In a significant move towards diversifying its investments, SoftBank has acquired a controlling interest of 51% in Cubic Telecom, a firm that excels in IoT software for connected vehicles. The purchase, costing €473 million, manifests SoftBank’s confidence in the expanding market of connected vehicles. As an established presence in this technological arena, Cubic’s software is currently used in approximately 17 million vehicles globally, thanks to its partnerships with over 90 multinational corporations.
In the words of Cubic CEO Barry Napier, “The focus on software rather than hardware means manufacturers can increase the value of a vehicle or device by adding new functionality, over-the-air, which will improve safety, comfort and performance”. Napier goes on to highlight the endless opportunities that AI provides, which open the door for innovative collaborations and business models.
Aside from the potential to expedite customer upgrades, connected vehicles promise lucrative, fresh revenue avenues for manufacturers. These could range from subscription-based services, such as improved mapping or fuel-efficiency features. Analysis by McKinsey & Co projects that 95% of new vehicles sold in 2030 will be connected, demonstrating the immense potential of this sector.
This explains SoftBank’s interest in the software-defined vehicle domain for years now. An example of its serious intent was the Vision Fund’s $2.25 billion investment in Cruise, General Motor’s autonomous vehicle branch, in 2019. Though there were some setbacks with Cruise, it continues to make strides in the US.
As SoftBank CEO Junichi Miyakawa claimed in a statement, “In line with our ‘Beyond Japan’ strategic growth initiative, we are extremely pleased to be teaming up with Cubic Telecom to make a full-fledged entry into the fast-growing market for … connectivity,”. Highlighting Cubic’s influence in the sector, Miyakawa expressed optimism for the fruitful partnership and growth of connectivity platforms for future social infrastructure.
This partnership offers Cubic, an Irish firm, extensive access to a myriad of Asian markets where SoftBank already has an established footprint. CEO Napier expressed that the partnership has facilitated their presence in these Asian markets, which was otherwise challenging.
As the concept of vehicles evolves more towards something resembling smartphones on wheels, the software that powers them is critical. For a corporation like SoftBank, which already has sizeable stakes in connectivity technology and AI, this partnership appears to be an optimal move.