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IoT & Edge

Intel, Mobileye $15.3B deal has cloud under the hood

Intel decided this would be a good week to shake up the autonomous vehicle industry, so the chip giant plunked down $15.3 billion to buy Mobileye, the Israel-based company that has been developing a range of technologies for the self-driving industry for nearly 20 years.

The deal between Intel Corp. and Mobileye -- the two companies already have a partnership dating back to last year before this week's acquisition announcement -- is a risky one, especially for Intel. At $63.54 per share, Intel is paying a premium for Mobileye, although CEO Brian Krzanich was at pains to paint the deal as part of a long-term strategy. (See Intel Buying Mobileye for $15 Billion.)

The two companies do expected the acquisition to close by year's end once regulators approve.

Beyond the financials, Intel Corp. (Nasdaq: INTC) is making a huge bet not only the autonomous vehicle market, but on the whole notion of its ability to offer cloud computing capabilities to its customers. The cloud, as it turns out, is the engine under the hood of this market.

The data is destined for the cloud and the heavy lifting of the acquisition will be to move it there.

In a talk with financial analysts following the deal's announcement on March 13, Krzanich explained that Intel's data center capabilities were a major factor in the deal. Specifically, Krzanich spoke of collecting data from the vehicles, analyzing it within the cloud and then redirecting it back to the car or truck in the form of more precise maps to ensure safety and reliability.

Intel's Brian Krzanich has placed his chips on cloud (Source: Intel)
Intel's Brian Krzanich has placed his chips on cloud (Source: Intel)

Intel already has a 15% stake in location data company HERE, and has already started work on the mapping requirements for autonomous vehicles. However, by combining those capabilities with Mobileye's technology, Intel is looking to push the limits of what data means in the autonomous vehicle market. (See Intel to Buy a 15% Stake in HERE.)

In his comments, Krzanich laid out three uses for the cloud data center for the technology the two companies plan to develop:

  • The first is way to capture the visual data that the vehicle records, and then offer new services based on that data.
  • The second is to use the data collected and stored in the cloud to offer a complete autonomous vehicle offering, which is what the two companies are already trying with BMW, Delphi and others.
  • The third is to re-imagine the data center, including the way it's built, how data flows from the vehicle and then back to it, and offer a much deeper analysis of that data.

"Put just one million autonomous vehicles on the road and you have the data equivalent of half the world's population," Krzanich wrote in a letter to employees on Monday. "This massive amount of data requires all of Intel's assets to provide the cost-effective high performance solutions our customers need."

Charles King, an analyst with Pund-IT research, wrote in an email that Mobileye provides Intel access to several Tier 1 automotive suppliers, and its combination of hardware and software made it an attractive offer. At the same time, Intel's processors and other technologies open up new ways to bring the technology to the vehicles.

"But the evolution of autonomous driving requires a range of robust IT infrastructure technologies, from muscular onboard components to robust wireless networks to high performance computing and cloud capabilities," King wrote to Enterprise Cloud News. "That is precisely what Intel's Xeon processors, FPGAs, 3D XPoint memory, and 5G modem solutions are designed the deliver."

When Krzanich announced Intel's new direction a year ago, following a large number of layoffs, he spoke about the company's shift to cloud, Internet of Things, artificial intelligence, and machine learning. The company referred to it as a "virtuous cycle" and Krzanich used the same language during Monday's call. (See Intel to Lay Off 12%, Focus on IoT & Data Centers.)

The Mobileye acquisition now puts all the pieces in place. The question is can Intel use its know-how, especially in the cloud, to pull all that data together? The next nine months will offer some guidance.

— Scott Ferguson, Editor, Enterprise Cloud News. Follow him on Twitter @sferguson_LR.

ak22 3/30/2017 | 5:44:55 PM
Re: Intel Presumably this play will also bolster Intel's efforts in the wider Internet of Things market too?
kq4ym 3/20/2017 | 10:57:18 AM
Re: Intel I'm still sceptical of the sooner than later predictions for wide spread self driving vehicles. Suere, there may be some trucking companies and Uber type vehicles coming relatively soon, but getting millions of vehicles out there, I'm not so sure. And while Intel is taking that "huge bet not only the autonomous vehicle market, but on the whole notion of its ability to offer cloud computing capabilities to its customers," would seem to not only be a huge bet but one that may not see a payoff for a decade or even more.
Ariella 3/15/2017 | 11:34:23 AM
Re: Intel @Scott that would be the $15 billion question now, wouldn't it? I've seen some reports claiming that autonomous cars will be on the  road quite soon. Boston reports having already been home to the first self-driving car here: https://www.bostonglobe.com/business/2017/01/04/have-liftoff-first-self-driving-car-hits-road-boston/G9y6JgQtWfIlTVasccBGWM/story.html
Scott_Ferguson 3/14/2017 | 9:20:08 PM
Re: Intel @danielcawrey: My only caution would be: Is that Intel is getting into the game a bit late, and using its capital to muscle its way in now. Also, its track record in acquisitions has not been the best. At the same time, the company is trying to realize its vision and is moving toward it. Biggest question: When do autonomous vehicles become reality?
danielcawrey 3/14/2017 | 6:40:01 PM
Re: Intel I would argue Intel needs this badly. They have to continue to move away from the PC market. With chipmakers increasingly using low-power ARM designs, the cloud could be a savior for Intel. 
marisilbey 3/14/2017 | 1:22:18 PM
Curious I'm really curious to see how the connected car space ultimately ties into other connected arenas - connected homes, smart cities, etc. There will be some early test crossover, but how we move from experiments to anything more solid isn't clear to me. 
Ariella 3/14/2017 | 10:34:24 AM
Re: Intel @Scott yes, you need that really fast processing to make the data transfer work in real or at least very near real time. That would be especially important for data updates for drivers on the road.
Scott_Ferguson 3/14/2017 | 10:28:35 AM
Re: Intel @Ariella: You have that right. Intel went more strategic with HERE and then decided to buy Mobileye outright. Both deals come back to the mapping issue: Getting the data from the car, to the data center, run it through analytics, and fire it back out to the car's system. This should make the self driving cars safer, but it's a matter of processing the data fast through the cloud. 
Ariella 3/14/2017 | 10:18:47 AM
Intel <Intel already has a 15% stake in location data company HERE, and has already started work on the mapping requirements for autonomous vehicles. However, by combining those capabilities with Mobileye's technology, Intel is looking to push the limits of what data means in the autonomous vehicle market. (>

Now that makes it a more strategic move than merely buying in connected car technology. Leveraging location data into the car's connected system opens up quite a number of possibiities for real time data that drivers and those marketing to drivers can use.
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