Author(s): Martin Garner
Here is the mapping and location platform owned by Audi, BMW, Daimler, Intel, Bosch, Continental and Pioneer. In 2Q17 it set up a new division, Here Mobility, aiming to democratise what it calls the mobility market. By mobility, it means the shift from car ownership to using other forms of transport as a service. Of course, this type of mobility is well established in most places, with networks of public transport as well as ferries, taxis, limousines, minibuses, tuk-tuks, rickshaws and public bicycle hire schemes.
Here points out a few key problems with these markets. Mostly they are not really a market but are run as a monopoly, oligopoly or cartel, and they are often highly regulated as a result. The trading of New York taxi medallions (permits) for over $1 million each in 2014 is a good example.
In practice this typically makes the providers slow moving, defensive, closed to new ways of working, and unwilling to open their systems up to others. Although London's Oyster card system is a good instance of joined-up transport that has worked well for almost 15 years, it's still not possible to pay for an iconic black cab with an Oyster card.
These factors mean that the markets are seen as ripe for disruption, and Uber is the poster child such activity. It's entered many countries around the world, and has upset large numbers of established providers and regulators in trying to break down barriers.
Uber has also spawned several major competitors in various countries and has been engaged in costly market share battles with several of them. The new mobility is seen by many as a winner-takes-all market, so the main strategy has been a land grab, with profits as something to be worried about later.
In other words, the world is seeing one set of monopolies being disrupted by another.
The purpose of Here Mobility is to provide all the back-end services a fleet owner needs to be able to operate in the same way as Uber. It has written a dispatch system, linking demand for journeys with individual vehicles, and is making this available as a service on top of its maps, traffic, transport and other information. By lowering entry barriers, it aims to make it possible to run mobility services as functioning markets, rather than as monopolies or cartels. This is a lofty ambition.
Here also suggests a number of benefits for cities, beyond having a market for transport. One is that it should be easier to join up services: for example, it could be possible to include taxis to and from the airport as part of a flight booking. A second example is joining up different services across a city, even if the city itself does not have the IT infrastructure to pull that together.
It should be possible for any semi-public building, such as a hotel or museum, to see anonymized data on the mobility journeys of its visitors so it knows where people travel from and to, when they visit and so on — those providers could then plan their own services better to suit the clientele.
Here has been running the division for just under a year, and is already up to 170 staff. Much of the effort is going into reaching out to cities and signing up providers within them. Here will be pushing at an open door in many places thanks to the aggressive nature of the disruption provoked by Uber and its ilk, and the resentment they have caused. So far Here claims to have achieved critical mass in 100 cities in 28 countries.
Here plans to charge a much smaller commission per journey than Uber takes from its drivers, so its business model is clearly predicated on achieving scale quickly. Given the current rate of progress, it says it is confident of being profitable within a few years.
From the point of view of its customers — the fleet owners — the commission is a new cost. Yet many operators are already under threat of losing business to disruptors such as Uber, or are seeing their business shrink, so they need to do something different. Here Mobility argues that it is not just adding cost to their business models, but is also enabling modern business approaches and opening new areas of demand by joining up modes of transport.
Nonetheless, we expect Here will face some significant challenges as it expands the initiative. One will be brand recognition — how acceptable will it be to the public if major disruptors, such as Uber, are not taking part? Can the local brands make it work on their own?
A second challenge will be privacy: users and regulators will be keeping a keen eye on a system that promises to gather — and share — information about multiple aspects of people's lives. A third will be the low level of IT systems and expertise of many transport providers, and the problem of integrating new and old systems.
A fourth challenge could be an aggressive response from the current cohort of disruptors. And finally, and perhaps most significantly, is the possibility that Google could enter the market with a competing service.
Overall this is a big idea, with huge potential and a refreshingly different approach from the standard Silicon Valley mentality. Although Here is off to a great start, there may well be some speed bumps in the road before the full potential can be realised.