, broken down
into layers: ‘Tier 1’, ‘Tier 2’ etc. Components go up the tree to the OEM
who has full control over the composition of this tree. Money flows
down the tree to the suppliers, and everyone are happy.

Enter Data. Data from onboard sensors, cameras and components

started playing a role in the automotive space more than a decade ago,
but in recent years its importance has grown exponentially. The collec-
tion and ownership of driving data has become a strategic advantage,
as Tesla has vividly shown.

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 However, data remained firmly in the hands of the OEMs. They pay for
the car components, but keep the data those components produce by-
and-large to themselves. They own the full stack.

This is fine if what you’re producing is a driveshaft or an onboard GPS,

but it is a huge problem if you’re in the business of developing AI com-
ponents that aims to warn drivers about road dangers, and have aspira-
tions to own the intelligence stack required for Autonomous Vehicles.

While I have zero knowledge regarding the inner workings of Mobileye,

I do know how the industry has changed in recent years, with the intro-
duction and popularization of a set of technologies known as ‘Deep
Learning’. Excelling in Deep Learning, a technique which conquered the
machine vision profession since 2012, is much less about years of
unique IP research & development, and much more about collecting
very large unique datasets. A good illustration of this was a recent
recentcom-
recent com-
com-
petition
petition
petition we ran at Nexar challenging researchers to create a traffic
lights detector. Within weeks some of the competitors have managed to
build state-of-the-art solutions because they had access to a massive
real-world driving training dataset from Nexar.

Mobileye has announced partnerships with some major OEMs that have
at least some data component in them, and have presented their REM
REM
REM
concept
concept
concept which aims to provide high resolution mapping as a service for
autonomous vehicles, but the challenge for true autonomous driving is
much larger. It requires not only accurate mapping, but rather, the abil-
ity to understand and predict what is going to happen on the road
recent com-
around you. You need to train your system to detect vehicles and pedes-
petition
trians and potholes and anything else. You need to be able to train your
system to the different traits of different cities and different countries.
For example, if you want to take your vehicles to India, you need to be
able to cope with cows
cowson
cows onthe
on theroad
the road
road.
road The task becomes much harder
when you move from detecting and classifying objects to detecting and
responding to danger. There is a very long tail of potentially dangerous
REM
situations happening on the road everyday, and learning all of these sit-
concept
uations is a very daunting task.

This complex task requires endless

endlessamounts
endless amountsof
amounts ofdata
of data,
data which even the
data
OEMs have a hard time collecting. Getting access to these data sets as a
single component manufacture is close to impossible.

cows on the road

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 The benefit of the Intel-Mobileye deal is that it allows the two compa-
nies together to build a more holistic set of solutions that own more of
the stack and have a better chance of getting access to the pools of data
required for a pole position in this next phase of the industry. It may
even allow them to build chips that learn ‘on-the-job’ leveraging the lo-
cal access to data each car has.

These kind of consolidation deals will be inevitable, as more and more

companies realize that playing the component game is no longer an op-
tion, and the future margins will come from owning the intelligence
stack, which first requires owning the data stack. In fact, I would sug-
gest we should interpret all major upcoming deals in the transportation
market through the lens of data and the accelerating race for data
ownership.

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