The Potential of Bike as a Service

Subscribe To Download This Insight

By Jake Saunders | 2Q 2017 | IN-4597

The first bike-sharing system started in Germany (1965) but meaningful traction only occurred in the 2000s, with schemes in Paris and London (e.g., the Barclays Cycle Hire), where bicycles could be released from bike stations upon presentation of a credit card. Mobile communications helped to shift the addressable market upward. UK’s OYBike used mobile phone technology to log use and charge for hires, as well as help set up hire points. It is estimated that more than 1,000 cities have bike-sharing initiatives, but in the last several years, bike-sharing services exploded in China. Now, it has its sights set on other Asian markets, too. In February 2017, three bike-sharing companies, two of them from China (ofo and Mobike), squared up to take a slice of the Singaporean bike-sharing market.

Registered users can unlock up to five pieces of premium content each month.

Log in or register to unlock this Insight.

 

Get on Your Bike

NEWS


The first bike-sharing system started in Germany (1965) but meaningful traction only occurred in the 2000s, with schemes in Paris and London (e.g., the Barclays Cycle Hire), where bicycles could be released from bike stations upon presentation of a credit card. Mobile communications helped to shift the addressable market upward. UK’s OYBike used mobile phone technology to log use and charge for hires, as well as help set up hire points. It is estimated that more than 1,000 cities have bike-sharing initiatives, but in the last several years, bike-sharing services exploded in China. Now, it has its sights set on other Asian markets, too. In February 2017, three bike-sharing companies, two of them from China (ofo and Mobike), squared up to take a slice of the Singaporean bike-sharing market. 

Is Singapore a Viable Market?

IMPACT


At first glance, Singapore may not seem like an ideal market. Singapore has a “very” comprehensive mass rapid transport system (MRT) and extensive bus routes. Furthermore, daily temperatures can top 30°C/85°F (Singapore is 1.5° from the equator), humidity is 80%, and the island experiences 2,300 mm of rain per year. However, car ownership is low, as the Singaporean government discourages car ownership by requiring aspiring car owners to secure a Certificate of Entitlement (CoE) that lasts 10 years and costs around US$36,000. That is on top of the cost of the car, insurance, electronic road pricing, and parking fees.

ofo and Mobike have their roots in Beijing, China. ofo was founded in 2014 and currently claims to have over 20 million registered users, most of them in China. Mobike is a close competitor; in January 2017, Mobike raised US$215 million in Series D funding, led by Tencent and Warburg Pincus. In February 2017, ofo raised US$450 million from DST Global, Chinese ride-hailing giant Didi Chuxing, and CITIC. ofo is valued at US$2 billion—not bad for a student project conceived at Beijing University. 

Bike Abuse

COMMENTARY


These latest bike-sharing initiatives, however, do have a few problems. One of its attractions is the convenience; the rider does not have to return the bicycle to a bike station. The rider can simply use his or her smartphone to snap the QR code within the bike-sharing app and close the lock on the wheel to complete payment. In Singapore media, there are reports of ridesharing bikes being left in inaccessible locations (perhaps the last user was hoping to make further use of the bike later on), thrown into canals, or stolen. These challenges will never completely go away but bike-sharing companies resorted to social engineering to mitigate these situations. For example, the Mobike app utilizes a "credit score" system to track user behavior. The rider has a starting score of 100 points. If he or she parks the bicycle in an inappropriate or unsafe location, 20 points are deducted. If he or she violates traffic rules, 50 points are deducted. However, if the rider has an uneventful ride, a point is added to his or her score.

Additionally, 4G technology is also coming to the rescue. Many of the existing sharing bikes use M2M modules that use GPS and GPRS to communicate the location of the bike. These 2G-based modules can be embedded inside the bicycle frame but power drain is a problem. ofo is collaborating with Huawei and China Telecom to implement a NB-IoT solution that will rely on a new smart bike lock, which will feature satellite tracking and will enable remote locking powered by a 13 Ah battery with a 2-year battery life. NB-IoT offers a 20-dB coverage improvement over GPRS, so bikes are more likely to be within the range of the network. The lower IoT module power consumption means the bike does not need solar power, reducing bike complexity and cost.

It remains to be seen if bike-sharing companies will be profitable in Singapore, but mobile communication innovation is helping to overcome the business and technical hurdles. 

Services

Companies Mentioned