Last month we had written about the deal between the Chinese online search giant Baidu (NASDAQ: BIDU) and the German automobile manufacturer BMW (FRA:BMW) (See Baidu Inks Strategic Research Agreements). This agreement is expected to foster joint research on driver-less cars. The ultimate goal is the development of semi-autonomous vehicles in a time-span of three years. These vehicles are expected to better integrate Baidu’s data services, such as navigation, with the automobiles. In this article we do a roundup of the new details that have emerged since the publication of our earlier report.

See our complete analysis of Baidu here

BMW Issues Statement

BMW has given an official update on the deal. It said that BMW’s autonomous vehicles that have been extensively tested in Germany will now be tried in the major cities of China. Since it requires detailed data on roads and traffic that cannot be stored in the cars, it looks to Baidu to provide these on the go through a telecommunications network. Prototypes of such vehicles will be tested in the highways of Shanghai and Beijing. Such vehicles will help overcome the presence of multi-level highways, tunnels and toll stations that have been brought on by rapid urbanization in these cities. [ ]

BMW revealed that the cars will have an electronic co-pilot system that is capable of fully taking over driving responsibilities if required. These cars are expected to hit the roads within the next two years in Beijing and Shanghai, and reduce the driving monotony of car-owners there. The project has been nick-named vision-zero to signal that there will be zero accidents with these vehicles, which are designed around a concept of accident-free mobility. [ ]

A Baidu spokesperson said the cars will assist drivers, not replace them so they should be called highly-autonomous vehicles. They collect data regarding road and traffic conditions and make autonomous decisions regarding the operation of the car. However, the spokesperson described it only as an intelligent assistant to the driver. The car can however, operate independently much the same way as a horse, he said. Whether the difference in opinions regarding level of independent operation of these cars is a gap in communication among the co-operating firms or a flaw in our understanding of the concept remains to be seen. [ ]

A Paying Customer For Baidu Maps?

Baidu had earlier bought out digital maps and navigation company RITU, giving it access to RITU’s navigation product Daodaotong. [ ] Daodaotong at one point claimed a leading 31% of China’s digital maps market share. [ ] This acquisition helped bolster Baidu’s capabilities in the navigation segment, which it had entered only in 2012. Its leading competitor post the acquisition became a company called Autonavi. Taking a longer term view and in an effort to boost market share, Baidu announced that its navigation app would be free going ahead. [ ]

Licensing its map software to BMW could open up an interesting new revenue opportunity for Baidu. This can help augment the monetization of the advances made by Baidu in mapping and navigation technology. The only other avenue for making money through maps is in helping businesses improve their sales through location based services. For instance, helping banks optimize customer reach through stream-lining their brick and mortar infrastructure. [ ] Another service that can be extended relates to directing buyers to nearby stores through customized promotional offers to potential customers in the vicinity of the store. [ ]

The Indoor Atlas Advantage

Baidu invested $10 million in mapping software maker Indoor Atlas about a month ago. Indoor Atlas helps locate the position of people and things within buildings. Indoor Atlas’ app uses magnetometers within smartphones to detect this magnetic field and use it as the basis for a map. This helps pin-point the location of the smartphone to within a circle of two meter radius. This is much more accurate and cost-effective than the wi-fi or bluetooth technology used currently to triangulate on a smartphone’s location. ((ref: 8))

Finding parking spaces, maneuvering towards exits and parallel parking in indoor parking can be challenging for people in urban areas. Incorporating Indoor Atlas’ technology can bring considerable ease to drivers in this aspect of driving. Its investment has given Baidu exclusive rights to Indoor Atlas’ technology in China. Whether they incorporate it into these driver-less cars that they are helping BMW introduce in China remains to be seen.

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