TransportTech moving into the fast lane

Transport is rapidly becoming the next big segment set for wide-ranging disruption, a drive set to be led both by start-ups and traditional tech majors. Taxi mobile app Uber’s surging valuation in 2014 has opened the gates for transportation innovations, and business transfer agents are seeing growing interest from VCs in the segment. Tech majors are already engaged in competition to standardise their digital content within vehicles, while US giant Google has been the dominant force behind the self-driving car. How London corporate finance and other funding hotspots react to apps such as Uber, which are balancing on the edge of legality, remains to be seen in the long term.

The wireless, on-the-move capability of a smartphone lends itself ideally to the transportation segment, be it as a navigational or service-ordering tool. The only drawback has been the limited wireless broadband accessibility of consumers worldwide, but global Internet penetration among mobile subscribers will break the one-third barrier in 2014.

The potential disruptive quality of mobile tech in transportation has already made big news throughout 2014 as unofficial taxi-hailing mobile app Uber is dismantling a long-standing taxi monopoly across the world’s largest cities. Its sharing-economy principles have been met with optimism by investors and the company has been valued at over $18.0 billion.

The opportunities inherent in “TransportTech” are luring the world’s largest telecom firms into the auto market.

Cars are at the forefront of digitalisation, with manufacturers increasingly adding new features to vehicles, such as music streaming, audio books, navigational aids and security enhancements:

  • Betting on the continued expansion and prospects of the world’s largest car market, German incumbent Deutsche Telekom penned an agreement with China Mobile to develop a connectivity platform for cars in China in early October 2014;
  • Apple has been steadily building its auto expertise by integrating its products into the Tesla electric vehicle, with the US giant launching a new operating system for vehicles called CarPlay in early 2014;
  • Though still in relative infancy, Google’s much-publicised self-driving cars can potentially unlock the driver from the responsibility of road-focus, thereby unleashing a host of media services that could compete for passenger/driver engagement.

Continued digitalisation in transportation will depend on how quickly legal and connectivity challenges are resolved across global markets. For instance, there is limited appeal in having a fully digitalised vehicle that has intermittent access to wireless broadband due to weak coverage. Regulators are also likely to curb demand for visual digital platforms in cars due to the perceived safety risks of distracted drivers.

Governments will also require time to adjust to disruptive services such as Uber, with the app having been banned in numerous countries due to its non-regulatory, hands-off approach to private taxi services.

 

 

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