Recently, Alibaba (NYSE:BABA) led a $18 million investment in a smart car technology start-up, WayRay, which is developing an augmented-reality car navigation system, the first in the world. This investment indicates that Alibaba is extremely optimistic about the AR technology, which it has already incorporated in its e-commerce platform. Apart from the current investment, Alibaba-backed internet connected car maker Banama Technologies is also entering into a partnership with WayRay to develop a new AR car infotainment system. Adoption of AR in the automotive industry is increasing rapidly. Use of this technology in automobile navigation is expected to make the driving experience safer and more convenient. While several automakers are investing in apps to enhance the driving experience, WayRay is pioneering the concept of AR in automobile navigation. Alibaba’s foray into this space will enable the company to exploit the potential of this technology in several ways (including integration with e-commerce) and this can open a new profitable revenue stream for the company in the long term.
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Tapping Into the Potential Of The Augmented Reality Market
According to MarketsandMarkets, the global augmented reality market is expected to reach $117.4 billion by 2022 and the automotive segment can form a significant portion of this market. According to Technavio research, the global automotive augmented reality market will grow steadily at a CAGR of 18% by 2020. This growth will be driven by the increased use of HUD (heads up displays) in low and medium range cars in the Asia Pacific region. These displays make driving safer as the drivers do not have to look away from the roads to access a navigation device. WayRay’s navigation product can be termed as an advanced HUD as it navigates the driver through a green arrow in front of his car to reach the destination. There is no need for any headgear or eyewear to use this technology. The system responds to simple voice commands eliminating the need to look at the dashboard and take one’s eyes off the road. WayRay is pioneering this technology and given that it ensures high safety levels it should get significant traction in the market.
Integrating Automobiles In The Internet Ecosystem
As the automobile landscape undergoes a transformation, technology is likely to play a key role in its future. Alibaba is looking to integrate cars in the internet-of-things ecosystem which will include internet services such as Alipay. Several players are exploring possibilities of integrating the car navigation system to e-commerce platforms, and recently Amazon teamed up with Ford Motors to integrate its Alexa voice assistant with Ford vehicles. This integration among other things will allow users to add items to their Amazon shopping lists while driving. Alibaba’s foray into a high technology car navigation system is an indication that the company might be looking to do something similar in the long term, driving revenues for its e-commerce segment.
According to a study conducted by IBM, the automotive industry will offer a greater personalized driving experience by 2025. Of the executives surveyed by IBM, 80% felt that in-vehicle cognitive technologies will be a key component of how vehicles learn to provide a better experience for the occupants and optimize their own performance. Alibaba appears to be tapping into this trend through its foray into an augmented reality based navigation system. We believe this can generate additional revenues for the company and at the same time open up opportunities to integrate its e-commerce business in automobile automation.
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