Alphabet's Waymo just explained how it can make money: selling its self-driving car sensors to partners

  • Waymo will begin to sell its Laser Bear Honeycomb 3D perimeter to partners.
  • This is one way that Waymo can help generate revenue outside of ride-sharing.
  • Waymo is valued at roughly $70 billion, according to Morgan Stanley.
Students use the Waymo driverless vehicles to get to school.
Source: Waymo
Students use the Waymo driverless vehicles to get to school.

Alphabet's autonomous driving unit, Waymo, announced Wednesday that it will begin to sell its self-driving car sensors to third parties interested in using the technology for other purposes outside of self-driving cars.

Waymo's LIDAR sensor, which helps self-driving cars "see" the world around them, is called Laser Bear Honeycomb 3D perimeter. The company said the sensors can be used in fields like robotics. They're available to buy now.

Waymo isn't licensing this technology to businesses that could cannibalize its own attempts in the self-driving industry. It sees LIDAR, which is an acronym for light detection and ranging, as a means to "spur the growth of applications outside of self-driving cars," while also serving as a revenue source.

It's one example of how Waymo will generate revenue for Alphabet outside of its small commercial ride-sharing business, which is called Waymo One and launched in Phoenix and surrounding areas in December.

Last year, Morgan Stanley said Waymo could be worth as much as $70 billion, a staggering figure for a unit that's still included in Alphabet's "other bets" category and hasn't disclosed any revenue figures.

Morgan Stanley isn't the only firm that's bullish on Waymo's prospects. UBS, which values Waymo anywhere from $45 billion to $135 billion, said Alphabet's self-driving car unit could generate as much as $114 billion in revenue by 2030 through ride-sharing services that allow customers to book a ride in one of its self-driving cars.

"Our custom LIDARs have been instrumental in making Waymo the first company in the world to put fully self-driving cars on public roads," Simon Verghese, head of Waymo's LIDAR team, said in a company blog post on Wednesday. "Now, we are making these sensors available to companies outside of self-driving — beginning with robotics, security, agricultural technology, and more — so they can achieve their own technological breakthroughs. Today, we're announcing that one of our 3D LIDAR sensors, which we call Laser Bear Honeycomb, is available to select partners."

Verghese said this is the sensor that Waymo places around the bumper of its autonomous cars. The sensors send out a pulse of light that "can see up to four different objects in the laser beams' line of sight." Simply put: LIDAR helps the cars avoid crashing in to things.

"We can scale our autonomous technology faster, making each sensor more affordable through economies of scale," Verghese said.