The Real Future of Cars Is in the Cloud

Don Peppers, 29 April 2014

At the beginning of the 20th Century Gottleib Daimler’s accounting folks drastically underestimated the eventual demand for automobiles because they couldn’t imagine anyone being able to operate a car without a professional chauffeur. We can all laugh at this idea, but now that we’re on the brink of robot-operated vehicles, we may be about to make the same kind of mistake.

And don't be fooled: robotic vehicles really are just around the technological corner. Google has been testing driverless cars for some time now, already logging nearly 400,000 driverless miles on various streets and highways, with only one driverless accident so far. At last week’s New York Times Energy for Tomorrow conference, the head of Google’s program, Anthony Levandowski, suggested we may see driverless cars on the market as soon as the year 2018. Chip Cutter’s LinkedIn post on the topic reviewed some of the implications for auto safety, the environment, regulatory issues and the currently high cost of the technology.

But while there's ever more discussion about how your car is becoming increasingly connected, and just last week I posted my own list of features that might make an automotive company more trustable to its customers, the truth is that robotic vehicles will soon trump both of these issues. Once driverless cars become available the current automotive business model will be completely outdated, whether or not car companies maintain direct links to their cars, and probably long before they figure out how to be trustable.

This is because the one big factor we all seem to be overlooking, the same way Daimler’s accountants once overlooked the disappearing chauffeur, is that when cars no longer need individual drivers, they'll no longer need individual owners, either. And this will transform the business model just as radically as when cars no longer needed chauffeurs.

Imagine a world in which you could use your smartphone to summon a car to come pick you up and drive you somewhere. Want to cut costs? You could automatically “share a ride” with someone else who is also being frugal and headed in the same direction. Need groceries in a hurry? Buy them online and they’ll come to you in a tiny little “car” so small it can’t accommodate a human, but can still navigate safely down the road to your front door.

Perhaps the best way to visualize the arrival of robotic vehicles is that the experience of being driven somewhere will soon be available “in the cloud.” Just like you can now access your favorite music or your business contacts on any device, you’ll soon be able to access the right kind of “being driven” experience on any device.

Rather than Software as a Service (SaaS), this will be Driving as a Service (DaaS).

I may be just as wrong as Daimler’s accountants were, so feel free to come back in twenty years and complain, but here’s what I think driverless cars really mean for the future of transportation: 

• Much less individual car ownership.
• Highly specialized vehicles – for deliveries, medical emergencies, single- vs. multi-passenger, long-distance, etc.
• Fewer cars on the road in general, as consumers take advantage of the economics of collaborative trips and ride sharing.
• Reduced demand for one-size-fits-all mass transit systems, which will eventually only be found in very densely populated areas, or along very heavily traveled inter-city routes.
• Driverless-only toll roads with no actual speed limits and average fast-lane speeds of 120 mph+.