HBS Case: Mobileye: The

Future of Driverless Cars

Dr. Neetu Yadav
BITS Pilani neetu.yadav@pilani.bits-pilani.ac.in
Pilani|Dubai|Goa|Hyderabad
 Case Summary
• Story about background of two founders of Mobileye;
• Made vision systems for assisted driving, autonomous driving,
and ultimately self-driving cars.
• Their unique position was built around a single camera, most
efficient and lowest cost way to deliver assisted driving
capabilities.
• There were other technologies available, however, the major
concern was actively improve safety and avoid accidents.

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 Case Dilemma
• 1. Whether Mobileye should sacrifice margin in order to retain
share, or continue to hold firm on price.

• 2. What role Google v/s Mobileye would play in future of self-

driving cars, and whether Google was a potential competitor or
partner for Mobileye?

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 Key Actions towards growth
• Creating integrated focused product line for hardware-software
solutions (EyeQ);
• Employing 300 people in Israel and 150 people in quality assurance in
Sri Lanka;
• Development of own systems-on-chip;
• Embracing substitute technology with a fusion system that would work
with radar, sonar, or lidar;
• Stopped working with customers of Tier 1 players those were
developing competitive products/technologies;
• Developed an aftermarket product to sell largely to truck fleets, which
provided additional validation that their concept worked
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 Mobileye’s Competitive Advantage
• First mover advantage in ADAS (Advanced Driver Assistance
System)- Core vision systems
– Tesla is using Mobileye as its core system;
– BMW, GM and Volvo included Mobileye technology in safety
packages for production of passenger vehicles.
Investment in R&D and introduction of single camera for image
processing

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 Sustainability of Competitive Position

• Has the company done a good job in:

– Building barrier to imitation?
– Mitigating threats to substitutions?
– Limited hold-up by customers and suppliers?
– Generating demand for their products? (Saturation)
– Driving efficiency in their organization? (Slack)
Source: Strategy and the Business
Landscape, Pankaj Ghemawat, 2E

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Sustainability of Competitive Position (Barriers
to imitate)
• First mover in monocular vision systems
• Pricing: $45 average price is low enough to make it appear
unattractive for new entrant
• Long sales cycles
• Long product cycles
• Long innovation cycles

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 Sustainability of Competitive Position
(Mitigating substitutions)
• Substitutes- Radar, Lidar, Sonar, iphone can do simple lawn
departure warning

Mobileye supports and embraces “fusion” system, which

combine vision with alternative technologies
This is an “Embrace and extend” strategy where it embraces the
substitutes and and incorporates the benefits of the substitutes
into their core vision system

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Sustainability of Competitive Position (Mitigate
the threat of hold-up)

• Mobileye made the strategic decision to remain Tier 2 supplier,

not Tier 1

• Mobileye also stopped working with Tier 1 players that

compete with them (Is it a god idea?)

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 Sustainability of Competitive Position
• Saturation
– Mobileye is depending on regulations to drive demand as
governments increasingly mandate safety systems to save lives, this
will generate global demand for these products

• Slack
– Not much information is available about efficiently working, but case
tells that there are only 400 people, and organization has outsourced
most other functions, which suggests a relatively lean organization.
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 How should Shashua and Aviram handle OEM
demands for lower prices?
• Market share V/s profits debate
• Scenario 1: Discount the price
• Capture as much of market as possible; prevent competitors
from getting traction in the market, give more flexibility to
customers
• Scenario 2: Hold the line on price
• Prices are already low; the regulatory environment is in the
favor or Mobileye; valuation issues; superior product; the risk
of a bad competitors’ products would be a suicide for an OEM
(good enough v/s flawless) 11
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 How should Mobileye play with Google?
• Collaborating with Google
– It is a thought leader in the driverless cars
– Working with Google will be major PR coup
– Google is potential acquirer of Mobileye

Not to collaborate with Google

- Google would be a competitor??

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 Strategy Rules
• 1. Look forward, Reason back
• 2. Make big bets, without betting the company
• 3. Build platforms and ecosystem-not just products
• 4. Exploit Leverage and Power- Play Judo and Sumo
• 5. Shape the organization around your personal Anchor

Book: Strategy Rules: 5 Timeless lessons from Bill Gates, Andy Grove and Steve Jobs
https://www.youtube.com/watch?v=WTkPIzI9JBA

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 Please note-Case discussion is solely for understanding and
applying theoretical frameworks for class learning; this can not
be used as a source of endorsement, sources of primary data,
and illustration of effective or ineffective management

Sharing or Posting these slides is strictly prohibited

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