June 06, 2007

Is Toyota the Microsoft of Cars?

Today it is being reported that Honda is dropping the Accord hybrid.

I don't think anybody disputes that hybrids are a growing segment of the car business. But most people believe that hybrids will not take over. The fact is that hybirds appear too complicated and costly to be worth the effort in real economic terms: two engines will always be more expensive than one. So hybrids are being sold as a "feel good" green product - something that you would buy as a second or third car. The Prius is a fashion statement that you can drive to Whole Foods, while chatting on your iPhone.

But for an hard-nosed engineer, hybrids are expensive, ugly adapters. They are destined to fall by the wayside....

Hybrids are Like Windows

With two engines and a glued-together powertrain, hybrids are neither cheap nor elegant.

And so it seems clear that hybrid cars are just a pit stop, a transitional blip, on the way to future simpler ways of achieving fuel efficiency such as E85, batteries, or fuel cells. Hybrids are too ugly to be a permanent solution.

Or maybe not?

Back in the 1980's, Microsoft was the only company to bet that consumers would tote around "personal computers" with a complex operating system that could work on a variety of different hardware. Microsoft's bet on separate software implied exposing a tremendously intrictate engineering architecture, a hodgepodge of installable drivers, ugly APIs for programmers, and visible complexity for the consumer. An openly adaptable OS is ugly. It was the wrong engineering choice for consumers, and nobody at Apple, IBM, or other personal computer makers made the same bet. Everybody else bet on their own elegant, reliable, brilliant hardware designs.

Yet of course Microsoft was right. What computer users in the 80's and 90's needed was not one specific piece of hardware, but a universal software adapter that allowed consumers to deal with the torrent of advancing hardware technologies chasing Moore's law. Because of their software adaptability, inelegant Microsoft computers were always cheaper, and always had newer components, than competitive solutions that were tied to specific hardware.

Destination: Fuel Chaos?

Today, the fuel world is on the brink of change. But how it is changing is uncertain. Not only is the price of gasoline rising; so is the price of electricity, biofuel, solar cells, everything. Energy generation technology, energy storage technology, energy transmission technology - it is all in flux. New industries around alternative powertrains are growing up. Carbon regulation is on the horizon, with unknown ramifications for various forms of energy.

Maybe the definining characteristic for automotive power in the next decade will not be a decisive switch to a specific state of affairs, but instead a long period of uncertain prices and a diversity of competing alternatives. In a world of constant change, who wins? The ugly adapter.

In a world of change, the car that everybody wants will be like Windows. We will want a car that can charge for free under the Solar Panels at work, run on E85 in the City, and still go with Unleaded when in West Virginia. That kind of mishmosh usage is only possible with an ugly adapter. A hybrid car.

Toyota, rightly or wrongly, is the only company claiming that it will be as cheap to build a hybrid as it is to build a conventional car. It is a visionary idea but seems probably untrue, like when Microsoft talks about TCO costs.

But maybe, if the world is changing, the ugly adapter will win anyway.

Is Toyota the Microsoft of the car business?

Posted by David at June 6, 2007 08:15 AM

I own a hybrid (Civic) and will never again buy a conventional car. In 4+ years and 45000 miles, the only maintenance cost I've incurred, beyond normal service, has been to replace a failed O2 sensor, a part that is present on all vehicles. So in my experience, hybrids are not "too complicated and costly".

If you drive a Prius or Civic Hybrid for 5-10 years, you will likely get your money back. If you like to change cars sooner than that, then maybe a hybrid is not cost effective for you. But I like to keep my cars for a while. I also like to support green technologies and innovation in general.

Posted by: anon at July 22, 2007 11:14 AM
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