How will Google make money with self-driving cars?

Google this weekend revealed an amazing technological breakthrough: A car that can drive itself. The revenue possibilities of the invention illustrate the new business realities of the Internet age, where simply selling things seems old-fashioned and quaint.

Google unveiled its work on automated cars Saturday on the official company blog. The cars drove from Google's Mountain View campus to its Santa Monica office -- a distance of about 350 miles, according to Google Maps. The cars drove San Francisco's winding Lombard Street, crossed the Golden Gate Bridge, the twisty Pacific Coast Highway, and around Lake Tahoe. The cars have logged 140,000 miles.

"Our automated cars use video cameras, radar sensors and a laser range finder to 'see' other traffic, as well as detailed maps (which we collect using manually driven vehicles) to navigate the road ahead. This is all made possible by Google’s data centers, which can process the enormous amounts of information gathered by our cars when mapping their terrain," Google says.

Google used a team of researchers with previous experience in the DARPA Challenges, autonomous vehicle races organized by the U.S. government.

"Safety has been our first priority in this project. Our cars are never unmanned. We always have a trained safety driver behind the wheel who can take over as easily as one disengages cruise control. And we also have a trained software operator in the passenger seat to monitor the software. Any test begins by sending out a driver in a conventionally driven car to map the route and road conditions. By mapping features like lane markers and traffic signs, the software in the car becomes familiar with the environment and its characteristics in advance. And we’ve briefed local police on our work," Google says.

Stakes are huge

The stakes for the human race are huge. More than 1.2 million people die in road traffic accidents every year, according to the World Health Organization; Google thinks it can cut that number by up to half, as self-driving cars become more reliable than autos with flesh-and-blood people at the wheel. Google says self-driving cars will "transform car sharing, significantly reducing car usage" (I'm not sure how that would work. If cars are easier, more convenient, and safer to use, wouldn't that make people drive more?).

"In terms of time efficiency, the U.S. Department of Transportation estimates that people spend on average 52 minutes each working day commuting. Imagine being able to spend that time more productively," Google says.

TechCrunch's MG Siegler acknowledges the robo-car is "world-changing awesome." But then he wonders how the technology might make money.

At first, this seems like a dumb question. You'd make money off a robo-car the same way that inventors have made money off ideas for the last 500 years: Build them and sell them. Or, more likely, license the technology to carmakers, who would build the tools into their vehicles.

However, that's not the Internet way of doing things. It's not the Google way. The Internet way is that you don't sell the thing itself, you give the thing away, while making money off of secondary revenue sources and aftermarkets, usually ads. You don't charge people for search, or email, or mapping services, or web-based office suites like Google Docs, or computer operating systems like Chrome. All of these tools are products that other companies have made billions of dollars selling. But Google mainly doesn't sell those, it gives them away, and makes money selling ads to people who use the services. Google and other Internet companies don't work that way out of altruism, they do it because it's better business.

Where's the money?

Siegler points to secondary revenue opportunities for a self-driving car. What if the 52 minutes per day that Americans spend commuting could be spent searching Google, watching Google TV, and using Gmail, all provided with Google advertising. That would be a pretty penny, and it's making money the Internet way.

Indeed, I saw the face of this future just last week, when I took Amtrak from San Diego to Los Angeles. It's a 2-1/2-hour train ride, and many people do it quite frequently, but they seem quite content to sit in the comfortable Amtrak chairs, working away on their wireless-connected laptops and taking meetings on their mobile phones. The train ride isn't dead commuting time, it's a busy part of their days. What if you could have the same kind of productive, pleasant experience in your car? That's part of the promise of self-driving cars, and part of the revenue opportunity for Google.

What other secondary markets and aftermarkets might there be for self-driving cars?

For more on the breakthrough, the New York Times has an overview on Google's self-driving cars, and a report on the technology Google used for its achievement, as well as a demo video.

Mitch Wagner

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is a freelance technology journalist and social media strategist.

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