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Today's car makers are like Nokia — right before it was crushed by Apple, VC Marc Andreessen says

  • Andreessen's comments come amid a massive shakeup at Ford, where a new CEO, a self-driving-car expert, was suddenly installed on Monday.
  • Andreessen says carmakers have seen software as an add-on. "Our thesis is, no, ... (t)he entire experience of being in the car will be defined by software."
  • "Car CEOs, the new generation, they're all working on this. ... But literally, the way they frame that question is, 'We, existing car company, do not want to be the Nokia of cars.'"

Microsoft came to dominate the computer industry not through desktops, but through its moneymaker Windows. Then Apple became the world's most valuable public company thanks not only to mobile phones, but also to the App Store.

Now, a company like Tesla could be poised to do the same thing to cars, technology investor Marc Andreessen of Andreessen Horowitz told Bloomberg View columnist Barry Ritholtz.

"There's no existing legacy car company in the world today that would say that's the case. They would all say that they are best at making cars, and that the software is a component that goes in the cars," Andreessen said. "Our thesis is, no, what's actually going to happen is the value will flow to the software layer. The entire experience of being in the car will be defined by software."

Andreessen's comments come amid a massive shakeup at Ford, where a new CEO, a self-driving-car expert, was suddenly installed on Monday. The high-profile shuffle, days after Andreessen's interview, highlighted the rise of self-driving vehicles — which rely not only on sensors but also on algorithms that collect data and make predictions.

"As you know, in phones you used to have these companies like Nokia, Rim and others that made phones and used software as just this sort of add-on to the hardware," Andreessen said. "Car CEOs, the new generation, they're all working on this. They're spending a lot of time out here [in Silicon Valley], and they're spending a lot of time with us. But literally, the way they frame that question is, 'We, existing car company, do not want to be the Nokia of cars.'"

Andreessen is famous for his thesis that "software is eating the world," predicting that every product or service that can become software will become software. By extension, Andreessen said that manufacturers of hardware that don't make accompanying software — like cars — will no longer get the majority of the profit from the products in time.

His firm is an investor in self-driving car companies like Comma.ai and DeepMap.

"Obviously there's a lot more software in cars than there was 10 or 20 years ago," Andreessen said. "Everybody knows that. It's a step further to say that in 10 years, the winning car company will be the car company that makes the best software."

Andreessen pointed to Apple's hallmark model of vertical integration: By controlling both the hardware and software production, Apple prides itself on assembly secure products that work smoothly together. That's in contrast to the horizontal Microsoft model, where software like Windows, Outlook and Word are available in many different versions on many different types of machines.

Either model could prevail and dictate the future of the automobile industry, Andreessen said. Right now, Tesla's Apple-like approach has the lead, although the company faces increasing competition from a flood of new companies in Silicon Valley, Andreessen said.

"If you squint at Tesla one way, it looks like Apple circa 2007, 2008 — where they've released the iPhone, they just haven't sold many yet. But they're going to sell a ton," Andreessen said. "Another way of looking at Tesla is they're Apple in 1992 with the MacIntosh. Yes, their integrated hardware-software is good, but other people are going to come up with software as well. ... And I think that's the big question on Tesla — which way does it tip?"

The full podcast — which includes tips on pitching Andreessen — is at Bloomberg.com.

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