Cruise, GM and Microsoft combine to commercialise AVs

The companies will combine software and hardware engineering, cloud computing, manufacturing and 'partner ecosystem' to "transform transportation to create a safer, cleaner and more accessible world for everyone", they said in a joint statement.

"Our mission to bring safer, better and more affordable transportation to everyone isn't just a tech race – it's also a trust race," said Cruise CEO Dan Ammann. "Microsoft, as the gold standard in the trustworthy democratisation of technology, will be a force multiplier for us as we commercialise our fleet of self driving, all electric, shared vehicles."

To unlock the potential of cloud computing for self-driving vehicles, Cruise will leverage Azure, Microsoft's cloud and edge computing platform, to commercialise its autonomous vehicle products at scale. Microsoft, as Cruise's preferred cloud provider, will also, in turn, tap into Cruise's deep industry expertise to enhance its customer-driven product innovation and serve transport companies worldwide through continued investment in Azure.

Microsoft will join General Motors, Honda and institutional investors in a combined new equity investment of around US$2bn in Cruise, bringing the post-money valuation of Cruise to $30bn.

"Advances in digital technology are redefining every aspect of our work and life, including how we move people and goods," said Satya Nadella, CEO, Microsoft. "As Cruise and GM's preferred cloud, we will apply the power of Azure to help them scale and make autonomous transportation mainstream."

GM chairman and CEO Mary Barra said: "Microsoft will help us accelerate the commercialisation of Cruise's all electric, self-driving vehicles and help GM realise even more benefits from cloud computing as we launch 30 new electric vehicles globally by 2025 and create new businesses and services to drive growth."

GM also will work with Microsoft as its preferred public cloud provider to accelerate digitisation, including collaboration, storage, artificial intelligence and machine learning capabilities. GM will explore opportunities with Microsoft to streamline operations across digital supply chains, foster productivity and bring new mobility services to customers faster.

Cruise is estimated to have a valuation of $30 billion – a significant increase over the $19 billion valuation it earned in 2019 – which is impressive considering the company still has no paying customers.

This apparent disparity between valuation and customer base was addressed in a series of Tweets in January by Cruise co-founder and president, Kyle Vogt. In the thread, he opens by stating "The vanity metric: $30 billion post-money valuation…The real metric: 0 million customers…Wait… what?". He then explains that developing the "Tech to [create AVs] is hard. It's not just AI, but realtime, safety-critical AI…[along with] manufacturing, industrializing new tech, and rollout of fleets. Few companies can acquire or already possess the critical mass of talent, capital, tech, and expertise to pull this off."

Vogt, continuing, says "Even fewer [companies] will achieve escape velocity; most will end up being worth nothing…A handful of front-runner AV companies that look most likely to win are attracting substantially all of the best human capital and a huge chunk of the financial capital…That is how a company without millions of customers can be valued at $30 billion".

With this investment, along with the addition of Microsoft as a technical partner, Cruise is confidently predicting it will be one of the few victorious companies to emerge into the commercial autonomous vehicles space.

In other words, Vogt believes that the extremely high requirements for finance, infrastructure and R&D experience demanded for AV development mean only the strongest companies can survive the race to commercialise AV technology. With this investment, along with the addition of Microsoft as a technical partner, Cruise is confidently predicting it will be one of the few victorious companies to emerge into the commercial autonomous vehicles space.

The addition of Microsoft is significant for a number of reasons. It is an established tech giant with enormous financial resources at its disposal – investment power that Cruise may need to call on in the future as it races with rivals including Waymo, Baidu and Aurora to develop the technology to power AVs. In addition, Microsoft is at the cutting edge of hardware and software R&D – capabilities that dovetail neatly with the difficult technical challenge Cruise is trying to solve. This is especially relevant for edge computing – a critical IoT technology that sees some data processing handled by the AV itself before that data is relayed back to a central hub for machine learning analysis.

Finally, Cruise is generally considered to be the second-placed AV developer behind Waymo – which has probably already surpassed the $30 billion valuation it earned back in 2019. Waymo's majority shareholder is Google's parent company Alphabet, a fierce rival to Microsoft in the tech landscape. This adds an extra dimension to the race between Cruise and Waymo, now that each has secured the financial and technological backing of a tech giant.

Not everyone is convinced by Cruise's $30 billion valuation, however. Dr Richard Windsor of research group Radio Free Mobile notes that some metrics indicate that mid-field challengers in the AV field are beginning to catch up with the leading companies in the race to develop AVs. As a result, the lead enjoyed by Cruise and Waymo may be less significant than stated – this could lead to a situation where more AV companies survive to commercialisation, leading to greater competition for the likes of Cruise and Waymo.

In addition, Dr Windsor notes that the proliferation of AVs may lead to fewer total vehicles on the road thanks to greater utilisation. This would reduce the overall number of potential vehicle sales these companies could make compared with today's vehicle market, again giving reason to adjust the potential earnings each could make in the future. Windsor notes that "hype, speculation and fear of missing out" are the current driving forces behind the valuations assigned to Cruise and Waymo and that their true market value can only be assessed once both firms commercialise their AV offerings.

Time will tell whether the lofty valuations placed on the likes of Cruise will be justified. If the company can bring the cost-per-mile of its autonomous commercial services down below those of human-driven vehicles, then the potential number of addressable markets including ride hailing, food and parcel delivery, or freight logistics could see it become a highly lucrative player. If, however, the technology never fulfils its promised goals, or the field of competitor companies proves more resilient than expected, both Cruise and Waymo may have a hard time living up to the monetary valuations placed on them.

When looking at the new Muster 2.0 drill process in the context of Royal Caribbean’s digital transformation, it is a natural development for a company striving to reduce passenger friction on board.

“The innovative programme is the first of its kind and reimagines a process originally designed for larger groups of people into a faster, more personal approach that encourages higher levels of safety,” says Royal Caribbean’s vice president of sales Ben Bouldin for Europe Middle East and Africa.

Over the last few years reducing friction has been the focus of Royal Caribbean’s digital department and the goal of the Royal app, which, among other features, allows guests to avoid queues by finding out information and booking dinner tables, activities, excursions and shows online.

In 2018, at the launch of Symphony of the Seas, Royal Caribbean’s senior vice president of digital Jay Schneider explained to Future Cruise that building guest products that “get people out of lines and let people enjoy their vacation first and foremost” has been one of his main missions.

Recently he said that: “Muster 2.0 represents a natural extension of our mission to improve our guests’ vacation experiences by removing points of friction.”

Schneider and Nick Weir, the senior vice president of entertainment at Royal Caribbean were instrumental to the development of Muster 2.0. Weir is behind some of the most original and innovative entertainment experiences guests can have at sea and has successfully mixed and transitioned formats and blended technology into traditional structures, such as turning an on-board ice rink into laser tag, back again into an ice show with synchronised drones and moving image effects such as those that transform the ice into an emotive Arctic whale scene.

“The safety drill has always put a pause on the cruise experience, and I felt like it could be more efficient,” explains Nick. When he was a cruise director he explains how he was responsible for the welcome party as well as drill announcements which always brought a halt to the fun as guests were starting to enjoy themselves.

“I happened to be outside on one hot, sweaty day during the drill, and I thought why not put it all on a device so it can be done individually and monitored? Technology naturally played a big part, location services on smartphones is essential, and a big team at Royal Caribbean came together to make it happen.”