Many Internet companies have been involved in car manufacturing for several years; however, the deep logic behind this lively trend is much more valuable to play and ponder than what we see at first glance.
Software anxiety behind cross-border
Most Internet companies started with software and services. However, there are uncertainties in the profit-making methods of software. Revenues such as advertising and subscriptions are easily affected by policies and market fluctuations. As a result, they lack a solid foundation. Finding a hardware entrance controlled by themselves has become their common choice to build long-term competitive barriers. This is essentially a strategic extension of turning virtual advantages into physical moats.
From personal computers to smartphones, every iteration of hardware has led to the emergence of new software giants. Internet-related companies know very well that if they are unable to participate in or even assume the role of defining the next generation of core hardware, they will most likely lose the right to express different opinions in the future. Therefore, manufacturing cars is not only a further expansion of business, but also an action focused on dominating power in survival to occupy a certain position in advance.
Why choose the automotive industry?
Cars have a unique appeal among all hardware. They are top industrial products with a high unit price, a long industrial chain, and a high level of technology integration. Successfully entering automobile manufacturing means being able to control a huge supply chain and mastering cutting-edge manufacturing processes. Its strategic value far exceeds that of consumer electronics. This provides an unprecedented integration stage for Internet companies.
More importantly, cars are transforming from mere transportation to "mobile smart terminals". This transformation has given birth to a new market with a value of trillions. Its imagination field is much larger than mobile phones or TVs. For those Internet giants looking for growth breakthrough points, this is almost the only track that has not been completely divided and has huge capacity.
The strategic carrier value of hardware
As far as Internet companies are concerned, the most direct goal of manufacturing their own hardware is to create an optimal carrier for their core software services. For example, there is a video website that manufactures vehicles, and its in-car entertainment system can seamlessly access its own film and television resource library in a natural state. In this way, the problems related to adaptation obstacles and profit sharing that existed during cooperation with other hardware manufacturers are completely eliminated.
With the help of its own hardware, enterprises can achieve a complete data closed loop from the cloud to the terminal. The data generated by vehicle operations, user interaction habits and other precious information can all be returned to optimize algorithms and services. The exclusivity of this data is a core advantage that no third-party cooperation can provide.
A barrier to market uncertainty
There are risks in relying on external supply chains, such as the supply of key technologies being cut off, or partners turning to competition. Building production capabilities in-house, especially in complex manufacturing areas like automobiles, can greatly improve a company's ability to withstand risks. This is like building a first-line "flood control embankment" for its own important software ecosystem.
During fluctuations in the economic cycle, investment in hardware assets is extremely huge, but it can provide a certain degree of physical value support to balance the high volatility of pure virtual business. This "hardware-software combination" business model can make enterprises more robust in both the capital market and actual operations.
The practical path from television to cars
The attempt made by LeTV Super TV is a pilot signal. It harbors the idea of consolidating its advantages in video content by controlling home entertainment-related entrances. Even though the final outcome is not very satisfying, this "content + hardware" path clearly shows the thinking logic of Internet companies.
Baidu is committed to the development of the field of autonomous driving. The Apollo platform it launched aims to become the "operating system" of smart cars. Xiaomi claims to be a wholly-owned car manufacturing move with the aim of copying its mature smart ecosystem into the automotive field. These cases all follow the same core gist, which is to rely on its own software capabilities as a spear and its own hardware as a shield to open up a new battlefield.
Future challenges and real victories
However, the nature of the automobile manufacturing industry is capital-intensive, its cycle is long, and its safety requirements are extremely high, which is completely different from the fast-paced Internet. The numerous crossovers into this field will start from the design, go through the testing phase, and then to the mass production process until safety certification. The difficulty of the entire process must be underestimated. Whether it can ultimately successfully deliver a car that meets safety and reliability standards while providing an excellent experience is still a huge question mark.
However, perhaps, for them, making cars that sell well and are popular is not the only purpose. As long as in this process, a technologically advanced and mature smart cockpit, a stable autonomous driving solution and other core components are developed, and a way is found to commercialize these core components, even if the entire automobile manufacturing project encounters obstacles and fails, it can be regarded as a success at a specific stage. In fact, the real goal has always been to create a new generation of hardware platforms that can carry its own future development direction.
Is this cross-border wave a dimension-reducing attack on traditional industries by the Internet, or is it an adventure full of thorns? Which Internet company are you more optimistic about the future of car manufacturing? Share your personal views in the comment area. If you agree with the analysis of this article, you are also welcome to like it and support it.
