Mobileye, headquartered in The Netherlands, has been successful over the years in the industry of autonomous driving systems technology. This case study looks at how the company could capitalize on the emerging market of driverless cars.
David B. Yoffie
Harvard Business Review (715421-PDF-ENG)
October 22, 2014
Case questions answered:
- What are the issues faced by Mobileye?
- What are your analysis and recommendation?
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Case answers for Mobileye: The Future of Driverless Cars
What are the issues faced by Mobileye?
Mobileye is experiencing a lack of profit compared to previous records.
- In 2001, the company had revenues of 35%, in 2002, it dropped to 22%. Over the years, the company has continued to create income, but it has continued to decrease from past years.
Mobileye tier one firms are no longer partners with the company and are also creating ADAS packages as well as alternatives.
- These companies include Delphi, TRW, Autoliv, and Continental. These companies are continuing to look for other alternatives rather than just ADAS, potentially going for new customers and becoming a threat to ADAS.
Tier one competition is gaining business from OEM, Mobileye could slowly be losing their competitive advantage.
OmniVision develops a similar product and is established in many different markets, such as entertainment, phones, medical imaging, and security. This will make it more challenging to expand into new markets if needed due to competition already being established in those markets.
Time of approval
- To create new products, it will take several years and be expensive to develop and test.
- If Mobileye ever wanted to become an OEM, the margins would be thin, and it would take around seven years to complete.
- Even if Mobileye became an OEM, they would be competing against firms with high brand loyalty and companies that have a lot of capital to work with, such as Tesla and Google.
Communication from higher up management to employees is slow. In the long-run, this will affect Mobileye’s culture, which is a critical factor of successful businesses.
Mobileye’s strategy regarding marketing is a concern. The company was unable to get into their target market.
After having great initial success, Mobileye is now looking to capitalize on the emerging market of driverless cars. With other competitors such as Google, Mobileye is trying to figure out a way to work with Google, who is a huge competitor in the driverless market.
- Innovative Products
- Experts in the field
- Reliable financial records and profit margins
- Strong display of patents, helping to reduce competition
- First to go into the driverless car market
- Limited penetration of driverless market concerning expanding
- Expected future profits are not guaranteed
- To the date in the case, profits continue to decrease
- Debt on financial statements
Mobileye is focused on the driverless car market. Being one of two leaders in the market, the company is having a meeting with Google to talk about partnership. If things go right, the company will necessarily eliminate their biggest competition in the field. On the other hand, Google has the capital and tools to make it hard for Mobileye to compete and can invest a lot of money into research and put pressure on Mobileye.
Threats of new entrants are low due to significant capital needed. The process technology needs to become certified is long and expensive, as well as regulations and tests required to sell products similar to Mobileye. The company has other competition such as suppliers and tier 1 organizations. Mobileye will continue to have a temporary…