Saturday 3 December 2016

The Irish tech firm that global car companies are desperate to dial into

Dublin's Cubic Telecom is in big demand among the world's top automakers as cars take a quantum leap into the future. But money's not the big driver for the company, boss Barry Napier tells our technology editor

Published 04/02/2016 | 02:30

'We had an offer to sell it [the company] last year and we didn't take that,' Cubic Telecom's Barry Napier reveals.
'We had an offer to sell it [the company] last year and we didn't take that,' Cubic Telecom's Barry Napier reveals.

At the world's largest tech trade event last month, there was one big story: cars. App-powered ones, self-driving models, even flying ones. But all the cars unveiled had one thing in common. They all need a way to get online.

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Increasingly, one Dublin company is giving this ability to them. With €37m in funding lining its pockets, Barry Napier's Cubic Telecom has already signed Audi up to connect millions of vehicles to its mobile network software. By the looks of things, Ford and General Motors may be next.

"It's not just about the connectivity," says Napier, a veteran of the Irish telecoms industry. "It's the software that we put in. We build directly into the technology that's powering the car. So as well as supplying LTE [4G] into the car, it's the entertainment, streaming and content."

And soon it might be the upgrade of a car itself. More and more vehicles are using software to upgrade engines instead of physical alterations.

"You've heard of Tesla's 'ludicrous' mode, right?" he says. "The upgrade that speeds up your acceleration to 2.8 seconds for nought to 60? It's about a five gigabyte update. They charge a driver ten grand for that. But that's the way it's going, over-the-air software updates that change the suspension settings and that sort of thing."

The problem is that car manufacturers aren't very good at telecoms. And they're a bit wobbly on software. Cubic combines both to give auto manufacturers a walk-through package.

And because Cubic has 28 'virtual' mobile networks around the world, car companies it signs up are covered almost wherever they sell their vehicles.

"It's not roaming, it's local on each network," says Napier. "We designed a multi-IMSI sim card, so if a car goes into France, we'll see it's in France and we swap it onto Orange. Same for the UK, or wherever. It gets around regulatory hurdles, it gets around latency. It gets around absolutely everything."

And the car companies are lapping it up. Audi, which Cubic was pitching for business, liked the product so much that it invested in the company. And more are on the way.

"We're talking to three of the top US auto companies," says Napier. "And with two of them we've got a good bit of traction."

General Motors, which operates Chevrolet in the US and Opel in Europe? Yes, he says.

"We hope to get a deal with them down the line."

Ford?

"Yes."

Fiat-Chrysler, he says, is going "in a different direction".

It's not just maintenance issues that this new kind of car connectivity can help with. Some of it is fun.

"Take customised driving settings," says Napier. "Let's say Audi takes an R8 [supercar] and puts Lewis Hamilton into it around a track. Now you have something special. You could probably sell those settings in a download."

It's also a way to beat the bumps and potholes.

"On your way to work, your car's sensors might see that there's a bump you hit every day at the same time, putting the same pressure on the shocks," says Napier. "It might alert you when the bump is coming up. The car can learn. And that brings us a little closer toward autonomous driving."

Cubic Telecom doesn't just do cars. Its business is set up to connect laptops and other mobile devices, too. But most of its movement appears to be coming in the automotive sector. The company appears to be in the right place at the right time.

Cars are fundamentally changing from the inside out. Apple and Google are both heavily getting involved, Apple with an electric car reportedly in development and Google with beefed up in-car connectivity programs. This is a development that has traditional manufacturers on their toes. And so far, it has been a boon for Cubic Telecom and its 55 staff.

Last summer, it finalised an €18m funding round, led by Audi and the multinational mobile technology firm Qualcomm. The deal brought to €37m the amount of investment that Cubic Telecom has taken on, with local backers such as ACT Venture Capital still in the mix from earlier rounds.

But it still leaves Napier and a couple of fellow executives with a healthy stake in the company. "Yes, we own close to 50pc," he says. "We've done alright out of it."

Napier recently had a "decent" opportunity to flip the company but turned it down.

"We had an offer to sell it last year and we didn't take that," he says. "It was to one of our current shareholders who is very active in this space. In fairness, they put a fairly decent offer down. What we had to decide was, as a team, are we going to do this or are we going to sell it?

"And we thought that we haven't capitalised on what we think we can do yet. So the money really wasn't the driver, we just wanted to get the services out there. We did that, we got it out there and we landed Audi. And then we got an investment then from Audi. So it was worth our while doing what our gut was telling us to do."

The Audi investment, he says, came about when the German car company compared the Irish firm's connectivity service with those from bigger mobile network operators.

"Audi was working with another mobile operator for a while but couldn't get the solution working with them the way they wanted to do," says Napier. "And then they came to us. And we did an end-to-end solution in six weeks. Separately we had been talking with the Porsche family, who own Volkswagen [Audi's parent company] about an investment. They all got talking and we put an investment together."

Audi has gone all in, integrating Cubic's services with its own. The result is that Audi-buyers this year will see new in-car systems powered by the Dublin company.

"In one sense, they're trying to recreate your living room in your car," says Napier. "When you get into an Q7, the dash is interactive. Our platform does billing, so we can decide on certain content whether you want to charge for it or not. You give the likes of Facebook for free, Top Gear, the BBC or whatever it is. We can differentiate between, say, an Audi A4 and an A8."

Cubic's involvement stretches to sourcing content, too. So a new Audi driver can buy mapping or entertainment services on the car's new interactive dashboard. It's all branded as Audi, but it's all developed and powered by Cubic.

"So when you walk out of your office or your home, you have the same high speed LTE connectivity," he says. "You can connect multiple devices. That means streaming devices for the kids in the back or, if you want, working in the back. What you're used to doing on your phone, or in your home or office, you can now do in your car." The Audi deal kicks off in 13 countries with nine different networks, with "more to come".

Despite Cubic's Technik being Vorsprunged right now, cars aren't the only thing the company does. It has worked with laptop makers for some time and is exploring possibilities with Microsoft. Napier says the company has engaged with Microsoft's high-flying Silicon Valley-based vice president for business development, Peggy Johnson. "One thing we've been chasing is services for existing software subscribers," he says. "We working with Peggy and her team on it."

Cubic's idea, it seems, is to diversify the commercial model by which Microsoft charges for some of its subscriber services.

"If you're a Microsoft subscriber, why do you have to pay to get your Outlook?" says Napier. "The first thing many of us do when we go abroad is to check our email. But then we're stuck looking for a wifi zone or whatever.

"If you're a Microsoft subscriber to Outlook, maybe it should come in free as part of your licence. And the way we pitch it, the economics really work for them [Microsoft]. It's just to try and get them to break the mould to do it. So those are the discussions that we're having."

Technically, Cubic might do this by embedding the connectivity into a device's chipset which it can now do. It need not be Microsoft paying, either.

"It could be your laptop, it could be your phone. It could be a Microsoft phone. Some phones now come with two sim cards, whereas in some cases the sim is now gone. It could be Outlook that you pay $99 for a year with all connectivity free, or it could be a Facebook phone that you give to your kids."

"While this sounds like a big marketing idea for the likes of Microsoft, it's easier to switch on a service for Microsoft or a laptop maker than it is for a car manufacturer. When you deal with a car, you've got to go through a big scrutinisation process. We've probably done 100,000km [of testing]. Then it's six to eight months after that."

June of this year is when Cubic will see its first connected Audis rolled out.

"There's more to come," says Napier.

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