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#432311 Everyone Is Talking About AI—But Do ...

In 2017, artificial intelligence attracted $12 billion of VC investment. We are only beginning to discover the usefulness of AI applications. Amazon recently unveiled a brick-and-mortar grocery store that has successfully supplanted cashiers and checkout lines with computer vision, sensors, and deep learning. Between the investment, the press coverage, and the dramatic innovation, “AI” has become a hot buzzword. But does it even exist yet?

At the World Economic Forum Dr. Kai-Fu Lee, a Taiwanese venture capitalist and the founding president of Google China, remarked, “I think it’s tempting for every entrepreneur to package his or her company as an AI company, and it’s tempting for every VC to want to say ‘I’m an AI investor.’” He then observed that some of these AI bubbles could burst by the end of 2018, referring specifically to “the startups that made up a story that isn’t fulfillable, and fooled VCs into investing because they don’t know better.”

However, Dr. Lee firmly believes AI will continue to progress and will take many jobs away from workers. So, what is the difference between legitimate AI, with all of its pros and cons, and a made-up story?

If you parse through just a few stories that are allegedly about AI, you’ll quickly discover significant variation in how people define it, with a blurred line between emulated intelligence and machine learning applications.

I spoke to experts in the field of AI to try to find consensus, but the very question opens up more questions. For instance, when is it important to be accurate to a term’s original definition, and when does that commitment to accuracy amount to the splitting of hairs? It isn’t obvious, and hype is oftentimes the enemy of nuance. Additionally, there is now a vested interest in that hype—$12 billion, to be precise.

This conversation is also relevant because world-renowned thought leaders have been publicly debating the dangers posed by AI. Facebook CEO Mark Zuckerberg suggested that naysayers who attempt to “drum up these doomsday scenarios” are being negative and irresponsible. On Twitter, business magnate and OpenAI co-founder Elon Musk countered that Zuckerberg’s understanding of the subject is limited. In February, Elon Musk engaged again in a similar exchange with Harvard professor Steven Pinker. Musk tweeted that Pinker doesn’t understand the difference between functional/narrow AI and general AI.

Given the fears surrounding this technology, it’s important for the public to clearly understand the distinctions between different levels of AI so that they can realistically assess the potential threats and benefits.

As Smart As a Human?
Erik Cambria, an expert in the field of natural language processing, told me, “Nobody is doing AI today and everybody is saying that they do AI because it’s a cool and sexy buzzword. It was the same with ‘big data’ a few years ago.”

Cambria mentioned that AI, as a term, originally referenced the emulation of human intelligence. “And there is nothing today that is even barely as intelligent as the most stupid human being on Earth. So, in a strict sense, no one is doing AI yet, for the simple fact that we don’t know how the human brain works,” he said.

He added that the term “AI” is often used in reference to powerful tools for data classification. These tools are impressive, but they’re on a totally different spectrum than human cognition. Additionally, Cambria has noticed people claiming that neural networks are part of the new wave of AI. This is bizarre to him because that technology already existed fifty years ago.

However, technologists no longer need to perform the feature extraction by themselves. They also have access to greater computing power. All of these advancements are welcomed, but it is perhaps dishonest to suggest that machines have emulated the intricacies of our cognitive processes.

“Companies are just looking at tricks to create a behavior that looks like intelligence but that is not real intelligence, it’s just a mirror of intelligence. These are expert systems that are maybe very good in a specific domain, but very stupid in other domains,” he said.

This mimicry of intelligence has inspired the public imagination. Domain-specific systems have delivered value in a wide range of industries. But those benefits have not lifted the cloud of confusion.

Assisted, Augmented, or Autonomous
When it comes to matters of scientific integrity, the issue of accurate definitions isn’t a peripheral matter. In a 1974 commencement address at the California Institute of Technology, Richard Feynman famously said, “The first principle is that you must not fool yourself—and you are the easiest person to fool.” In that same speech, Feynman also said, “You should not fool the layman when you’re talking as a scientist.” He opined that scientists should bend over backwards to show how they could be wrong. “If you’re representing yourself as a scientist, then you should explain to the layman what you’re doing—and if they don’t want to support you under those circumstances, then that’s their decision.”

In the case of AI, this might mean that professional scientists have an obligation to clearly state that they are developing extremely powerful, controversial, profitable, and even dangerous tools, which do not constitute intelligence in any familiar or comprehensive sense.

The term “AI” may have become overhyped and confused, but there are already some efforts underway to provide clarity. A recent PwC report drew a distinction between “assisted intelligence,” “augmented intelligence,” and “autonomous intelligence.” Assisted intelligence is demonstrated by the GPS navigation programs prevalent in cars today. Augmented intelligence “enables people and organizations to do things they couldn’t otherwise do.” And autonomous intelligence “establishes machines that act on their own,” such as autonomous vehicles.

Roman Yampolskiy is an AI safety researcher who wrote the book “Artificial Superintelligence: A Futuristic Approach.” I asked him whether the broad and differing meanings might present difficulties for legislators attempting to regulate AI.

Yampolskiy explained, “Intelligence (artificial or natural) comes on a continuum and so do potential problems with such technology. We typically refer to AI which one day will have the full spectrum of human capabilities as artificial general intelligence (AGI) to avoid some confusion. Beyond that point it becomes superintelligence. What we have today and what is frequently used in business is narrow AI. Regulating anything is hard, technology is no exception. The problem is not with terminology but with complexity of such systems even at the current level.”

When asked if people should fear AI systems, Dr. Yampolskiy commented, “Since capability comes on a continuum, so do problems associated with each level of capability.” He mentioned that accidents are already reported with AI-enabled products, and as the technology advances further, the impact could spread beyond privacy concerns or technological unemployment. These concerns about the real-world effects of AI will likely take precedence over dictionary-minded quibbles. However, the issue is also about honesty versus deception.

Is This Buzzword All Buzzed Out?
Finally, I directed my questions towards a company that is actively marketing an “AI Virtual Assistant.” Carl Landers, the CMO at Conversica, acknowledged that there are a multitude of explanations for what AI is and isn’t.

He said, “My definition of AI is technology innovation that helps solve a business problem. I’m really not interested in talking about the theoretical ‘can we get machines to think like humans?’ It’s a nice conversation, but I’m trying to solve a practical business problem.”

I asked him if AI is a buzzword that inspires publicity and attracts clients. According to Landers, this was certainly true three years ago, but those effects have already started to wane. Many companies now claim to have AI in their products, so it’s less of a differentiator. However, there is still a specific intention behind the word. Landers hopes to convey that previously impossible things are now possible. “There’s something new here that you haven’t seen before, that you haven’t heard of before,” he said.

According to Brian Decker, founder of Encom Lab, machine learning algorithms only work to satisfy their preexisting programming, not out of an interior drive for better understanding. Therefore, he views AI as an entirely semantic argument.

Decker stated, “A marketing exec will claim a photodiode controlled porch light has AI because it ‘knows when it is dark outside,’ while a good hardware engineer will point out that not one bit in a register in the entire history of computing has ever changed unless directed to do so according to the logic of preexisting programming.”

Although it’s important for everyone to be on the same page regarding specifics and underlying meaning, AI-powered products are already powering past these debates by creating immediate value for humans. And ultimately, humans care more about value than they do about semantic distinctions. In an interview with Quartz, Kai-Fu Lee revealed that algorithmic trading systems have already given him an 8X return over his private banking investments. “I don’t trade with humans anymore,” he said.

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Posted in Human Robots

#432303 What If the AI Revolution Is Neither ...

Why does everyone assume that the AI revolution will either lead to a fiery apocalypse or a glorious utopia, and not something in between? Of course, part of this is down to the fact that you get more attention by saying “The end is nigh!” or “Utopia is coming!”

But part of it is down to how humans think about change, especially unprecedented change. Millenarianism doesn’t have anything to do with being a “millennial,” being born in the 90s and remembering Buffy the Vampire Slayer. It is a way of thinking about the future that involves a deeply ingrained sense of destiny. A definition might be: “Millenarianism is the expectation that the world as it is will be destroyed and replaced with a perfect world, that a redeemer will come to cast down the evil and raise up the righteous.”

Millenarian beliefs, then, intimately link together the ideas of destruction and creation. They involve the idea of a huge, apocalyptic, seismic shift that will destroy the fabric of the old world and create something entirely new. Similar belief systems exist in many of the world’s major religions, and also the unspoken religion of some atheists and agnostics, which is a belief in technology.

Look at some futurist beliefs around the technological Singularity. In Ray Kurzweil’s vision, the Singularity is the establishment of paradise. Everyone is rendered immortal by biotechnology that can cure our ills; our brains can be uploaded to the cloud; inequality and suffering wash away under the wave of these technologies. The “destruction of the world” is replaced by a Silicon Valley buzzword favorite: disruption. And, as with many millenarian beliefs, your mileage varies on whether this destruction paves the way for a new utopia—or simply ends the world.

There are good reasons to be skeptical and interrogative towards this way of thinking. The most compelling reason is probably that millenarian beliefs seem to be a default mode of how humans think about change; just look at how many variants of this belief have cropped up all over the world.

These beliefs are present in aspects of Christian theology, although they only really became mainstream in their modern form in the 19th and 20th centuries. Ideas like the Tribulations—many years of hardship and suffering—before the Rapture, when the righteous will be raised up and the evil punished. After this destruction, the world will be made anew, or humans will ascend to paradise.

Despite being dogmatically atheist, Marxism has many of the same beliefs. It is all about a deterministic view of history that builds to a crescendo. In the same way as Rapture-believers look for signs that prophecies are beginning to be fulfilled, so Marxists look for evidence that we’re in the late stages of capitalism. They believe that, inevitably, society will degrade and degenerate to a breaking point—just as some millenarian Christians do.

In Marxism, this is when the exploitation of the working class by the rich becomes unsustainable, and the working class bands together and overthrows the oppressors. The “tribulation” is replaced by a “revolution.” Sometimes revolutionary figures, like Lenin, or Marx himself, are heralded as messiahs who accelerate the onset of the Millennium; and their rhetoric involves utterly smashing the old system such that a new world can be built. Of course, there is judgment, when the righteous workers take what’s theirs and the evil bourgeoisie are destroyed.

Even Norse mythology has an element of this, as James Hughes points out in his essay in Nick Bostrom’s book Global Catastrophic Risks. Ragnarok involves men and gods being defeated in a final, apocalyptic battle—but because that was a little bleak, they add in the idea that a new earth will arise where the survivors will live in harmony.

Judgement day is a cultural trope, too. Take the ancient Egyptians and their beliefs around the afterlife; the Lord of the underworld, Osiris, weighs the mortal’s heart against a feather. “Should the heart of the deceased prove to be heavy with wrongdoing, it would be eaten by a demon, and the hope of an afterlife vanished.”

Perhaps in the Singularity, something similar goes on. As our technology and hence our power improve, a final reckoning approaches: our hearts, as humans, will be weighed against a feather. If they prove too heavy with wrongdoing—with misguided stupidity, with arrogance and hubris, with evil—then we will fail the test, and we will destroy ourselves. But if we pass, and emerge from the Singularity and all of its threats and promises unscathed, then we will have paradise. And, like the other belief systems, there’s no room for non-believers; all of society is going to be radically altered, whether you want it to be or not, whether it benefits you or leaves you behind. A technological rapture.

It almost seems like every major development provokes this response. Nuclear weapons did, too. Either this would prove the final straw and we’d destroy ourselves, or the nuclear energy could be harnessed to build a better world. People talked at the dawn of the nuclear age about electricity that was “too cheap to meter.” The scientists who worked on the bomb often thought that with such destructive power in human hands, we’d be forced to cooperate and work together as a species.

When we see the same response over and over again to different circumstances, cropping up in different areas, whether it’s science, religion, or politics, we need to consider human biases. We like millenarian beliefs; and so when the idea of artificial intelligence outstripping human intelligence emerges, these beliefs spring up around it.

We don’t love facts. We don’t love information. We aren’t as rational as we’d like to think. We are creatures of narrative. Physicists observe the world and we weave our observations into narrative theories, stories about little billiard balls whizzing around and hitting each other, or space and time that bend and curve and expand. Historians try to make sense of an endless stream of events. We rely on stories: stories that make sense of the past, justify the present, and prepare us for the future.

And as stories go, the millenarian narrative is a brilliant and compelling one. It can lead you towards social change, as in the case of the Communists, or the Buddhist uprisings in China. It can justify your present-day suffering, if you’re in the tribulation. It gives you hope that your life is important and has meaning. It gives you a sense that things are evolving in a specific direction, according to rules—not just randomly sprawling outwards in a chaotic way. It promises that the righteous will be saved and the wrongdoers will be punished, even if there is suffering along the way. And, ultimately, a lot of the time, the millenarian narrative promises paradise.

We need to be wary of the millenarian narrative when we’re considering technological developments and the Singularity and existential risks in general. Maybe this time is different, but we’ve cried wolf many times before. There is a more likely, less appealing story. Something along the lines of: there are many possibilities, none of them are inevitable, and lots of the outcomes are less extreme than you might think—or they might take far longer than you think to arrive. On the surface, it’s not satisfying. It’s so much easier to think of things as either signaling the end of the world or the dawn of a utopia—or possibly both at once. It’s a narrative we can get behind, a good story, and maybe, a nice dream.

But dig a little below the surface, and you’ll find that the millenarian beliefs aren’t always the most promising ones, because they remove human agency from the equation. If you think that, say, the malicious use of algorithms, or the control of superintelligent AI, are serious and urgent problems that are worth solving, you can’t be wedded to a belief system that insists utopia or dystopia are inevitable. You have to believe in the shades of grey—and in your own ability to influence where we might end up. As we move into an uncertain technological future, we need to be aware of the power—and the limitations—of dreams.

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Posted in Human Robots

#432271 Your Shopping Experience Is on the Verge ...

Exponential technologies (AI, VR, 3D printing, and networks) are radically reshaping traditional retail.

E-commerce giants (Amazon, Walmart, Alibaba) are digitizing the retail industry, riding the exponential growth of computation.

Many brick-and-mortar stores have already gone bankrupt, or migrated their operations online.

Massive change is occurring in this arena.

For those “real-life stores” that survive, an evolution is taking place from a product-centric mentality to an experience-based business model by leveraging AI, VR/AR, and 3D printing.

Let’s dive in.

E-Commerce Trends
Last year, 3.8 billion people were connected online. By 2024, thanks to 5G, stratospheric and space-based satellites, we will grow to 8 billion people online, each with megabit to gigabit connection speeds.

These 4.2 billion new digital consumers will begin buying things online, a potential bonanza for the e-commerce world.

At the same time, entrepreneurs seeking to service these four-billion-plus new consumers can now skip the costly steps of procuring retail space and hiring sales clerks.

Today, thanks to global connectivity, contract production, and turnkey pack-and-ship logistics, an entrepreneur can go from an idea to building and scaling a multimillion-dollar business from anywhere in the world in record time.

And while e-commerce sales have been exploding (growing from $34 billion in Q1 2009 to $115 billion in Q3 2017), e-commerce only accounted for about 10 percent of total retail sales in 2017.

In 2016, global online sales totaled $1.8 trillion. Remarkably, this $1.8 trillion was spent by only 1.5 billion people — a mere 20 percent of Earth’s global population that year.

There’s plenty more room for digital disruption.

AI and the Retail Experience
For the business owner, AI will demonetize e-commerce operations with automated customer service, ultra-accurate supply chain modeling, marketing content generation, and advertising.

In the case of customer service, imagine an AI that is trained by every customer interaction, learns how to answer any consumer question perfectly, and offers feedback to product designers and company owners as a result.

Facebook’s handover protocol allows live customer service representatives and language-learning bots to work within the same Facebook Messenger conversation.

Taking it one step further, imagine an AI that is empathic to a consumer’s frustration, that can take any amount of abuse and come back with a smile every time. As one example, meet Ava. “Ava is a virtual customer service agent, to bring a whole new level of personalization and brand experience to that customer experience on a day-to-day basis,” says Greg Cross, CEO of Ava’s creator, an Austrian company called Soul Machines.

Predictive modeling and machine learning are also optimizing product ordering and the supply chain process. For example, Skubana, a platform for online sellers, leverages data analytics to provide entrepreneurs constant product performance feedback and maintain optimal warehouse stock levels.

Blockchain is set to follow suit in the retail space. ShipChain and Ambrosus plan to introduce transparency and trust into shipping and production, further reducing costs for entrepreneurs and consumers.

Meanwhile, for consumers, personal shopping assistants are shifting the psychology of the standard shopping experience.

Amazon’s Alexa marks an important user interface moment in this regard.

Alexa is in her infancy with voice search and vocal controls for smart homes. Already, Amazon’s Alexa users, on average, spent more on Amazon.com when purchasing than standard Amazon Prime customers — $1,700 versus $1,400.

As I’ve discussed in previous posts, the future combination of virtual reality shopping, coupled with a personalized, AI-enabled fashion advisor will make finding, selecting, and ordering products fast and painless for consumers.

But let’s take it one step further.

Imagine a future in which your personal AI shopper knows your desires better than you do. Possible? I think so. After all, our future AIs will follow us, watch us, and observe our interactions — including how long we glance at objects, our facial expressions, and much more.

In this future, shopping might be as easy as saying, “Buy me a new outfit for Saturday night’s dinner party,” followed by a surprise-and-delight moment in which the outfit that arrives is perfect.

In this future world of AI-enabled shopping, one of the most disruptive implications is that advertising is now dead.

In a world where an AI is buying my stuff, and I’m no longer in the decision loop, why would a big brand ever waste money on a Super Bowl advertisement?

The dematerialization, demonetization, and democratization of personalized shopping has only just begun.

The In-Store Experience: Experiential Retailing
In 2017, over 6,700 brick-and-mortar retail stores closed their doors, surpassing the former record year for store closures set in 2008 during the financial crisis. Regardless, business is still booming.

As shoppers seek the convenience of online shopping, brick-and-mortar stores are tapping into the power of the experience economy.

Rather than focusing on the practicality of the products they buy, consumers are instead seeking out the experience of going shopping.

The Internet of Things, artificial intelligence, and computation are exponentially improving the in-person consumer experience.

As AI dominates curated online shopping, AI and data analytics tools are also empowering real-life store owners to optimize staffing, marketing strategies, customer relationship management, and inventory logistics.

In the short term,retail store locations will serve as the next big user interface for production 3D printing (custom 3D printed clothes at the Ministry of Supply), virtual and augmented reality (DIY skills clinics), and the Internet of Things (checkout-less shopping).

In the long term,we’ll see how our desire for enhanced productivity and seamless consumption balances with our preference for enjoyable real-life consumer experiences — all of which will be driven by exponential technologies.

One thing is certain: the nominal shopping experience is on the verge of a major transformation.

Implications
The convergence of exponential technologies has already revamped how and where we shop, how we use our time, and how much we pay.

Twenty years ago, Amazon showed us how the web could offer each of us the long tail of available reading material, and since then, the world of e-commerce has exploded.

And yet we still haven’t experienced the cost savings coming our way from drone delivery, the Internet of Things, tokenized ecosystems, the impact of truly powerful AI, or even the other major applications for 3D printing and AR/VR.

Perhaps nothing will be more transformed than today’s $20 trillion retail sector.

Hold on, stay tuned, and get your AI-enabled cryptocurrency ready.

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Posted in Human Robots

#432051 What Roboticists Are Learning From Early ...

You might not have heard of Hanson Robotics, but if you’re reading this, you’ve probably seen their work. They were the company behind Sophia, the lifelike humanoid avatar that’s made dozens of high-profile media appearances. Before that, they were the company behind that strange-looking robot that seemed a bit like Asimo with Albert Einstein’s head—or maybe you saw BINA48, who was interviewed for the New York Times in 2010 and featured in Jon Ronson’s books. For the sci-fi aficionados amongst you, they even made a replica of legendary author Philip K. Dick, best remembered for having books with titles like Do Androids Dream of Electric Sheep? turned into films with titles like Blade Runner.

Hanson Robotics, in other words, with their proprietary brand of life-like humanoid robots, have been playing the same game for a while. Sometimes it can be a frustrating game to watch. Anyone who gives the robot the slightest bit of thought will realize that this is essentially a chat-bot, with all the limitations this implies. Indeed, even in that New York Times interview with BINA48, author Amy Harmon describes it as a frustrating experience—with “rare (but invariably thrilling) moments of coherence.” This sensation will be familiar to anyone who’s conversed with a chatbot that has a few clever responses.

The glossy surface belies the lack of real intelligence underneath; it seems, at first glance, like a much more advanced machine than it is. Peeling back that surface layer—at least for a Hanson robot—means you’re peeling back Frubber. This proprietary substance—short for “Flesh Rubber,” which is slightly nightmarish—is surprisingly complicated. Up to thirty motors are required just to control the face; they manipulate liquid cells in order to make the skin soft, malleable, and capable of a range of different emotional expressions.

A quick combinatorial glance at the 30+ motors suggests that there are millions of possible combinations; researchers identify 62 that they consider “human-like” in Sophia, although not everyone agrees with this assessment. Arguably, the technical expertise that went into reconstructing the range of human facial expressions far exceeds the more simplistic chat engine the robots use, although it’s the second one that allows it to inflate the punters’ expectations with a few pre-programmed questions in an interview.

Hanson Robotics’ belief is that, ultimately, a lot of how humans will eventually relate to robots is going to depend on their faces and voices, as well as on what they’re saying. “The perception of identity is so intimately bound up with the perception of the human form,” says David Hanson, company founder.

Yet anyone attempting to design a robot that won’t terrify people has to contend with the uncanny valley—that strange blend of concern and revulsion people react with when things appear to be creepily human. Between cartoonish humanoids and genuine humans lies what has often been a no-go zone in robotic aesthetics.

The uncanny valley concept originated with roboticist Masahiro Mori, who argued that roboticists should avoid trying to replicate humans exactly. Since anything that wasn’t perfect, but merely very good, would elicit an eerie feeling in humans, shirking the challenge entirely was the only way to avoid the uncanny valley. It’s probably a task made more difficult by endless streams of articles about AI taking over the world that inexplicably conflate AI with killer humanoid Terminators—which aren’t particularly likely to exist (although maybe it’s best not to push robots around too much).

The idea behind this realm of psychological horror is fairly simple, cognitively speaking.

We know how to categorize things that are unambiguously human or non-human. This is true even if they’re designed to interact with us. Consider the popularity of Aibo, Jibo, or even some robots that don’t try to resemble humans. Something that resembles a human, but isn’t quite right, is bound to evoke a fear response in the same way slightly distorted music or slightly rearranged furniture in your home will. The creature simply doesn’t fit.

You may well reject the idea of the uncanny valley entirely. David Hanson, naturally, is not a fan. In the paper Upending the Uncanny Valley, he argues that great art forms have often resembled humans, but the ultimate goal for humanoid roboticists is probably to create robots we can relate to as something closer to humans than works of art.

Meanwhile, Hanson and other scientists produce competing experiments to either demonstrate that the uncanny valley is overhyped, or to confirm it exists and probe its edges.

The classic experiment involves gradually morphing a cartoon face into a human face, via some robotic-seeming intermediaries—yet it’s in movement that the real horror of the almost-human often lies. Hanson has argued that incorporating cartoonish features may help—and, sometimes, that the uncanny valley is a generational thing which will melt away when new generations grow used to the quirks of robots. Although Hanson might dispute the severity of this effect, it’s clearly what he’s trying to avoid with each new iteration.

Hiroshi Ishiguro is the latest of the roboticists to have dived headlong into the valley.

Building on the work of pioneers like Hanson, those who study human-robot interaction are pushing at the boundaries of robotics—but also of social science. It’s usually difficult to simulate what you don’t understand, and there’s still an awful lot we don’t understand about how we interpret the constant streams of non-verbal information that flow when you interact with people in the flesh.

Ishiguro took this imitation of human forms to extreme levels. Not only did he monitor and log the physical movements people made on videotapes, but some of his robots are based on replicas of people; the Repliee series began with a ‘replicant’ of his daughter. This involved making a rubber replica—a silicone cast—of her entire body. Future experiments were focused on creating Geminoid, a replica of Ishiguro himself.

As Ishiguro aged, he realized that it would be more effective to resemble his replica through cosmetic surgery rather than by continually creating new casts of his face, each with more lines than the last. “I decided not to get old anymore,” Ishiguro said.

We love to throw around abstract concepts and ideas: humans being replaced by machines, cared for by machines, getting intimate with machines, or even merging themselves with machines. You can take an idea like that, hold it in your hand, and examine it—dispassionately, if not without interest. But there’s a gulf between thinking about it and living in a world where human-robot interaction is not a field of academic research, but a day-to-day reality.

As the scientists studying human-robot interaction develop their robots, their replicas, and their experiments, they are making some of the first forays into that world. We might all be living there someday. Understanding ourselves—decrypting the origins of empathy and love—may be the greatest challenge to face. That is, if you want to avoid the valley.

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Posted in Human Robots

#432031 Why the Rise of Self-Driving Vehicles ...

It’s been a long time coming. For years Waymo (formerly known as Google Chauffeur) has been diligently developing, driving, testing and refining its fleets of various models of self-driving cars. Now Waymo is going big. The company recently placed an order for several thousand new Chrysler Pacifica minivans and next year plans to launch driverless taxis in a number of US cities.

This deal raises one of the biggest unanswered questions about autonomous vehicles: if fleets of driverless taxis make it cheap and easy for regular people to get around, what’s going to happen to car ownership?

One popular line of thought goes as follows: as autonomous ride-hailing services become ubiquitous, people will no longer need to buy their own cars. This notion has a certain logical appeal. It makes sense to assume that as driverless taxis become widely available, most of us will eagerly sell the family car and use on-demand taxis to get to work, run errands, or pick up the kids. After all, vehicle ownership is pricey and most cars spend the vast majority of their lives parked.

Even experts believe commercial availability of autonomous vehicles will cause car sales to drop.

Market research firm KPMG estimates that by 2030, midsize car sales in the US will decline from today’s 5.4 million units sold each year to nearly half that number, a measly 2.1 million units. Another market research firm, ReThinkX, offers an even more pessimistic estimate (or optimistic, depending on your opinion of cars), predicting that autonomous vehicles will reduce consumer demand for new vehicles by a whopping 70 percent.

The reality is that the impending death of private vehicle sales is greatly exaggerated. Despite the fact that autonomous taxis will be a beneficial and widely-embraced form of urban transportation, we will witness the opposite. Most people will still prefer to own their own autonomous vehicle. In fact, the total number of units of autonomous vehicles sold each year is going to increase rather than decrease.

When people predict the demise of car ownership, they are overlooking the reality that the new autonomous automotive industry is not going to be just a re-hash of today’s car industry with driverless vehicles. Instead, the automotive industry of the future will be selling what could be considered an entirely new product: a wide variety of intelligent, self-guiding transportation robots. When cars become a widely used type of transportation robot, they will be cheap, ubiquitous, and versatile.

Several unique characteristics of autonomous vehicles will ensure that people will continue to buy their own cars.

1. Cost: Thanks to simpler electric engines and lighter auto bodies, autonomous vehicles will be cheaper to buy and maintain than today’s human-driven vehicles. Some estimates bring the price to $10K per vehicle, a stark contrast with today’s average of $30K per vehicle.

2. Personal belongings: Consumers will be able to do much more in their driverless vehicles, including work, play, and rest. This means they will want to keep more personal items in their cars.

3. Frequent upgrades: The average (human-driven) car today is owned for 10 years. As driverless cars become software-driven devices, their price/performance ratio will track to Moore’s law. Their rapid improvement will increase the appeal and frequency of new vehicle purchases.

4. Instant accessibility: In a dense urban setting, a driverless taxi is able to show up within minutes of being summoned. But not so in rural areas, where people live miles apart. For many, delay and “loss of control” over their own mobility will increase the appeal of owning their own vehicle.

5. Diversity of form and function: Autonomous vehicles will be available in a wide variety of sizes and shapes. Consumers will drive demand for custom-made, purpose-built autonomous vehicles whose form is adapted for a particular function.

Let’s explore each of these characteristics in more detail.

Autonomous vehicles will cost less for several reasons. For one, they will be powered by electric engines, which are cheaper to construct and maintain than gasoline-powered engines. Removing human drivers will also save consumers money. Autonomous vehicles will be much less likely to have accidents, hence they can be built out of lightweight, lower-cost materials and will be cheaper to insure. With the human interface no longer needed, autonomous vehicles won’t be burdened by the manufacturing costs of a complex dashboard, steering wheel, and foot pedals.

While hop-on, hop-off autonomous taxi-based mobility services may be ideal for some of the urban population, several sizeable customer segments will still want to own their own cars.

These include people who live in sparsely-populated rural areas who can’t afford to wait extended periods of time for a taxi to appear. Families with children will prefer to own their own driverless cars to house their childrens’ car seats and favorite toys and sippy cups. Another loyal car-buying segment will be die-hard gadget-hounds who will eagerly buy a sexy upgraded model every year or so, unable to resist the siren song of AI that is three times as safe, or a ride that is twice as smooth.

Finally, consider the allure of robotic diversity.

Commuters will invest in a home office on wheels, a sleek, traveling workspace resembling the first-class suite on an airplane. On the high end of the market, city-dwellers and country-dwellers alike will special-order custom-made autonomous vehicles whose shape and on-board gadgetry is adapted for a particular function or hobby. Privately-owned small businesses will buy their own autonomous delivery robot that could range in size from a knee-high, last-mile delivery pod, to a giant, long-haul shipping device.

As autonomous vehicles near commercial viability, Waymo’s procurement deal with Fiat Chrysler is just the beginning.

The exact value of this future automotive industry has yet to be defined, but research from Intel’s internal autonomous vehicle division estimates this new so-called “passenger economy” could be worth nearly $7 trillion a year. To position themselves to capture a chunk of this potential revenue, companies whose businesses used to lie in previously disparate fields such as robotics, software, ships, and entertainment (to name but a few) have begun to form a bewildering web of what they hope will be symbiotic partnerships. Car hailing and chip companies are collaborating with car rental companies, who in turn are befriending giant software firms, who are launching joint projects with all sizes of hardware companies, and so on.

Last year, car companies sold an estimated 80 million new cars worldwide. Over the course of nearly a century, car companies and their partners, global chains of suppliers and service providers, have become masters at mass-producing and maintaining sturdy and cost-effective human-driven vehicles. As autonomous vehicle technology becomes ready for mainstream use, traditional automotive companies are being forced to grapple with the painful realization that they must compete in a new playing field.

The challenge for traditional car-makers won’t be that people no longer want to own cars. Instead, the challenge will be learning to compete in a new and larger transportation industry where consumers will choose their product according to the appeal of its customized body and the quality of its intelligent software.

Melba Kurman and Hod Lipson are the authors of Driverless: Intelligent Cars and the Road Ahead and Fabricated: the New World of 3D Printing.

Image Credit: hfzimages / Shutterstock.com

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