Category Archives: mobile

Why Apple has to make inroads in the autonomous self-driving car space, and fast.

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Autonomous vehicles; not wearables will be the new mobile platform.

Autonomous self-driving vehicles (AVs) will be the new mobile platform, on top of which a host of new products and experiences will be developed. Like Apple’s iOS and Google’s Android mobile operating systems, on top of which multi-billion dollar iTunes and mobile advertising businesses have been built, connected autonomous vehicles will enable a multitude of new products and experiences that the consumer will be purchase and/or consume during the ride.

Ride-monetization opportunities are valuable competitive advantages to a robot taxi platform.

As we have learned first-hand in the ride-hailing business, any ability a ride-hailing platform possesses to keep ride fare prices low is a strong competitive advantage. The reason for this is simple. Consumer demand for a given platform’s rides is highly sensitive to ride prices/fares it charges. That is, the platform that offers the lowest prices and wait-times will enjoy the most demand. The ability to generate revenues on AV rides — on top of the ride fare — provides extra margin and room for the robot taxi service provider to lower ride fare prices and still be profitable.

Waymo, Apple, Amazon and Uber possess the best ride-monetization opportunities.

Google’s Waymo is the AV team arguably best positioned to create in-car ride-monetization experiences. Nest, Google Express, Youtube, and of course the digital ad business provide a multitude of opportunities for Waymo and its parent. Perhaps the next best-positioned providers of ride-monetization experiences are Apple and Amazon.

Apple needs to move fast in the autonomous vehicle space.

The smartphone will continue being a key tool in our lives, but Apple must play a role in this future mobile platform otherwise it risks massive declines in its enterprise value. Apple may be late to AV game, but there is hope for Apple to win. With its suite of entertainment, content, and home-system products, Apple is one of the best positioned to create ride-monetization solutions. Seamless cross-product integrations and experiences are what Apple does best. The autonomous vehicle will be just another one of the products with which Apple products will need to integrate. If Apple doesn’t win a major stake in the AV future, Google’s Android — through its integrations into the autonomous vehicle ride experience — could create a better-integrated mobile OS and capture not only Apple’s share of that market but also share of adjacent markets in hardware and content.

As it stands now, Apple has made its AV strategy clear, and it will partner with car manufacturers to provide the autonomous hardware/software technology needed to make a car drive from point A to point B. The challenge will be for it to get the technology working fast enough and to set up the manufacturing partnerships before other teams beat them to it, and there aren’t many car manufacturers left who haven’t already partnered with an autonomous vehicle technology team.

Very strong network effects will be at the core of the autonomous vehicle revolution, which will hinge largely on robot taxi platforms instead of direct-to-consumer vehicle sales. The first teams to get a working product to market will have significant advantage over late bloomers, who will struggle to profitably create a product that offers value in excess of the significant switching costs that the would-be customers would incur to leave its existing AV tech provider.

 

Does it make sense for OEMs to be investing in AVs and urban mobility products?

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TLDR: AVs and robot taxi services are not a near-term (3-7 year) threat to existing OEM business lines, but they are a longer-term (7+ year) threat to OEMs; and this is why they are investing so heavily in AV technology.

Investments being made by large car manufacturer (OEMs) in self-driving autonomous vehicles (AVs) and urban mobility solutions are receiving a lot of attention these days, and for good reason. AVs promise significant societal benefits and economic opportunity, but I want to contemplate and deconstruct why OEMs are making these investments.  What is the business rationalle.

The going sentiment or explanation seems to be A) that AVs and these urban mobility solutions threaten the OEMs existing business and/or B) that the OEMs’ ability to design, manufacture, and distribute vehicles makes them a natural necessity in the future value chain of AVs. While I agree with the latter explanation, I think there is room to elaborate  on the former.

 

Vehicle sales will not decline significantly over near-term (3-7 years) because of robot taxi services.

First, the majority of cars and trucks are sold to consumers and businesses located outside dense urban city centers. Second, as I’ve explained in a previous post, robot taxi fleets will be economically constrained–over the near-term–to being deployed within dense urban city centers. As a result, over the near-term, if anywhere, robot taxi services will reduce car ownership rates within dense urban centers, but car ownership rates in urban centers are already low, therefore little impact will be made on the number of vehicles sold by OEMs. Simply put, car ownership is already low in the areas/populations wherein AV-based robot taxi services will be launched over the next 3-7 years. It won’t be until robot taxi services slowly make their way out to lower density suburban areas that car ownership there starts to be impacted.

I would suggest that vehicle sales by volume are declining not because of ride-hailing services, but rather vehicle build quality is improving. Cars are being built better and are lasting longer, and hence need to be replaced less frequently. Again, for most people living in the suburban US, ride-hailing is not a substitute for car ownership. And for most people living in urban environment, car-sharing (eg. GetAround) and short-term rental (eg. ZipCar) services are more likely to be a substitute* for car ownership than ride-hailing service is. Sure, hailing a ride is better than renting a car for two hours in most situations (that’s why ZipCar’s business is declining significantly), so ride-hailing services might be substitute for some urban market segments but I would argue that most car owners in urban areas own their car because they have consistent weekly inter-city transportation needs. Most people decide to buy/lease a vehicle because they have consistent transportation needs that cannot be solved with a better alternative. Getting to/from work or shuttling the kids to/from five days a week, for example.

The same holds true for suburban car owners. If you live outside dense urban areas and decide to buy/lease a vehicle, it is because you have consistent transportation needs that cannot be solved with a better alternative. Getting to/from work or shuttling the kids to/from five days a week, for example. For most people, car ownership is a better alternative for these consistent trips than Uber and Lyft.

As a result, I would argue that car ownership has not been impacted significantly by ride-hailing services–in neither urban nor suburban population.

Ride-hailing platforms have become a complementary transportation solution; not a substitute. They have become a substitute only for traditional taxi services. For urban dwellers, it complements mass-transit utilization. For suburban dwellers, it complements car ownership, as a solution for infrequent trip needs such as getting to/from the airport or nights on the town to avoid drinking and driving.

Although I don’t think robot taxi fares will come down to the level of mass-transit fares, the already low car ownership rates in urban populations means that I see robot taxi trips being used by consumers as a substitute for an occasional mass-transit trip; not permanent car ownership.

It’s a long-term play for OEMs.

Robot taxi services are not a near-term threat to OEMs, but I do think they are a long-term threat (7+ years). For the reasons stated above and in this post, robot taxi ride fares over the near-term will remain prohibitively high for suburban populations, where car ownership is highest. Eventually, in the longer-term (7+ years), the technology and economic constraints will change such that serving more sparsely populated areas can be done profitably, and robot taxi platforms will start serving these areas.

This is why I think hundred-year-old OEMs are investing in urban mobility and AV tech. OEMs don’t and shouldn’t care about being relevant over the next decade; they’re aiming to be relevant over the next 100 years.

 

*According to Jeffrey Rifkin, “Some 800,000 individuals in the U.S. are now using car-sharing services. Each car-share vehicle eliminates 15 personally owned cars.”   

Quick guide to great mobile strategy design

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Create mobile optimized site(s).  Whether responsive or adaptive design, make sure users have a good mobile web experience. If you can’t make your entire site mobile optimized or responsive, then focus on those pages to which users will be directed while on a mobile device. For example, the URL in an email that will be opened on user’s phone should put the user on a mobile optimized site.

Take advantage of mobile tools to create unique services.  Three factors make the mobile device a game-changer in terms of understanding user’s context. These are: 1) sensors (e.g. GPS, microphone, accelerometer, clock, etc.) onboard the device, 2) data flowing from wearable tech and other devices and systems into the mobile device, and 3) the fact that mobile device is always on the person.  My advice is to think outside the box, and create an experience that takes advantage of mobile platforms and tech, and that is unique to other channels. Your mobile web and apps do not have to offer the same functionality that is available in all your other channels.  Decide what existing and new services make most sense to be on mobile.

Think local, but don’t not strictly!  (mobile—especially with the GPS sensor and internet connection—is a tool we use on the go and to find things physically near us) but don’t forget that mobile is not just on-the-go experiences anymore, as our mobile devices are powerful, light-weight computers with bigger screens and more sensors that are increasingly being used at home and in the office to consume long-form content as well!

Think time sensitive tasks and job/task-focused users.  The natural ubiquitios nature of mobile means that it often is the first thing we reach for to solve urgent problems. Hence, content should be organized and reshaped so that it is to find and digest via mobile.   For example, organize content by jobs, use search instead of lots of navigation bars, shrink content into smaller file sizes, make content lower resolution, etc.

Include mobile in your marketing plan.  Whether advertising, customer referrals, customer feedback, customer support, etc.

Enable integration of third party data/channels in omnichannel execution.  Mobile sits at the center of an omnichannel experience that includes sensors and a range of digital and physical touchpoints, from store clerks to geo fences.  Don’t forget about integrating data from third-party channels, as this can be an opportunity to create value-add experiences for users!

Constantly analyze how users are using your mobile assets.  Are people not using certain assets?  How long are people using assets? Where are they using them? When are people using them?  On what devices are people using them?    Work towards putting IT infrastructure and organizational processes that enable you to track users as they move through and across channels.  This is by no means easy to do but it is very to doable today and it is where the world is moving very quickly.