Yesterday’s news that the EU is to mandate Driver Monitoring Systems (DMS) by 2020 confirms my view that Seeing Machines is set to be the next Mobileye. (Something that respected FinnCap analyst Lorne Daniel first told us years ago).
People are waiting for Euro NCAP to specify that camera-based systems are its preferred option for DMS but I’m confident that this will be the case. (They’ve been ahead of the curve all along).
I’m particularly confident because Semicast’s Lead Analyst Colin Barnden recently explained to me that there are 4 types of DMS:
1. Steering angle sensor (coffee cup)
2. Embedded capacitive touch sensor (steering wheel)
3. Time-of-flight (likely DOA)
4. Camera-based (Seeing Machines, Smart Eye etc.)
This was his conclusion: “The first two are very cheap but not particularly reliable. ToF fits in between and is unlikely to meet any OEMs needs. Camera-based is what I believe Euro NCAP will specify.”
Of course, the decision hasn’t been announced yet by Euro NCAP.
Market opportunity
While we await confirmation, there is also clearly a debate about the size of the market opportunity for Seeing Machines following the announcement.
At one extreme, ABI Research previously stated 65m by 2020.
At the other end, John-Marc Bunce, analyst at house broker Cenkos yesterday doubled his estimate saying: “Our long-term forecasts for Seeing Machines previously envisaged 4m vehicles globally in the financial year ended June 2022 rising to 15m by 2027 and we believe this EU mandate could easily double our expectations.”
Now Colin Barnden on May 16 (before the EU announcement) estimated 20m units by 2021. Today I asked him for his latest view. Here it is. (What follows below is all him, unedited by me).
“I await further details from Euro NCAP before changing the forecast, so a worldwide market for camera-based DMS of about 20 million units in 2021 still stands. That includes just passenger cars and light trucks, so there will be further volume in busses, coaches and heavy trucks too.
The broad effect of yesterday’s announcement is to move all of Europe to “Level 2” on the SAE automation taxonomy as of 1 September 2022, with both longitudinal and lateral correction provided by autonomous emergency braking (AEB) and lane keep assistance systems (LKAS). This is a step change in vehicle safety and the EC is to be applauded for its decisiveness. I expect the EC would have been influenced in its decision making by recent events in the US, with some members of the tech community moving too fast and breaking things, in their efforts to be first to deploy “Level 5” driverless vehicles. In comparison, the EC has gone for the simple and sensible approach of just making humans drivers into better drivers, by mandating systems which are proven, easy to understand and cost effective for immediate mass-market deployment.
Mobileye
I note your post about Mobileye earlier this week. If you were to take a market size of 20 million units for camera-based DMS and apply your other estimates, you would have a revenue for Seeing Machines just in automotive of about USD 375 million in 2021. If you compare that to Mobileye’s revenues of about USD 360 million for 2016 then some interesting conclusions can be drawn. If your reader’s are interested, the full Mobileye 20-F filed with the US SEC can be viewed at:
https://www.sec.gov/Archives/edgar/data/1607310/000157104917001997/t1700397_20f.htm
The part of the Seeing Machines business model which seems to me to be completely overlooked by the market is the recurring revenues provided by the Safety-as-a-Service (SaaS) component of the Guardian business unit. It won’t take much for SM’s revenues and profits to pass those of Mobileye on a three-to-four year horizon in my opinion. Mobileye were of course bought by Intel in 2017 for USD 15.3 billion.”