The ‘connected car’ is about to achieve
mass market penetration. If they are to go on building this new market,
the automotive and mobile industries will need to work in close
collaboration.
There are huge opportunities for the connected
car market, both in terms of revenue and ways to cement customer
loyalty. By 2022, the market will comprise an estimated 700 million
connected cars plus 1.1 billion aftermarket connected devices providing
services such as navigation, usage-based insurance, stolen vehicle
recovery and infotainment. European telecoms giant Telefónica Digital
has just published a report that identifies
the opportunities and challenges
in stimulating collaboration between the two industries which will
together build this new market. These focus mainly on the need to
harmonise the industries’ work practices and business models, not an
easy task for two radically different sectors.
Overcoming the disconnect between mobile and automotive industry lifecycles
Mobile operators and automotive manufacturers must now start to draw
up their business models in collaboration with each other, suggests the
Telefónica report, pointing out nevertheless that today their approaches
and aims vary considerably. For instance, while Automotive Original
Equipment Manufacturers typically look for local connectivity solutions,
BMW and Nissan take a global approach to the market and so need to be
able to secure suitable agreements to provide global, or at least
regional, coverage. Another major challenge for the connected car sector
is the difference in life-cycle between the mobile and automotive
industries. New features, such as operating system upgrades and new
applications, are provided almost constantly for the smartphone, whereas
automobile manufacturers work on five-year cycles. According to BMW,
one of the most positive developments in the growth of the connected car
is that it has moved the M2M (Machine-to-Machine) debate away from pure
automation to become more about the Internet of Things.
The advent of new business models
The other issues are more to do with the customer. The connected car
is about to cause an upheaval in the traditional dealership model. It
offers a unique opportunity for manufacturers to engage directly with
their customers. Branded app stores, upgrades to software solutions
over-the-air, and sharing of vehicle data all provide automotive OEMs
with opportunities to maintain brand awareness among customers. However,
the question of who pays for connected car services is an issue that is
far from being resolved. Consumers are used to making a one-off payment
when purchasing a vehicle, but embedded connection entails an
additional bill to be paid for actual connectivity. This all means that
new business models need to be created. One suggestion from General
Motors is that operators could for example recognise vehicles as a
second device on a customer’s data plan for a low monthly fee.
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