Technology Companies Move into Transportation
December 5, 2016
Quadrant Information Services: Insurance carriers brace for a new reality as tech giants like Google and Intel turn their attention to the auto and trucking industries, setting the stage for a reshaped economic landscape.
(Pleasanton, CA) December 05, 2016—Tech companies are moving to the automotive market, because that’s where the money is. In mid-November, Brian Krzanich, CEO of Intel Corporation, took the stage at the Los Angeles Auto Show to deliver his company’s first keynote address at an automotive event. The headline news in the widely anticipated speech was that Intel Capital will be investing $250 million in autonomous (i.e., computer-controlled) driving over the next two years. Technologies that will benefit from the investment, according to Intel, include connectivity (of the car to the Internet), context awareness (the car knows what’s going on around it), deep learning, and security. Intel’s own processing power comes into play with the amount of data required for autonomous driving. Krzanich pointed out that cars are already equipped with a variety of sensors, cameras and controllers that create, gather and transmit data. He said that the automotive industry needs to be prepared to handle as much as four terabytes of data generated daily by every car.1
“The fact that Intel chose to make this announcement at the L.A. Auto Show highlights the massive crossover that’s currently taking place between technology and transportation,” commented Michael Macauley, CEO of Quadrant Information Services, a leading supplier of pricing analytics services to property and casualty insurance carriers. Referencing announcements made earlier this year regarding joint ventures between Google and Fiat Chrysler and between Uber and Volvo, Macauley said, “As cars become devices that we drive (or don’t drive), and devices become more integrated with our transportation experience across modes, cross-pollination between tech companies and auto manufacturers is becoming a necessity.”
However, what looks like cross-pollination to one observer can look like poaching to another. This is an understandable reaction on the part of the auto industry, Macauley pointed out. He noted that what’s happening here is, to some extent, the movement of a profitable but limited industry into fields that offer—for the victors—a lot more room in which to operate.
This is particularly important to a company such as Uber, which set out—effectively, according to most observers—to disrupt the taxi and limousine service industry. According to the Department of Commerce, the entire U.S. taxi and limousine industry last year generated revenues of about $20 billion.4 Uber does not have a significant share of that market, and they lost $1 billion last year. They’re now moving into autonomous trucking. As a $9 trillion industry, trucking is 450 times larger than taxis and limo services.5 It’s something with a more promising reward-to-punishment ratio.
Meanwhile, Tesla Motors CEO and visionary Elon Musk is sponsoring a design competition for something called the “Hyperloop,” a system of metal pods running through buried pipeways that would allow people to travel from Los Angeles to San Francisco—a distance of 382 miles—in 35 minutes, at an average speed of 658 mph. This would involve the solution of several as-yet-unsolved problems in physics, but Musk and the young scientists working on this believe it can be done. A team at Carnegie Mellon has come up with a concept it hopes will take home the grand prize in January.6
This may be a great example of why it’s better to have these two industries—tech and auto—working together rather than working separately, Macauley noted. “We do know that there’s a tight, natural fit between these two industries, and that a shape-shifting will occur. At Quadrant, we’re factoring information into our calculations as fast as it comes in. Insurers have a big wave of change to negotiate, and we’ll be there to help.”
About Quadrant Information Services:
Quadrant Information Services, headquartered in Pleasanton, CA, provides pricing analytics solutions for property and casualty insurance companies. Quadrant gives actuary, product development, pricing, sales and marketing personnel at its client companies—which include all the major insurance carriers in the United States—the data they need in order to make accurate, data-driven decisions. An industry innovator since its founding in 1991, Quadrant has provided the P&C insurance field with a long series of technological advances, including InsureWatch, the industry’s first cloud-based pricing tool, which allows the user to produce unlimited combinations of reports with the click of a mouse. For more information, and to learn why Quadrant is for insurance companies that are tired of losing the right customers and winning the wrong ones, please visit www.quadinfo.com.
1. Hall-Geisler, Kristen, “Intel announces $250 million for autonomous driving tech,” TechCrunch, November 15, 2016.
2. Buss, Dale, “Automobili-D Is Detroit Auto Show’s Answer to Butting In By Technology Exhibitions,” Forbes, September 30, 2016.
3. Greenough, John, “Here’s why tech companies like Apple and Google want to disrupt the auto industry,” Business Insider, June 22, 2015.
4. “Taxi & Limousine Services in the U.S.: Market Research Report,” IbisWorld, July, 2016.
5. “Commercial Freight Activity in the United States by Mode of Transportation: 2002,” U.S. Department of Transportation, Bureau of Transportation Statistics, and U.S. Department of Commerce, U.S. Census Bureau, 2002 Commodity Flow Survey.
6. Napolitano, Julia Eve, “Hyperloop: Vehicle concept revolutionizes transportation speed,” Carnegie-Mellon Tartan, November 20, 2016.
7. Shankland, Stephen, “Moore’s Law: The rule that really matters in tech,” CNET, October 15, 2012.
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Karla Jo Helms