Data Centers on Wheels: How Intel Plans to Capitalize on Mobility

Intel sealed its commitment to become a player in the burgeoning autonomous vehicle industry when it bought computer vision company Mobileye for more than $15 billion in 2017. The venerable Santa Clara, CA-based chipmaker is betting that its data analytics and connectivity chops—as well as its semiconductors—combined with Mobileye’s computer vision and mapping functions, will attract a significant share of business from automakers that want to equip their vehicles for tech-assisted driving, and for the future of fully autonomous navigation.

But beyond in-car technology, Intel (NASDAQ: INTC) is also looking toward a role in the ecosystem of data-centric businesses that will grow up to support the transformation of the auto industry into the service-oriented sector dubbed “mobility.” If broad swaths of the population abandon individual car ownership in favor of trip options such as on-demand rides, private shuttles, scooters, bikes, and a re-imagined public transit system—of course, that’s still an “if”—tech companies will be needed to organize all that activity. Those companies will depend on massive amounts of data, and much of it will come from connected cars gathering information about routes, road features, weather, delays, pedestrians, traffic, and other factors. As Intel expressed it in a company presentation on the Mobileye acquisition, future cars will be “data centers on wheels.”

“There is going to be an incredible amount of data,” says Trina Van Pelt, who is group managing director of three core development areas at Intel: automated driving groups, data center and cloud, and artificial intelligence. She is also vice president of Intel Capital, the venture investment arm of Intel.

With two decades of experience in equity investing and mergers and acquisitions behind her, Van Pelt is now responsible for high-level strategic planning for Intel Capital; that means investments that open up paths over the next five to ten years for Intel’s business opportunities “beyond silicon,” as she describes it.

Van Pelt (pictured above) is one of the Intel leaders aiming to expand the company’s reach outside its foundational role as a semiconductor supplier to the tech companies that remake the business world. Intel is staking its own claim to the lucrative business possibilities in data and services, as confirmed by CEO Bryan Krzanich at the Intel Capital Global Summit in May. Reams of data can now be stored cheaply, and advanced analytics can extract valuable business intelligence from it, Krzanich said.

Van Pelt sees mobility management—the online coordination of transportation activity—as a data-centric business arena that could be a central control point that ropes in many other business lines, such as retail and entertainment. Imagine a rider who uses a mobile app to decide what train to catch home, for example.

Someday, Van Pelt says, the rider might also order groceries while still on the train. The groceries could be ready for pick-up in a locker at the train station, and an Uber car would pull up to take the rider and the food the rest of the way home.

Over time, software that facilitates and tracks such rider patterns could improve transportation and other business services through predictive analytics, Van Pelt says.

How data may influence the co-evolution of cities and transportation

Software and other innovations could enable city infrastructures to accept autonomous vehicles once they’re ready for mass adoption, Van Pelt says. Data analysis could help cities make smarter planning decisions for an era of multimodal transportation, she says. For example, she asks, should a city build more parking lots at train stations for individual drivers, or subsidize rates for ride-hailing cars?

Van Pelt envisions end-to-end roles for Intel in the transportation future, from powering devices for intelligent edge computing to offering an “integrated mobility platform” that could be compared to an app store.

Startup companies are already popping up to fill tech support roles for a reconfigured transportation economy, like the first tiles laid down in what may become a completed mosaic of the mobility business ecosystem. For example, San Francisco-based software startup Stratim created an online marketplace to connect car fleet owners more efficiently with maintenance and repair shops. Stratim was acquired in February by big Indiana used-car auction company KAR (NYSE: KAR).

Meanwhile, Seattle-based Convoy and New York-based Transfix are among the companies using data analytics to help shippers find freight hauling companies. The automated services of such companies are laying the technological groundwork for the logistics of operating self-driving car and truck fleets. Autonomic, which created a software development platform for mobility-related apps, called the Transportation Mobility Cloud, was acquired early this year by Ford Smart Mobility. Like Intel, Ford is looking beyond producing automotive technology alone, and investing in projects related to data services, software, and connectivity for the future of transportation.

Another element of the emerging mobility support ecosystem is trip planner apps—from Google Maps to startups like Moovit and Transit—which are starting to become more comprehensive gateways to the growing number of transportation options for riders.

Intel Capital has been investing in mobility-related businesses and partnering with some of them to build toward its own goals. In January of 2017, Intel announced that it had acquired a 15 percent stake in Here, a navigation company whose technology augments Mobileye’s mapping functions.

In February, the Intel venture capital arm led a $50 million investment round in Moovit, which is racing to map the schedules and routes of public transit systems worldwide by drawing on regional transit authority data as well as crowdsourced reports from riders. Moovit, based in Tel Aviv and San Francisco, is trying to attract more than a billion users by 2021.

The Moovit investment heralded a data-sharing partnership among Moovit, Intel, and Intel’s unit Mobileye. Like Moovit, Intel had been coordinating with cities and transit systems to prepare for the future of mobility and, eventually, of autonomous vehicles. Last year, Moovit started offering companies, city governments, and transit systems access to its data on commuter travel patterns, wait times, route usage, walking distances to train stations, and other details through its Smart Transit Suite, a service designed to assist with the management and planning of urban transportation. That data will now inform Mobileye’s services to automakers, fleet operators, and other customers.

Moovit, for its own part, is looking to wider opportunities as a data service provider in business-to-business partnerships with new types of customers, in addition to transit agencies and auto industry players, says Steve Swasey, a company communications executive. The data on transportation patterns amassed through Moovit’s free trip planner app could be valuable to non-transportation entities such as school systems, sports teams, hospitals, and real estate companies, he says. Househunters using a real estate app like Zillow might search neighborhoods for intel on commute times, for example.

As mobility options proliferate, will one app link to them all?

Van Pelt says Moovit’s data on the gaps in public transit routes could be useful to private mobility companies that want to design transportation services to cover the “last mile” for riders who must debark at a train station too far from their homes or workplaces. Some regional governments have already become customers for such mobility companies, by subsidizing rides rather than operating municipal bus routes.

This kind of coordination fits with Intel’s primary focus on services to enterprises, rather than business models focused on consumers. But Van Pelt says Moovit is one of the companies with the potential to become a commanding consumer-facing Mobility-as-a-Service app if it continues to offer riders an expanding array of private trip options in addition to public transit. Moovit began integrating Uber into its rider menu in 2016, and it also displays a few other ride-hailing company services outside the United States.

Competition is heating up, however, to be the one-stop consumer marketplace app for mobility options. Google Maps, which gives driving directions as well as public transit trip planning, also links to Uber and Lyft. Montreal, Canada-based startup Transit, which began as a pure-play public transit app, integrated Uber as an option in 2014, then added car-sharing partners Car2Go, Communauto, and four other services in Canada, and continues to seek more private mobility partners. Transit also manages a payment conduit for bike-sharing.

Even Uber and Lyft are trying to make their apps more than just a gateway to a single ride-hailing service. The two top ride-hailing companies are looking at bike-sharing partnerships, have created their own car-pooling services, and have begun integrating municipal transit options into their apps. At a conference on May 31, Uber CEO Dara Khosrowshahi said the company’s app will eventually offer a wide range of outside trip options, Recode reported.

“Just like Amazon sells third-party goods, we are going to also offer third-party transportation services,” Khosrowshahi told Recode’s Kara Swisher in an interview. That aggregator’s business model may not be surprising coming from Khosrowshahi, who, as Expedia’s former CEO, presided over a collection of online travel services marketplaces including CarRentals.com, Travelocity, hotels.com, and Orbitz.

Van Pelt says the competition for roles such as the go-to mobility aggregator app won’t necessarily lead to a winner-takes-all outcome. “I think there’s going to be room for many players,” she says.

Intel Capital’s investment strategies

The startups sprouting up to fill mobility support niches create partnership opportunities for Intel, as it plans for its own future in transportation-related data services.

One of Van Pelt’s guiding principles is: “Don’t replicate what’s already done: partner.”

Intel Capital takes a stepwise approach to startup investing, from helping to incubate new ideas, to investing in startups, partnering with them, and then evaluating them as acquisitions for Intel, says Van Pelt, who was involved in the Mobileye acquisition and the Moovit investment. She shared some elements of her investment strategy, or portfolio theory, in the context of mobility:

The size of the market opportunity matters, when it comes to a company like Intel that generated net income of $9.6 billion on revenue of $62.8 billion in 2017. For a startup that has the chance to grow revenues in the range of $1 billion to $2 billion, Van Pelt says, Intel Capital would be more likely to invest and take an equity stake up to 40 percent, rather than plan to bring the startup inside Intel. A startup offering a potential $5 billion to $10 billion market opportunity is a more likely acquisition prospect for Intel, she says.

But the startup’s business mission also matters, Van Pelt says. A smaller company might fit well into Intel’s core business areas, or offer intangibles such as network benefits, she says.

“There’s no precise recipe,” Van Pelt says. “Sometimes, it’s just, look in your fridge,” especially when new growth opportunities appear.

Intel, when it acquired Mobileye last year, said it anticipated a market opportunity of $70 billion by the year 2030 in tech-assisted and fully autonomous vehicles, along with related data-centric businesses and services. The company predicted that the bulk of that revenue would come from vehicle systems in 2030, with the data services component approaching $10 billion. But Intel also estimated that the vehicle-related businesses would stimulate extra data center, cloud, and network activity amounting to an additional market greater than $40 billion by 2030.

Intel’s autonomous and tech-assisted driving component is still a nascent element among the company’s more established data-centric business groups, which made a record showing in Intel’s fourth-quarter 2017 earnings report. Those units, including groups for data centers, Internet of Things, and “programmable solutions,” together contributed 47 percent of Intel’s fourth-quarter revenue. The data center group led the pack with $5.6 billion in fourth-quarter revenue.

Van Pelt envisions Intel creating an “integrated data exchange” that would make it easier for companies such as insurance carriers and financial firms to obtain specific data sets that could support their existing business lines and new use cases. For example, she says, a company might want data on rush hour dynamics in cities with at least 500,000 residents. Intel could be the data broker that anonymized and standardized the aggregate data from many sources that could help answer such queries, Van Pelt says. The data might be sold in an auction-style marketplace, with Intel taking a revenue share of 30 to 40 percent, while the collector of the data reaped as much as 70 percent.

Intel could also play a role in helping enterprises to monetize the valuable data socked away in their own data centers or cloud storage sites, or to develop new business models that become feasible because the required data is now available, Van Pelt says.

“I would love to see Intel, in five to 10 years, have a $10-plus billion data services revenue,” Van Pelt says.

Top photo courtesy of Intel Capital.

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