Scooter Revolution Hits A Snag As Businesses Lose Money

Scooter Economics

The scooter revolution isn’t as sexy as autonomous cars, but scooters will be more important to transportation in the near term. That’s because most trips are short and autonomous car technology won’t be implemented for at least a few years.

Specifically, 35% of all personal trips are less than 2 kilometers and 75% are less than 10 kilometers. Whatever micro mobility technology gains usage in the next few years will transform 35% of trips at least. Investing in this space is far from a slam dunk though.

As you can see from the slide below, it takes 115 days or 3.8 months for companies to break even on scooters, but they only last 3 months. Prices need to go up or scooters need to be more durable.

Maybe companies can fine users if they are reckless with the scooters.

Of the $3.50 made per ride, there are $2.85 in costs. The companies make $3.25 per day because there are 5 rides per day. Unfortunately, scooters cost $375.

(Click on image to enlarge)

There’s a possibility scooter prices will come down as batteries become cheaper. If the companies buy cheaper scooters now, some people might not like them and they might break down even quicker.

This can be a great business model if costs are managed better, but right now it isn’t. Maybe some sort of premium program similar to Uber X will help these firms make money.

The Cloud Still Has Potential

Even though the cloud has been driving profit growth for Amazon and Microsoft for a few years now, it is still under-penetrated, meaning there is more growth potential left.

Public cloud adoption is under 10%. AWS (Amazon), Azure (Microsoft), and Google make up more than 80% of incremental sales. Azure has been taking share from AWS.

The chart below shows the cloud industry. Size of the circles is the size of revenues. Y-axis also shows last 12 month revenues and the x-axis shows last 12-month growth rates.

As you can see, Azure grew at a 78% rate to $11.8 billion in sales and AWS grew 45% with $27.9 billion in sales. Shadows and arrows show the direction growth is going. It’s no surprise Azure is slowing quicker than AWS because such a high growth rate is unsustainable.

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