Intel’s plan to become the leader in self-driving seems a great idea on paper. No one doubts there is a bright future for self-driving cars and Intel wants to lead the pack. However, the acquisition doesn’t come without serious risks.
For starters, Intel has made huge commitments in areas outside its traditional desktop and laptop chips arena. There was Intel TV which was supposed to put Intel on top of the television revolution. Then, we had the mobile program intended to give Intel a good shot at leading in smartphone chips. Well, all of those programs were crashed before the company could collect any meaningful rewards.
Additionally, during the last couple of years we saw several tech heavy-weights investing big on self-driving technology. This means that there are huge competitive threats looming over the ability to sustain prices and margins. For instance, Alphabet claims to be contributing for a fall in prices in self-driving technology.
Again, this seems like a desperate move from a big company late to market, trying to catch up by writing a big fat check. Well, usually it’s not a sound business model.