The Connected Car: Driving IoT

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The automotive industry currently finds itself at a crossroads.Innovative technologies, new digital services, and autonomous driving features are racing forward as the connected car joins the Internet of things. The pace is moving so fast that PWC’s Connected Car Study 2015 projects that worldwide annual sales of connected-car technologies will triple to $130.5 billion by 2021.

Let’s first define what is a connected car:

“Connected car” describes a car equipped with communication technology that allows for the direct flow of data to and from the car, without the need for a mobile device. Besides the known communication and information services from the mobile world, a connected car can communicate directly with “the cloud” to offer services such as connected navigation, including dynamic routing based on traffic, weather, or road conditions, or an automatic parking spot finder that offers directions to available parking spots. A connected car will be able to exchange information in real time with its immediate surroundings, including other vehicles (vehicle-to-vehicle; V2V) and/or infrastructural elements (vehicle-to-infrastructure; V2I). This is also an enabler for data-enhanced driving functionalities such as automatic vehicle speed adjustment in accordance with traffic flow and speed limits, or collision avoidance.

 

The 7 Core Connected-Car Functionalities

Automobile manufacturers are seeking to satisfy and grow its customer base by standing out in a crowded market. To do this, they must focus on these seven functional areas:

  1. Autonomous Driving – This is the operation of the vehicle without a human driver at the wheel. Mercedes-Benz’s autonomous long-haul truck has been making headlines for the past few years even though it won’t be on the market until 2025.
  2. Safety – Automatically sensing and avoiding potential collisions. Recently, there has been a moral debate about whether the car should save a driver or a pedestrian in an unavoidable collision.
  3. Entertainment — Wi-Fi or Local Area Network hotspots in cars provide access to audio, video, and social networks while also supporting the mobile office.
  4. Well-Being – Detecting and mitigating driver fatigue and providing individual assistance.
  5. Vehicle Management – Minimizing operational costs while maximizing comfort and convenience.
  6. Mobility Management – Providing guidance on faster, safer, and more fuel efficient driving and routes based on data gathered by the vehicle.
  7. Home Integration – Connecting the car to homes, offices, and other building such as integrating alarm systems.

Collectively, these are the technology goals of  car manufacturers (OEMs). However, those goals do not necessarily track the desires of the consumer.

What Consumers Want from Connected Cars

Maps and navigation is still the most-desired in-car service. Their second most-desired service was weather
information. Consumers definitely want in-car entertainment and a Wi-Fi hotspot. As it turns out, what consumers want can often differ from the prevailing direction of the technology.

For consumers, autonomous driving isn’t at the top of their list, in spite of newly introduced autonomous parking. Consumers are more interested in practical things such as receiving traffic information, getting weather information, searching for places of interest and parking spaces, and avoiding getting a ticket from speed cameras.

Today’s Connected-Car Market

PWC’s report projects that connected car technologies will generate $42.9 billion in end-customer spending in 2016, with safety and autonomous driving accounting for 61% of the total. Looking at the premium automotive market, spending on digital technology is projected to increase to 10% of total vehicle sales by 2021. That’s more than double the current level of 4%.

Manufactures and Tier 1 suppliers are investing heavily in R&D because they view connected-car features as necessary to stay competitive and avoid price dilution. This is true even though these features won’t significantly raise car prices. As the Accenture survey found, this is largely because the people in the high volume segment of middle-income purchasers are less willing to spend money on connected features even though they desire them.

Looking Ahead

The Connected Car Study 2015 report forecasts that, over the next five years, it is quite possible that the connected car will disrupt the entire automotive industry. IT giants Google and Apple are both of expanding into the auto industry, not only by providing in-car digital services but also by developing their own self-driving cars. However, they are also regarded as threats to the integrity of car data and as inevitable competitors for the hearts and minds
of the car-buying consumer. Google’s work on building an autonomous car is well known. Recent media reports, based on internal company documents, claim that Apple’s top-secret ‘Titan’ project involves building a car that’s not only all-electric but may have some degree of autonomy. Given the company’s track record in other high-tech solutions, and its remarkable success in creating brand loyalty, no wonder the industry is getting nervous.

The automotive industry will undergo a fundamental change with automakers taking on a new identity as providers of mobility services. This shift will give them access to lucrative new digital revenue streams from entertainment, commerce, and other sources thanks to integrated mobile and Wi-Fi connections.

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Mr. Fellah, is a Senior Analyst and founder of Maravedis with 20-year experience in the wireless industry. He authored various landmark reports on Wi-Fi, LTE, 4G and technology trends in various industries including retail, restaurant and hospitality. He is regularly asked to speak at leading wireless and marketing events and to contribute to various influential portals and magazines such as RCR Wireless, 4G 360, Rethink Wireless, The Mobile Network, Telecom Reseller to name a few. He is a Certified Wireless Network Administrator (CWNA) and Certified Wireless Technology Specialist (CWTS).

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