Baidu's "Android" play may end up more like Nokia
*This post has been updated on July 25th at 9:30 am to include a response from Baidu.
Baidu, the search juggernaut often called "the Google of China," with a 76% share of the country's 700 million Internet users, is pushing further to mimic the U.S. tech giant, styling a new open-source self-driving program as "the Android of autonomous cars."
But experts are skeptical of "Apollo," as Baidu calls the program. They sense desperation from a self-driving late-comer hunting for a big break in a significant future industry. "I see it more as a Hail Mary pass" than a threat to industry leaders like Alphabet's Waymo and Tesla, Navigant analyst Sam Abuelsamid tells Axios.
Why it matters: Baidu's play — even if ultra-ambitious — reflects the scale of the global race to transform transportation, and is a shot over the bow of leaders of the nascent industry. China and its tech giants are highly unlikely to stand by while U.S., German and Japanese companies seize the high ground in a new self-driving age.
If self-driving becomes as widespread as analysts forecast, it will have geopolitical implications, too: In the same way as the U.S. has set the rules for the Internet and the smart phone, the country that headquarters the dominant self-driving technology would reap enormous economic and strategic advantage.
The background: When Baidu launched Apollo on July 5, the conventional wisdom was that it was being pushed as a national champion by the Chinese government, since no single company in the country's highly fractured auto sector had the same heft to launch such a program.
And, seen in this light, the Android strategy seems apt. Android, after all, enabled Google — the Alphabet subsidiary — to leverage the collective power of developers, hardware makers and its own expertise to quickly overtake incumbent Apple in market share for smartphone technology. In fact Baidu has company: Autoware, an open-sourced self-driving program for urban navigation, was launched last year.
But history doesn't necessarily repeat or rhyme: "The Android analogy is ironic," says Raj Rajkumar, professor of electrical and computer engineering at Carnegie Mellon University. "Baidu wants to use the Android strategy to compete against" Google sister company Waymo. But, if the Android strategy is so shrewd, Rajkumar says, why hasn't Alphabet repeated it to again capture the inside lane?
At this stage, Apollo looks comparatively primitive: It's difficult to exactly judge Baidu's technology, as, like most of its rivals, it jealously guards its data. But its few public demonstrations have impressed seemingly no outsider. A China-based analyst who requested anonymity because he's not authorized to speak with reporters said that in Baidu's July 5 demonstration of Apollo in Beijing, its car showed no ability to recognize and avoid foreign objects, a hurdle that American rivals crossed long ago.
And it's not really open-source: Baidu will give much of its software away, but Skymind's Chris Nicholson tells Axios that it will maintain control of the code and hide aspects of it from users. "That actually has significant repercussions, both for the quality of the code that will be hidden (it will probably make it worse), and the security of the software that will be embedded in vehicles," he said in an exchange of emails.
Nicholson went on: "Baidu's search engine is actually not that great. So do we want 'not that great' software steering our cars? Also, do we want code with possible backdoors embedded in all our vehicles?"
Ultimately, is Baidu's against-the-odds gamble worth doing? Bhavtosh Vajpayee, an analyst with Sanford Bernstein, writes that Baidu is already spending a concerning amount of money on "moonshot investments," with AI research alone taking half its profits. And ultimately, it lacks the same resources as Alphabet: On Thursday, analysts expect Baidu to report about $503 million in profit for the second quarter; Alphabet, in comparison, yesterday reported $3.5 billion in quarterly profit, even after accounting for a $2.7 billion fine from Europe.
*Baidu provided the following emailed response to Axios:
"As one of the most important applications of Artificial Intelligence, autonomous driving is going to change our lives profoundly. Apollo's open source platform will allow us to gradually provide robust technologies and the highest quality data to accelerate the pace of innovation toward fully autonomous driving. We have been working with multiple partners on autonomous driving since the very beginning, and the continued momentum around the Apollo project is an indication of our shared commitment to driving this technology forward. It's an exciting time for the artificial intelligence community, and we look forward to the many breakthroughs we will accomplish over the next several years in the autonomous driving industry and beyond."