Mellon Mobility Innovation: Let’s Get Connected
As 2019 came to a close, global Purchasing Managers’ Indexes (PMIs) firmed, trade tensions eased, inventory levels normalized and interest rates declined, opening up the potential for stability and a cyclical recovery for the mobility industry. However, this progress and anticipation for a stronger start to 2020 has been interrupted by the rapid spread of COVID-19.
Despite the near-term pause in global growth from the pandemic, innovation remains well-positioned to drive the mobility industry forward over the next decade. Innovation, such as the introduction of 5G technology, is playing an increasing role in many new forms of mobility. This is driving secular growth opportunities as new products and services offer higher content and functionality. As we examine four core categories within the mobility industry, Connectivity, Autonomous Vehicles, Sharing and Electrification (CASE), we believe a transformational shift is underway, beginning with connectivity.
Connectivity is a subtheme that will continue to be a key source for future growth. According to the GSM Association, 5.2 billion people or 67% of the world’s population, subscribed to a mobile service in 2019 and approximately 1 billion new subscribers were added to global networks in the past five years.1 Another 1.2 billion subscribers may be added to these mobile broadband networks in the next five years and may see higher social, environmental and economic benefits from this connectivity. While 4G wireless services accounted for 4 billion subscribers in 2019, 5G is rapidly becoming available and is poised to reach beyond the 24 markets served in 2019 with 39 new markets announced. By 2025, 5G may account for 1.8 billion connections and 20% of total global subscribers. Continued mobile subscriber growth and new, high-bandwidth applications could quadruple global data usage by 2025.
5G is the next wave of innovation for the mobility industry, and it will usher in much faster speeds, much higher connection density and lower latency. 5G services are deploying increasingly worldwide, and the technology is necessary to support the quality of service required by autonomous vehicles, among other mission-critical devices. According to FLIR Systems, a world leader in thermal imaging systems and sensors, new vehicle connectivity will still only reach 50% by 2020, up from 15% in 2013. Much of the world’s existing fleet of 1.5 billion vehicles is still ripe for penetration.2 5G launches will fuel future mobility use cases such as vehicle-to-vehicle, vehicle-to-pedestrian, vehicle-to-network and vehicle-to-infrastructure, which will promote safer, cleaner and more efficient transportation systems.
For consumers, these applications may include not only more fully-autonomous cars, but also add smart traffic and smart parking systems. Higher connectivity rates and speeds produced by 5G technology will also better support new products and services such as virtual assistants. These assistants will enable people to accomplish significantly more in a given day. As competing responsibilities increase, more people are turning to these assistants and utilizing them in their homes, vehicles and on their phones. However, the latest challenge is determining which assistant has the ability to complete which task. Enter cognitive arbitration – a new AI capability that connects multiple assistants allowing for seamless completion of various tasks. These connected capabilities will give people the ability to control external factors, such as locating the nearest restaurant or asking a home-based virtual assistant to place an order. Society is busier than ever and consumers are demanding simpler, more efficient solutions to their problems. This technology, combined with self-driving vehicles, could be the next step in completely transforming the transport system and we see tremendous opportunity in this area.
In our next article, we explore what is driving the growth of autonomous vehicles and where we expect additional opportunities to emerge.
1 GSMA. The Mobile Economy 2020.
2 NVDA 2019 Analyst Day.
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