Driver Safety!'s Profile
Lena – Thanks for the interesting post on Comcast! This is certainly an important trend in both telecom and media; managing through it will be a key source of value for companies such as Comcast (but also including the likes of AT&T, Disney, Verizon, and others).
You mentioned that Comcast increased subs in 2Q16. They added 32,000 video subscribers in 3Q16, also (see here: http://www.cmcsa.com/releasedetail.cfm?ReleaseID=995492). Moreover, they added 330,000 High-Speed Internet subscribers in that quarter. Cord-cutters still need Internet access (which they’re likely to get through Comcast; albeit at lower prices than if Comcast also sells video). It’s also worth noting that Comcast, through their NBC Universal business unit, is one of the owners of Hulu.
I think you’re right that part of the “solution” to cord-cutting is offering something that consumers want. To that end, almost half of residential video customers have X1. I count myself as one of them. It’s a great product. Today, I found that SyFy (an NBC Universal network, by the way) was playing the original 1970s Westworld.
But I wonder if there’s more that could be done than to just deliver a better user interface. What if, for example, Comcast rented Verizon’s mobile network and sold you cell phone service bundled with your X1 video? (see here: http://www.theverge.com/2016/9/20/12986872/comcast-mobile-network-verizon-mvno-2017) That’d be really interesting to me. We’re starting to see something similar following AT&T acquisition of DirecTV. Maybe “the bundle” isn’t dead, yet?
Haibo – I’m glad that you raised WeChat; it’s very important to how we should understand the evolution of “digital” life throughout the world. While WhatsApp may still have a larger user base globally (I think they announced 1 billion users back in February?), WeChat’s level of engagement and its ability to serve as a portal for payments, eCommerce, and digital gaming is particularly impressive!
I wonder — do you think that the “WeChat model” will work outside of China?
I’m reminded that in the U.S. much of the electricity distribution infrastructure is still based on wooden utility poles along the sides of roads that were originally invented in the mid-19th century. There’s certainly inertia to certain ways of doing things. By contrast, I sent my first Venmo payment through iMessage yesterday evening. It was remarkably easy — instead of going to the Venmo application, searching for the individual’s user name, confirming their identity, and only then sending the payment — I was able to send the payment based on their phone number. Plus, that payment is in the middle of our message thread (so we have a good record!). Perhaps the app-in-app hybrid approach that iMessage has recently rolled out could be successful? What do you think?
Thanks for sharing this post, Alicia! I encourage you to check out my post about Lytx – which is a company that has also created driver-monitoring technologies, principally for the commercial trucking industry (see here: https://d3.harvard.edu/platform-rctom/submission/lytx-l%c9%aat%c9%aaks-n-1-a-company-saving-lives-on-the-road-digitally/)
I’m curious about your (and your sister’s) experiences with the Progressive Snapshot. Did you find that the “buzz” when you had to brake was useful feedback? Did Progressive give you any kind of follow-up or “report card” about your driving?
Lytx’s product is a two-way video recorder that gets mounted on the windshield of a truck. Unlike the OBD-II products used by the P&C insurers, the Lytx service links into an accelerometer, all of the other sensors on the truck, and also records video. All of these sources of information give their algorithms the ability to determine more about a driver’s behavior (are they actually accelerating too quickly? or is the accelerometer picking up a false signal? etc.) and the driver’s context on the road (braking quickly is a good thing if there is a pedestrian that enters a cross-walk!). The Company uses all of this information to identify risky driving — but also to provide coaching and feedback to drivers. If everyone on the road is getting better at driving, then perhaps we can reduce the number of accidents, injuries, and fatalities. There were over 35,000 motor vehicle fatalities in the U.S. last year!
I wonder whether Progressive – and other insurers – can do more than just use accelerometer data to set an insurance “discount.” To me, there’s an imperative on those collecting driving behavior data to also provide ongoing coaching and feedback.
Andres – I’m glad that you wrote about Cisco. I think we’d be remiss to talk about new, upcoming opportunities created by digitization without including them. I’m curious – what do you think about the Jasper acquisition? (Particularly the price tag) Was it a good move for Cisco?
I was fortunate to visit the Jasper folks at Mobile World Congress back in February. It struck me, however, that there are a number of companies working on remote/mobile device management systems (for things such as remote updates and resets). There is also an interesting trend towards “soft SIM”/”eSIM” technology, which could allow cellular M2M/IoT products to move between service providers more fluidly. That technology seems to live with whomever is playing the mobile (virtual) network operator role in the value chain, for now. I’d love to learn more about how companies are charging for those technologies, too. Are they going to be good businesses? Or table-stakes enablers?
By contrast, Jasper really stuck out to me as playing a unique role in the “monetization” step in the value chain — kind of like an Amdocs-for-IoT. They seem to be well integrated with the likes of AT&T, Telefonica, NTT DoCoMo, and China Unicom (among many others!). Whereas Amdocs is an incumbent for billing/charging/monitoring, etc. among consumer cell phone plans that cost greater than $60 per month, Jasper really plays a similar role for IoT plans (which may cost a fraction of that price). That seems to be a really valuable place to play! But I wonder how Cisco might leverage Jasper’s expertise going forward. Hopefully this will be a really, really big market — so perhaps it could still change significantly!
AvO – Thank you for sharing! I agree: Deltares is an interesting example of how governments/the public sector can partner with the private sector to create innovative solutions and address the effects of climate change. While I think we’d all agree that it’d be better not to have to address flooding or increases in sea level, the fact of the matter is that these trends will have very real impacts on people’s lives. A new report from the University of Massachusetts this past summer indicated that the impact of rising sea levels could have a significant impact on Boston, putting nearly 30% of the city underwater (https://www.bostonglobe.com/metro/2016/06/22/climate-change-could-have-even-worse-impact-boston-than-previously-expected/S6hZ4nDPeUWNyTsx6ZckuL/story.html). The estimated $108 billion (billion with a “b”!) in damages created by Hurricane Katrina, alone, offer a stark reminder of how calamitous this could be.
Like Sharp Boy, I’m curious as to how much it could cost to protect coastal cities from rising sea levels? In some ways, this could be a strong justification for any spending to ‘right the ship’ of climate change (as it were …).
Satoshi – I completely agree. In fact, I’d encourage you to read my blog post about NRG Energy, the U.S.’s largest independent power producer. Unlike the path you’ve proposed for Mitsubishi, NRG attempted to transition its portfolio from fossil fuel (coal and natural gas-fired) power plants to renewables. In the process, however, they exposed a number of difficulties in executing such a transition. First, and foremost, is the difference in investment profile between fossil fuel power plants and renewables. The coal and natural gas-fired power plants had high cash flow yields and made money off of the so-called ‘dark’ and ‘spark’ spreads (basically the price at which energy can be acquired through fossil fuel commodities and the price at which resultant power can be sold into the market). By contrast, renewables have higher up-front capital costs and lower, bond-like cash yields (call it 8-14% to equity holders after accounting for tax equity?). Also important to NRG was the ‘culture clash’ that came from de-prioritizing an existing business. For individuals working at natural gas-fired power plants, what happens when the parent company says that the future is in utility-scale solar? As a business leader, it’s tough to tell your employees that you’re trying to put their part of the business (which they’ve worked in for the last 20 years!) out-of-business. For these reasons, I think your recommendation that Mitsubishi carve-out the renewables business and run it with a separate investment evaluation process make a lot of sense.
Going forward, I wonder whether there is also an opportunity for Mitsubishi in renewables services. Would Mitsubishi’s renewables business also be interested in developing a business around doing the ongoing services for solar or wind plants? In the U.S., some owners of these plants outsource the ongoing maintenance and break-fix to third parties. That could be a new, growing profit pool where a competitor of Mitsubishi’s scale could leverage global capabilities and generate value in a less asset-intensive way.
Molly – Thank you for sharing a practical (and pragmatic) strategy for reducing the climate impact of fossil fuels! I agree that, especially in regions (California) where water is a scarce resource, re-using appropriately analyzed “waste” water in an environmentally thoughtful way is a fantastic idea. I’m curious as to your view of the go-forward commercial viability of water treatment and recycling systems throughout the U.S.
Navigant Research would suggest that this could be a $3.8 billion market by 2025 (http://www.businesswire.com/news/home/20160511005001/en/U.S.-Wastewater-Treatment-Recycle-Systems-Revenue-Expected). Do you see that market evolving? Is most of the value in particular treatment technologies? Testing? Or, in services (like your own) that structure the appropriate use of the water (taking into account the appropriate environmental circumstances)?
Exxon – Thank you, also, for your provocative post.
I agree with Jess – the transition from fossil fuels to renewable energy sources is particularly difficult for incumbents. I’d encourage you to take a look at my post about NRG Energy, Inc., which is the U.S.’s largest Independent Power Producer. NRG tried to transition its mix of business towards renewables but ran into several difficulties. Chief among them, investors found it increasingly difficult to purchase the Company’s stock. Renewables, such as utility-scale solar (with long-term power purchase agreements and generally lower cash yields), may have very different investment profiles than Exxon’s current businesses. Moreover, what happens to someone working on an oil platform, or in a refinery when their parent company says that their business is the ‘old’ or ‘non-core’ business. What happens when Exxon’s suppliers and customers think that they are no longer serious about their commitments? All of these are very real concerns for the ‘fossil fuel’ incumbents.
Second – I’d like to address the notion that “developing nations are addicted to growth, and no developing nation is going to prioritize carbon emissions over improving the lives of its population, so Exxon must take a larger role in developing alternative technologies.” I’d like to point you to this blog post in Bloomberg from 2014 (http://www.bloomberg.com/news/articles/2014-08-29/poor-countries-shouldn-t-sacrifice-growth-to-fight-climate-change). The author writes, “Consider that the average income in a country such as Tanzania is 3 percent of average incomes in the U.S. (adjusted for purchasing power). Doubling Tanzania’s income would still leave it desperately poor. Electricity conception per person in the East African country is 92 kilowatt-hours per year. Americans burn through that much electricity every two and a half days.” It seems reasonable to me that individuals in Tanzania would (1) want their economy to grow and (2) want to consume more power to the extent that they have the wealth to do so. Is that an unreasonable “addiction” to you? I hear your view that Exxon, as a large company, can influence the energy used elsewhere in the world (not just in the U.S.), but I think policy and expectations need to be set using a realistic perspective of what those countries are trying to do (and why).
Andrew – I’m glad that you raised the state-mandated shift towards renewables in California in the context of PG&E. I think it’s a fascinating topic and certainly one that could set (or, at least, change and influence) policy for other power markets. As I understand it, the California Independent System Operator (CAISO) manages the flow of electricity for ~80% of California (and a bit of Nevada). You can track their progress in renewables generation, even (see here: http://www.energy.ca.gov/renewables/tracking_progress/documents/renewable.pdf).
Some of the equity analysts I’ve read have indicated that CA appears on course to meet a target of generating 33% of its energy needs from renewable sources by 2020. But I’m curious your perspective on whether there are risks to this transition in addition to the capital intensity. One risk that I’ve seen highlighted is the “Duck Curve.” During the afternoon, as all of the solar generation in the state ramps up steeply, the net load required of other power generators drops significantly. This net load then ramps steeply as solar turns off and people go home to turn on their TVs and air conditioning. This, as the analysts suggests, requires new power generation that can respond quickly to the change in load.
What do you think PG&E’s role in all of this is? Should they continue investing in utility-scale solar? Do they need new ‘responsive’ non-renewable power generation in addition to renewables to successfully transition the grid? Or are there other ways to overcome the Duck Curve through storage?