Mobil Eye Case
A)
Mobileye, founded by Amnon Shashua and Ziv Aviram, is a company leading the market in technologically advanced software algorithms, system-on-chips, and applications customized to extensively process visual information for the use of advanced driver assistance systems, or ADAS. Mobileye is the market leader for ADAS because of its unmatched customer value proposition, or CVP; focusing on continuously improving safety, avoiding accidents, and saving lives in an increasingly affordable way. This value the customer receives comes from the applications that increase the safety in vehicles such as warnings for lane departure and forward collision, autonomous emergency braking, and many other active safety features. These applications are provided by an affordable, single camera equipped with designed chips and software algorithms giving the customer artificial vision of the surrounding world. Mobileye was the first company to produce such technologically advanced visual processing systems, making it easy for them to market to luxury and lower-end car manufacturers; having car safety as their main source of customer value. Mobileye first targeted their products towards the higher-end, more luxurious car manufacturers because the customers buying these cars are typically less price sensitive and able to afford the additional safety features. As demand continued to grow for their driver assistance systems, Mobileye began targeting lower-end car manufacturers, offering simpler and more affordable ADAS for the customers in that market. Mobileye decided to create the lower cost package so they would not lose their market share in the low-end segment; sacrificing some profit margin to do so. Mobileye’s strategy is sustainable because it is appealing to high- and low-end markets and the demand for ADAS solutions will only increase; no one is going to want to purchase a car that is considered unsafe. Current and future car safety regulations on OEMs, original equipment manufacturers, will only require more active safety features resulting in increased demand for Mobileye’s solutions. To keep Mobileye in the state of growth it is currently in, they may need to adapt and innovate so as to keep up their value to the customers. The company’s CVP of overall car safety will need to improve and differentiate itself if ever faced with direct competition. They will need to maintain their competitive advantage by continuously adding to and evolving the custom applications in their ADAS technology. Thinking of new challenges and distractions drivers face on the road and developing an application of eliminating those threats will continue growth. Mobileye will have to increase the performance of their systems while not sacrificing the low cost and compact size of their products. To maintain growth, Mobileye’s CVP may have to reassure the market why their ADAS’s are the best, most technologically advanced, and safest for their cars.

B) Mobileye is years ahead of most everyone in visual processing for ADAS, but they are not without competition in their market. In short, Mobileye is a Tier 2 company selling computer chips and software algorithms to Tier 1 companies who are composed of the suppliers and component and systems companies, and then there are the OEMs, original equipment manufacturers, which are the auto manufacturers. A potential competitor could be the involved Tier 1 suppliers, mainly including Autoliv and Continental. These companies are customers as well as competitors because they all develop ADAS packages, some were developed with Mobileye’s technology, others with radar, lidar, and other vision processing systems. Autoliv and Continental thought an advantage came from using stereo-vision systems because of the small niche market, but according to Shashua that market was small and shrinking quickly.
Another potential competitor is Google, who received the world’s press because of their prototype self-driving car revealed in 2014. Google has the advantage of already developing a self-driving prototype in 2014 and unveiling it to the public. This vehicle requires no steering wheel, gas, or brake pedals, and already has 500,000 miles of test-driving. It includes an advanced linar, light detection and ranging, sensor system for developing detailed maps of roads it has traveled on. Google’s disadvantages as a competitor all stream from the outrageous cost of its self-driving car prototype, which is $170,000. Shashua and Aviram do not believe it could be commercialized at such a price. Also, the mapping system would involve an immense amount of driving and is extremely unrealistic on a global scale. There is also a possibility of road construction, changing roads and highways making the memory saved in the systems inaccurate for the mapping system used by Google. In addition, Shashua and Aviram believe that it is not to Google’s advantage to attempt such huge leaps into the future so soon.
Lastly, the other potential competition that could challenge Mobileye would be OmniVision. This company develops digital-imaging solutions for a multitude of markets besides automotive, including entertainment, medical imaging, PC cameras, mobile phones, and security and surveillance. OmniVision has technology such as a 360 degree view, lane change detection, and autonomous driving. The technology used in those various devices could be applied to visual processing for ADAS’s, along with radar and lidar. An advantage OmniVision possesses is that it has the basic technology that is used for the systems used in active car safety features because digital imaging in all the above devices includes identifying different variables and highlighting them. They are on the right track with digital imaging solutions in automobiles but are far behind Mobileye. The main disadvantage is the amount of time it takes to enter into an OEM account. It would take years to test and validate the software and applications used in the ADAS’s, then comes the challenge of convincing the OEM’s to adopt the new and inexperienced product, which could take up to 7 years according to Aviram.
Mobileye’s has about 80% of the vision market currently, and Aviram states that as the market transitions to vision as the primary sensor, they should get ahold of an 80% share. It is also forecasted that Mobileye will get an 80% share of all the autonomous driving systems in the world within a few years. As Mobileye’s market share increases, its main competitors, Google and OmniVision, are most likely contemplating a few options to address the increased market share. One option is for Google and Mobileye to collaborate and combine resources; joining forces to achieve mutual goals much more quickly. Google may also continue its path to being the first producer of a fully autonomous vehicle. Although Mobileye produces much of the same technology, competitors could argue that Mobileye’s ADAS are not autonomous vehicles because the passengers do not surrender full control of the vehicle. OmniVision, on the other hand, will most likely continue their strategy of a primary focus on autonomous testing of technology. They very well may be a real threat to Mobileye in the future, but not today because of how many markets OmniVision is a part of, which makes for resource sharing, allowing Mobileye to continually gain market share.

C) Mobileye is a Tier 2 supplier that sells chips and software to a Tier 1 company, like Delphi and Autoliv, who then sell the full package to OEM’s for installation in the vehicles. In some cases, like Mobileye’s, they would lobby OEM’s to specify the technology wanted by the customer, and sell directly to them instead of going through a Tier 1 company. Mobileye’s main revenue stream is from selling chips and software to a Tier 1 company, or selling directly to the OEM’s as they did for the first six years of sales. According to Yoffee, by 2013, a number of car manufacturers had implemented Mobileye’s technology including GM, Ford, Chrysler, Volvo, BMW, Jaguar, and a few others. In order for this revenue stream to grow, Mobileye must continuously update and improve their technology so Tier 1 companies and OEM’s will continue to buy them and a be a part of the autonomous vehicle process. An additional revenue stream for Mobileye comes from the aftermarket, or stand-alone aftermarket. This market produces revenues by selling and installing Mobileye’s processing technology into the existing vehicle base. Numbering close to 1 billion, according to Shashua and Aviram, this presented a big opportunity to test their products. Mobileye sold cameras including the Mobileye technology, along with a video/audio display directly to fleet managers and consumers for about $350-400 retail. Those numbers generated impressive margins of over 50%. In 2013, the case study states that the aftermarket was responsible for 22% of Mobileye’s revenue. As business continued, aftermarket revenues continued to grow but its percentage of Mobileye’s overall business declined. For the aftermarket revenue stream to continuously grow, Mobileye will need to innovate and updates its cameras and audio/visual displays to keep the customer interested and satisfied. There are a couple of ways in which Mobileye could add two more revenue streams without changing its product line. One new revenue stream will result from increased regulations and mandates imposed by regulatory bodies and government agencies to increase the safety of vehicles. Regulations requiring minimum safety features or some form of ADAS will increase revenue for Mobileye because they are the market leader for this technology, and OEM’s and Tier 1 companies will turn to Mobileye for the solution. According to the case study, a sharp increase in demand is partially due to the influence that regulators have on OEM’s. Shashua and Aviram believe that another source of revenue will come from the never ending demand for new applications as Mobileye continuously moves toward fully autonomous vehicle technology. The processing power of the chips increases with every generation and software is always being updated, giving the Mobileye technology the capability to process such information.