Data Is Big. But How Do You Monetize It?
The state of Washington wants to start charging sales tax on personal data, and businesses are fighting it tooth and nail. You can bet if one state wins, then sooner or later we’ll have 49 other taxes and all heck will break loose.
Suddenly, everyone’s attention is focused on data. Intel just spent $15.32 billion on Mobileye. A key premise of the deal is monetizing the data created and compiled by self-driving cars. I wish they would have called us first. We’ve been tracking and analyzing the business of data and information for almost 20 years. Shoot, we were there before it was cool, and the tech gang didn’t know what data was nor did they care about it. Now, according to McKinsey, the self-driving car is going to bring $450-$750 billion annually on new applications, such as shopping inside cars or vehicles as entertainment centers. Although, most of that “revenue” isn’t going to come from data, it’s going to come from commerce, car rental fees, or whatever business models drive the industry.
Morgan Stanley says, “Tech firms are hunting for ever more data. Miles = data.” Tech firms are notorious for paying billions of dollars for things that get thrown away or written off. Data today is only about a $150-billion-dollar industry, with most of that coming from business applications. IoT will be important, and there will be tons of data talking to tons of data and machines talking to machines.
Monetizing that data is a whole other kettle of fish, and I’m not sure anyone could recommend they pay $15 billion on the premise of monetizing its data. The biggest data companies are in the $2–4 billion range in annual turnover. They are focused on big industries, big verticals, and big use cases such as those we wrote about in our earlier blog.
I have no doubt the self-driving car is important. One of our clients said that in five years there will be 20,000 data streams off a modern jet, up from 5,000 today. Data is big, but what about monetizing it? There has to be enough money to go around. In the more than 20 years of tracking and analyzing this industry, the data dollars come from relatively fixed budgets. There are new pockets of money sometimes, but most often, they come from someone else’s market share loss. So, Intel — call us next time. Our analysts know data monetization like the back of their hand. We can keep you from making bad decisions and help support great ones. Most of all, we know where the data dollars are buried and can help you find them.
Mobileye reportedly has 80% of the advanced driver assistance systems that can apply brakes or keep a car in its lane. We’re not sure what data is going to come off of that, but they say it’s a start.
Until things like data ownership, who has rights to data and how it can be used, are clear, this is a heck of a big bet by Intel, and $15 billion is a big chunk of change. If I were a stock holder, I’m not sure I’d be too happy right now. No matter what, that’s a lot of data to pay back … but the ibankers got the gold. Who says there isn’t gold in them thar data hills?
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