How long can Uber keep bleeding cash?

It is becoming increasingly popular to invest in money-bleeding technology giants in preparation of an inflection point in profits, but you have to wonder how long Uber will be able to hold on for.

Uber is a massive brand, an innovator and genuine disruptor to the status quo. There are few examples of a concept riding the wave of digital to create such a severe disturbance to the traditional world. And while Uber might be the biggest transportation brand in the digital era, it is haemorrhaging cash quarter-on-quarter. Other segments have demonstrated there will be an inflection point, the moment of glory horrendous losses are turned into monstrous profits, but that scenario might be a long-way off for Uber.

Looking at the quarterly results, revenues grew to $3.09 billion for the period, a 20% increase year-on-year, but net loss from operations was $1.03 billion. This is 116% more than it lost in the same period of 2018.

The losses are certainly starting to mount as well. In the final quarter of 2018, Uber reported a net loss of $865 million. In Q4, the loss was slightly worse at $939 million. In this period of 2018, the firm reported net loss of $478 million from operations.

In the digital economy, investors are seemingly happy to swallow negatives, Uber’s share price following the announcement of the financials is holding steady, though how long can the potential remain potential?

Encouraging these investors are companies like Amazon and Netflix. In both of these cases, the firm build a dominant position in the respective segments, scaled globally, attracted millions of customers and then turned attentions to profits. Uber might be able to do the same thing, it is following the same trends, though there are sceptical voices.

Some might suggest Uber will continue to be a loss-making company until autonomous vehicles emerge. The theory is sound, after all a company’s biggest overhead is staff. Uber will be able to free up billions once the technology is perfected, making it a very profitable company. However, it might be decades before autonomous vehicles are a realistic prospect on the streets.

The technology might not be far away, but there are so many other moving parts which need to be factored in. Firstly, will people trust handing control of vehicles to machines? Are regulations and legislation in place to facilitate the introduction of this technology? How long will it take parallel industries, such as insurance, to ready themselves? Is the infrastructure, both roads and mobile connectivity, ready for autonomous vehicles? Have safety concerns been appropriately addressed?

There are so many factors to consider, the progression of autonomous vehicles is much more than technology. It might be decades before self-driving cars hit the streets; can investors wait that long for the Uber inflection point?

There is also an interesting, and slightly nefarious, philosophical question to consider when it comes to programming the artificial intelligence component of the technology.

Let’s say a car is driving down the street, travelling at 20 mph when a child steps into the road. The child is within the braking distance of the car therefore it is physically impossible to stop the vehicle in time. There are three options for the AI to choose from:

  1. Continue driving forward and potentially kill the child
  2. Turn sharply left and potentially drive into pedestrians
  3. Turn sharply right and potentially drive into on-coming traffic

In each of these scenarios, there is the potential for a fatality. But here is the issue; the AI will have to make a ‘conscious’ choice, the outcome might mean death, and the software engineer will have to write the software deciding how the AI will react.

The reason why this is different to today’s driving condition is because a human reacts without thinking through the possible outcomes. We cannot assess the information fast enough and react with a logical action, but AI can.

This scenario is of course highly unlikely, sensors and cameras on street furniture might be able to warn the vehicle of the on-going hazard, but it is a possibility therefore the AI has to be programmed to decide. There is no right answer here, but the AI is flawed unless a decision on what course of action to take is made.

Some might suggest the option with the smallest percentage chance for a fatality should be taken, but the risk of a fatality is still there. Because the vehicle has made a decision, should someone be held accountable if someone dies as a result of the action? This is a very complicated area.

So, if autonomous vehicles are out of the question for years to come, Uber will have to think of other ways to make money.

Uber Eats is proving to be a profitable venture for the firm, while the management team has promised to cut back on promotions which might carve into profits. But will these side ventures compensate for the way the core business and R&D businesses are churning through cash. What is clear, Uber needs to stop bleeding cash in such a dramatic fashion or credibility with investors might start to run dry.

Telia extends 5G reach to Estonia

Just a few weeks after lighting up a 5G network in Sweden, Telia has taken the connectivity euphoria across the Baltic Sea to Estonia.

In partnership with TalTech University, Telia has turned on Estonia’s first 5G network as a test bed for the university, as well as local companies and start-ups. The 5G network is a permanent installation using standardized and commercial 5G products.

“We hope to see new and exciting future services and business models built upon 5G,” said Kirke Saar, CTO at Telia Estonia. “Thus, different stakeholders are welcome to test the possibilities of the new technology at the TalTech University. It is the perfect place for this, combining technical knowledge, smart people and cooperation experiences with very different partners. Additionally, 5G technology supports our newly opened NB-IoT network which now has its first commercial user.”

“It´ll open limitless opportunities for communication in virtual world,” said Rector of TalTech Jaak Aaviksoo. “TalTech, Telia and Ericsson take this step together because we believe in the creativity of both scientists and students in using this platform and generating new ideas. 5G means a thousand steps into the future for the whole Estonia.”

This is of course not Telia’s first venture into the 5G world, having opened up the network at KTH the Royal Institute of Technology in Stockholm, earlier this month. This network has been poised as the first building block for 5G in Sweden.

The first task for the TalTech network will be a 4K live stream on the university campus of the network opening party from the Tallinn Old Town Christmas Market, which was recently voted the best in Europe.

The partnership will not limit the ambitions of those wishing to play around with the 5G network, though one of the first initiatives will focus on autonomous driving. TalTech´s self-driving car made its first official journey in September, though progress will surely be accelerated with the 5G input.

The next stage of the autonomous initiative will be establishing a vehicle-to-vehicle communication platform with Telia, while also optimising the vehicle structure with Silberauto, one of the biggest automotive companies in the Baltics.

UK goes through the gears in autonomous driving race

The US, China and Japan have been moving ahead swiftly in the race to put autonomous vehicles on public roads, but new trials in West London perhaps indicate the UK is not that far behind.

Following successful trials through Oxford town-centre, a new initiative has been announced by the DRIVEN consortium, an Innovate UK funded initiative focused on introducing Level 4 autonomous vehicles. This project will be mapping the streets of Hounslow, expecting to launch trials in the area by this Christmas, before planning to run a fleet of autonomous vehicles between Oxford and London in 2019.

This initiative will be led by Oxford University spin-off Oxbotica, an autonomous vehicle software provider, but also supported by insurance partner AXA, while Nominet will be testing data transfer between vehicles and consortium partners as part of the development of a robust cyber security model for self-driving vehicles.

“Being autonomous before Christmas will showcase the huge amount of work Oxbotica’s expert team of engineers has completed since the DRIVEN consortium was established,” said Graeme Smith, CEO of Oxbotica. “These trials further demonstrate to the wider UK public that connected and autonomous vehicles will play an important role in the future of transport. This milestone shows the advanced state of our capabilities and firmly keeps us on the road to providing the technology needed to revolutionise road travel.”

While this might excite (or terrify) the locals, this is not the only self-driving news to emerge out of the UK in the last week.

Up in Scotland, the country’s first self-driving buses will be tested through a 14-mile route between Fife and Edinburgh across the Forth Bridge. The single-decker buses will require a human driver to be present at all times, though unmanned tests will take place in the depot parking the vehicles and also taking them through the washing machine.

Back in London, cab firm Addison Lee and Jaguar Land Rover have also announced trials through the city. Addison Lee hopes to have the entirety of the Borough of Greenwich covered with a service by 2021, while Jaguar Land Rover also plan to deliver a ‘premium mobility service’ across the capital using driverless Discovery cars. Details are relatively thin for the moment, though it is certainly encouraging to see such trials emerge.

As with most technology developments, the UK has generally been perceived to be behind the trend. In this instance, the US has been leading the way, with numerous trials across the country, though Japan and China have also been steaming ahead. These trials should not suggest the UK is on par with these technology powerhouses, but at least it is seemingly leading the chasing peloton. The tests also offer a bit more credibility to the Government ambition of having autonomous vehicles on the road by 2021.

The ambitious claim came from UK Chancellor of the Exchequer Philip Hammond last year, promising ‘genuine’ driverless vehicles on the road by 2021. We are still sceptical as to how much of a revolution these vehicles will actually be, public incredulity and resistance to change will perhaps make this more of an evolution over decades, though this will not score the appropriate level of political points.

A recent survey from OpenText suggests 31% of UK respondents believe there will be more autonomous vehicles on the roads than human-driven ones over the next 10-15 years, though this is down from the 66% who answered the same question positively 12 months ago. In 2017, 24% said they would feel comfortable being a passenger in an autonomous car, yet this figure has dropped to 19% in this year’s edition. It seems the excitement and confidence in the technology is still not there.

This is an area which the government and industry are yet to tackle; the general public. Irrelevant as to whether the technology is advancing at lightning speed, without consumer acceptance the technology will never be a success. These are after all the people who will buy the vehicles, or choose between a driverless and human-powered taxi. Without approval of the general public, this technology will fail.

The UK is still very much a fast-follower when it comes to technology adoption, though this is not necessarily the worst position to be in. As it stands, ‘best of the rest’ is probably an appropriate title as the US, China and Japan pave the way, but progress is being made.