BY MARK PRESTON, FOUNDER AND CSO, STREETDRONE
With a boom in the number of companies investing in self-driving technology and ride hailing/micro-mobility services (Uber buys JUMP, Ford buys SPIN) and a wane in the appeal of private vehicle ownership, new opportunities are prompting a vast number of companies to fiercely contest untapped market share. StreetDrone’s founder Mark Preston, examines the future mobility market, and who is likely to come out on top.
“Sitting here on my BA flight on the way back from a weekend away, I was pondering a comment made by a colleague recently. They said that it’s not going to be the traditional OEMs who will survive the upcoming mobility revolution. Some are already refining their focus to become part of the wider, future mobility ecosystem; Ford acquired SPIN as part of their “Smart Mobility” division whilst GM has teamed up with Lyft to penetrate the ridesharing market. However, just look at their previous attempts to move down the value chain into other areas as diverse as mapping, CAD systems, KwikFit, rental cars and others – none of them are famous for it!
Some say that the real value creators in the future of mobility will be Google, Netflix and others, who can provide valuable services while we are sat in our autonomous vehicles. With an average of 1.1 hours per day spent travelling across Europe, that’s a lot of eyeballs! However, with no prior experience of managing the vast physical infrastructure required, it can be argued that the tech giants are relatively unsuited to the challenge.
The other areas that Google, CityMapper and Apple Maps control is the user interface for most of our journey planning: more and more this seems like one of the obvious entry points for customers looking for ride hailing and other mobility solutions. There are parallels in the travel business where aggregators such as Expedia began to join demand and supply using the digitisation of the third “Industrial Age”.
Who else could compete?
Airlines is the first thought. They are used to high capitally intense businesses with fleets of planes spread out around the world, servicing and tracking all manner of spares, maintenance contracts, high end safety systems and processes. These are all things that need to be considered for running high volume fleets of self-driving vehicles. For quantification, each fleet of could be equivalent to around 50,000 vehicles based on a typical cab infrastructure across the UK (Uber has circa 25,000 vehicles in London). Continuing this estimation gives approximately £3 billion of assets under management: sounds doable for the likes of EasyJet (£2.8 billion assets in 2015) who already have a car hire infrastructure, EasyCar under their belt.
The self-driving service marketplace may also take a similar shape to the airline industry. It is likely that there will be number of competitors in each country at the beginning, with eventual consolidation. In the long term, this may lead to international joint ventures maintaining brands in their individual regions, such as the British Airways and Iberia merger which created Europe’s 3rd largest airline. In addition, airlines are well practised in the world online bookings, aggregators, application interfaces and fiercely competitive pricing; of which we are likely to see within the self-driving vehicle space.
Another aspect relates to the commoditisation of the vehicles themselves. It’s not often we choose an airline based on which plane it flies, more likely the cost, service levels and space: a total experience. This is likely to be similar for self-driving vehicles, in that we may choose the relative level of comfort we desire, both in terms of class of seats, and the carrier itself rather than making decisions based on specific vehicles. For long journeys, we might choose our national flag carrier and a cheaper budget airline for day to day travel of short distances of up to around 4 hours (though we might see a different threshold time for ground transport based on the Marchetti constant that says that all throughout time, we have generally limited ourselves to 1 hour of travel per day).
Miles and Minutes
Whilst airlines look well placed to create value, can we afford to neglect the telecoms providers? StreetDrone has always said that Mobility-as-a-Service would result in “devices” on a network, and bundles of miles and minutes much like current mobile phone offerings which are starting to become available with Whim and others in test areas the begin with. Perhaps, therefore, the current telecoms operators are well suited to dealing with the complexities of varying user demand across multiple markets. However, they could easily fall into the same category as Netflix and Google, lacking the practical experience of dealing with high capital intensity, safety and maintenance schedules associated with mass transportation. In addition, customer relationships make take vastly different forms – whilst a two week wait for an internet connection installation might be acceptable, could the same be said for transport to an important business meeting?
The market opportunity, fallibility of other competitors and compatibility with their current strengths means that the door may lie open for airlines to enter this rapidly evolving marketplace. The scenario at present lends itself to an airline spinning off its processes and systems, travel apps and customer service centres to start a mobility-as-a-service capability centred around a fleet of autonomous vehicles. Perhaps it won’t be too long before I’ll be hopping off my BA flight, straight into an EasyAV.
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