The Future of Business is Technological (part 2).

Almost every science fiction story or movie involves self-driving cars. This technology is now a reality, with “autonomous vehicles” proven safe and legalized in many states. But beyond simply freeing up time, self-driving cars have enormous implications for business.

Of course, the automotive industry will be impacted. Self-driving cars only increase the attractiveness of ZipCar and other car-sharing services (UT Arlington has “Connect by Hertz,” a similar car-sharing service on campus). Previously, these services suffered because when a customer needed a car they needed to get themselves to where the car was. But with self-driving cars, the car can come to you. This will greatly increase the attractiveness of car-sharing services, and might even reduce the demand for cars overall.

Beyond the automotive industry, self-driving cars will have enormous implications for other areas of business. For example, when cars can park themselves, and come when you call them (think Batman calling the Batmobile), the need for convenient and close-by parking will reduce. Real estate and economic development will be significantly changed.

Other things to consider with this new technology are changes to the way auto insurance policies are written and enforced, how traffic and fuel is regulated for these driverless vehicles, and consumer culture of ownership versus renting. When considering consumer behavior, will the product be slow to catch on, with early adopters and experts first and gradually adopted by mass consumers, or will there be some economic, convenience or status incentive to make the product desirable by all consumers?

These are the issues being discussed and researched in the College of Business at UT Arlington. Marketing associate professor Zhiyong Yang, Ph.D., recently published a paper in the “Journal of Marketing” that explores consumer adoption of new products, and the independent and interdependent influences that affect the adoption of innovation. His findings demonstrate that new product adoption is driven by the perceived fit between the product’s newness level and the optimal level of distinctiveness sought by consumers.

“Transportation and real estate go hand in hand,” says Steve Isbell, lecturer in the Finance and Real Estate Department. “As for how real estate has been impacted by the automobile in general, one need only track suburban development alongside the popularity of the automobile. Beyond that, the interstate highway system also played a major role in real estate development.”

Economics Professor Roger Meiners notes that driverless cars will mean greater productivity, as people can read, send text messages, and complete multiple tasks while riding. The vehicles will also be a boon for elderly people who will have increased mobility to go shopping, go to the doctor, and visit family and friends. “Driverless cars hold multiple promises,” he says. “There will be fewer injuries and deaths from accidents, as almost all are caused by human error. That will mean lower insurance premiums for auto insurance, less repair work and, more importantly, fewer trips to the emergency room.”

Meiners also states that shared cars should become much more common with the advent of driverless cars, as they can be called to come when needed. “Cars are costly and sit unused the vast majority of the time (while declining in value). Driverless cars can go around and pick up many people during the day, making the use of taxis and mass transit less attractive with such door-to-door service available.”

He predicts that the landscape will change significantly because fewer total vehicles will be needed, lessening the need as well for road expansions and parking lots. It’s possible that people who live in urban areas will not own cars, and instead use a shared driverless vehicle when they need to go somewhere.

What other aspects of business will be touched by new technology such as self-driving cars? How will your industry adapt to and integrate these technologies? I welcome your comments and feedback below!

FURTHER INSIGHT:

“With Autopilot in Slow Traffic, Mercedes Steps Toward Driverless Cars” by Dorothee Tschampa
http://www.businessweek.com/articles/2013-09-05/with-autopilot-in-slow-traffic-mercedes-steps-toward-driverless-cars

“Self-Driving Cars for Testing Are Supported by U.S.” By Claire Cain Miller and Matthew L. Wald
http://www.nytimes.com/2013/05/31/technology/self-driving-cars-for-testing-are-supported-by-us.html?hp&_r=0

“At High Speed, on the Road to a Driverless Future” By John Markoff
http://www.nytimes.com/2013/05/28/science/on-the-road-in-mobileyes-self-driving-car.html?_r=0&pagewanted=all

“Student’s self-driving car tech wins Intel science fair” by John Roach
http://www.nbcnews.com/technology/students-self-driving-car-tech-wins-intel-science-fair-1C9977186

Driverless Car HQ
http://www.driverlesscarhq.com/

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