Mobility: from 5G to the edge
Technology has been centre stage during the pandemic and as recovery gets underway, George Saffaye, global investment strategist on the BNY Mobility Innovation Fund, examines why many advancements of the past year are only just the beginning.
Has Covid changed the tech sector forever or is its influence a temporary phenomenon?
I don’t know if it has changed technology so much as made people understand just how advanced and pervasive it is. I think that is key. It isn’t that the pandemic created this wave of digital transformation, it very much accelerated it. I think people – investors – are seeing just what we can achieve based on this.
We have seen an evolution toward “home is the new data centre”. This has implications for how organisations can allocate new resources regardless of geography. They can re-envision their entire work force – it opens up a whole new world of opportunities, in everything from telehealth to digital engagement. We think this growth is exponential and the next decade is going to be key to this.
The pandemic has led many to leave Western cities over the past year. Is urbanisation in the West dead? What role will mobility innovation play in this story?
Honestly, it could go either way. Ahead of the pandemic there is no doubt – the statistics were all pointing to urbanisation. We’re a planet of 7.5 billion people, headed towards 10 billion by 2050, and if you look at the acceleration of growth in urban areas it has gone from roughly under 50% in the 1950s heading towards c70% over the next 30 years. However, during the pandemic a lot has changed and there is no doubt in the US we are seeing how home buying accelerated dramatically. It’s one thing living in an apartment, where the 800 feet is only for sleeping because you’re out socialising, living your life – but when you have to work there, live there, sleep there, it becomes a burden. So now we’re seeing that broadening out.
We have another phenomenon taking place too, which has to do with millennials. They really had a challenging start during the financial crisis and now they are developing their spending power. As such, they are creating households and that is an additional push to de-urbanisation – they want to spread out, start families. This pandemic, coincidentally, created a trend in that direction.
Either way, the technological innovations we are taking about will help us meet future sustainability needs – including mobility innovation. If you have dense cities and more people, how are you going to move them? We’ve got to create sustainable solutions. If you have more out in the suburbs, an acceleration in automobile and transportation links is necessary. These have to be long term solutions that are going to be more environmentally friendly. That is the dexterity of technology. It doesn’t care which way urbanisation goes, it will be there to provide the solutions.
Will we see technology in our lives differently from this point forward?
It is important to understand just how transformational some areas of technology are, such as 5G (true 5G in the higher spectrum with higher speeds and the latency issues are exponentially better). When we have that rolled out, globally, we are going to see new and innovative opportunities built around it and one of these will be the move towards edge computing – the processing of data at the site of intake, where the data comes in and processed into actionable information vs passing onto the data centres. This allows a response to the data in real time. Think of autonomous vehicles – they can drive independently, unconnected – now think about real time data and its reach. For example, let’s say there was an accident with potential injuries. That information, taken in by sensors within infrastructure, is able to be interpreted “at the edge” and acted upon – from calls for an ambulance to communication to other cars to stay away from the area (allowing first responders to get there more quickly).
I think we are also going to see end-to-end supply chains built on 5G, involving very little human interaction where data can be interpreted at site and acted upon. Covid has brought into focus just how susceptible supply chains have been – so I think edge computing will be a very big opportunity in that area. There are so many applications. If you’re a patient long-term investor, I’d let this play out.
Is there greater room for innovation or are we set for profit taking?
You have to think about where the world is moving. To us the most dangerous word in the lexicon is legacy. As investors, consumers and users, if you anchor to the way things have been done it is dangerous. Technology has become pervasive but it has become even more so because it is disruptive and it is moving us forward.
The world moving from an analogue base to a digital base is underway. I think estimates in the US put it at c9% of the economy but it is growing at a rate of about 35% a year. We are slowly – or maybe it is fast – becoming a digital economy and, as such, the requirement for data and data processing is growing. Data is the life blood. Understanding what a company does well, engaging with employees as well as customers, will become ever more critical. Data will help it thrive, get better. We are going to see new levels of digital engagement. Knowing what your customers like about you, dislike, how you can react to it, what parts of your business do you need to focus on to get better will all be done through digital means.
This is in every sector. Look at construction. You will not believe what these companies are already generating measuring their vehicles out in the field. They are not autonomous just yet but those big tractors are generating tons of data in terms of their usage, quality – even their maintenance.
The value of investments can fall. Investors may not get back the amount invested.