Bixi Bankruptcy: What Does It Mean for American Bike-Share?

The Montreal-based equipment supplier for several American bike-share systems, including Citi Bike, filed for bankruptcy protection yesterday. It’s unclear exactly how the restructuring or sale of the company known as Bixi will play out, but the bankruptcy filing could accelerate the transition to more robust and reliable hardware and software for Citi Bike and other systems. It also figures to be a messy process, though the company that operates Citi Bike expressed confidence today that it won’t impede service.

Photo: Citi Bike

Bixi has always been a strange company. An offshoot of Montreal’s municipal parking contractor, it received significant financial backing from the city of Montreal. Bixi both operates bike-share systems in Canadian cities and runs a subsidiary that supplies bikes, stations, and other equipment to bike-share operators in New York, London, Chicago, San Francisco, Boston, DC, and other cities. The subsidiary was supposed to be sold off to disentangle Montreal from Bixi’s business ventures, but according to the Times, two deals fell apart and a sale never happened.

The bankruptcy news is not unexpected. It’s most troubling for Montreal, which is owed several million dollars by Bixi, and for the other Canadian cities where Bixi runs bike-share systems. In New York and the cities where Bixi is a subcontractor, the restructuring or break-up of Bixi could be a blessing in disguise, helping to resolve some longstanding problems with the company’s product.

Until 2012, Bixi’s bike-share equipment ran on a software platform developed by 8D Technologies. That’s what Bixi was using when it bid on and won the NYC bike-share contract with Alta Bike-Share. But after an intellectual property dispute with 8D, Bixi went to a different firm to develop replacement software, and the systems that have launched since the switch — including Citi Bike, Divvy, and Bay-Area Bike-Share — have been plagued by delays, glitches, and inefficiencies. While the software has been updated to some extent, in New York, especially, it’s been a drag on operations and an obstacle to system expansion. Both Citi Bike and Divvy, in Chicago, are withholding payments to Bixi because the software is not up to snuff.

It’s not clear yet whether Bixi’s international operation will be restructured as a financially viable entity, or if it will be broken up. Bixi itself contracted out much of its manufacturing — including the bikes — so in the event that the company gets dissolved, American bike-share operators should be able to find suitable replacement suppliers. One company that’s potentially waiting in the wings is 8D, which has developed equipment including kiosks, docking units, and locking mechanisms to go along with its software.

Shifting from Bixi to different suppliers would be a challenging transition for bike-share operators, but it could appear seamless from the bike-share subscriber’s perspective.

For now, operators supplied by Bixi do not expect the bankruptcy to detract from the customer experience. “We are committed to a thriving and expanded Citi Bike system,” said Dani Simons of NYC Bicycle-Share, the subsidiary of Alta Bike-Share that runs Citi Bike. “We’re still sorting out the details but we don’t expect the news from Montreal to affect our operations in 2014.”

  • Larry Littlefield

    Unlike the automakers, airline companies, and Wall Street, bicycle manufacturers — and everything else related to bicycles — is not too big to fail.

  • mrmcd

    Isn’t a lot of the bixi technology still under patent? My main worry is that there simply won’t be another manufacturer of equipment available until this bankruptcy is sorted out, which could be a problem for expanding and maintaining the existing systems.

  • Kevin Love

    Bixi does have competitors. One of them, Social Bicycles, is a New York City company. See:

    http://socialbicycles.com/

    What I find most interesting is that Social Bicycles puts the technology on the bike, so that there is no need for specialized kiosks and docking stations.

    The city of Hamilton, Ontario (population a shade over 1/2 million) is about to become Social Bicycle’s largest customer. It will be interesting to see how this works out.

  • inventropolis

    In addition to Social Bicycles is Nextbike from Leipzig, Germany. Offers incredibly advanced technology at a fraction of cost of Bixi. A second one in development is Lock-8.

    Regardless, there are very compelling arguments for Citibike to shift to Nextbike or other superior, low cost technologies as soon as possible.

    Bixi is like the old landline phone. Nextbike is like the iPhone 5s. Lock8 is like the iPhone 6 (really cool, but not quite ready for prime time).

    http://inventropolis.com/the-world-bike/

  • Jonathan R

    Hoboken, NJ had a similar system in 2013. I read somewhere that average use was one ride per bicycle per day, a small fraction of New York City’s rate.

  • Jeff

    Just curious, what makes Nextbike “next generation” technology? It very well may be superior hardware and software compared to the Bixi systems, but it is inherently a “smart dock”-based system, correct?

  • inventropolis

    Nextbike has “smart-dock” (e.g. Bixi) and “smart-bike” (e.g. Sobi) systems that can operate under a single software system.

    Like many operators, they are believed to be looking at the implications presented by Lock-8.

  • herb

    The Canadian BIXI systems (other than Montreal, it’s just Toronto and Ottawa) are not owned by BIXI. In Ottawa the infrastructure and bikes are owned by the National Capital Commission and operated by the BIXI company SVLS http://www.cbc.ca/news/canada/ottawa/bixi-struggles-raise-concerns-about-ottawa-bike-share-s-future-1.1866696

    And in Toronto the City had already agreed in December to purchase BIXI Toronto prior to the BIXI bankruptcy http://www.theglobeandmail.com/news/toronto/toronto-to-take-over-struggling-bixi-bike-sharing-program/article15761883 and is looking for an operator, possibly Alta Bike-Share.

  • JarekAF

    Will we ever find out why Bixi stopped using 8D?

  • p_chazz

    Studebaker, Braniff Airways and Lehman Brothers beg to differ.

  • herb

    It’s easier to imagine than it is to implement.

    What we do know is that BIXI, Velib, etc have operated successfully for a few years. They’re proven technology. Just because the parent company had an intellectual property fight with its subcontractor doesn’t mean the technology itself is obsolete.

    It’s possible that something new will eventually be even more successful. Social Bicycles looks promising, though currently there are no large scale systems out there. Can it scale up to 9000+ bikes like London’s Barclay bikes? We’ll see. Next year, they’ll launch 500+ in Hamilton, Ontario so I’m quite interested to see how they’ll do. At least they’ve thought through all the requirements – sturdy bikes, online registrations and reservations, way to rebalance bikes, locking system, GPS to keep bikes in “virtual corrals”, mechanics – and have tested small systems.

    So far it seems that the only thing Lock-8 has is a lock and an app for unlocking and sharing a link. It’s a long way from being a complete system. Whoever adopted that would need to come up with everything else.

  • inventropolis

    I agree with implication. Experience and credibility is critical.

    Nextbike has nearly 20,000 (twenty thousand) bikes in bikeshare operations in 60 markets in 13 countries. They’ve been profitable for 9 years. They have more bikes in operation than any existing operator on North America.

    We also worked with Social Bicycles in Hoboken last summer (a pilot that combined bike rental and bike share). While small, pilot was exceptionally successful.

  • inventropolis

    While Philly may go with the older smart-dock technology, nearly all major RFPs in the past year have gone smart-bike (Tampa, Phoenix, Atlanta…). Even Alta has partnered with Sobi in Providence.

    Reason is cost. Smart-dock is infrastructure overkill. Smart-bike is about 25% of the cost of smart-dock. This translates to more bikes for same amount of money.

  • Money.

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