Here is who will benefit most from connected cars

Written by on March 29, 2017 in Guest Blog with 0 Comments

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Connected cars are shaping up to be the fastest growing sector of the IoT. Revenue projections from connected cars range from $40 billion to north of $100 billion a year by 2020. Auto manufacturers will profit from connected vehicles and mobility services, but other industries are also poised to gain from it.

 Here are a few that are already merging into the fast lane.

Communications Industry

Connected cars rely on many wireless systems to provide in-car connectivity, allow for over-the-air firmware updates, talk to other vehicles and traffic infrastructure, and provide data to third parties.

Mobile network operators (MNOs) will claim the lion’s share of these subscription-based connectivity revenues, but they’ll have to do more to retain customers. Because of the rise of eSIMs, they no longer have the built-in customer retention that comes with static SIMs. Instead, automakers and other connected service providers can now ditch underperforming carriers with the flip of switch. MNOs can bolster loyalty by offering incentives, like AT&T’s recent launch of unlimited 4G data plans for Chevrolet.

MNOs also must work on their historically abysmal customer service reputations to woo automakers wary of tarnishing the high levels of affiliation associated with their brand. In an era where automobile ownership is being supplanted by various Transportation-as-a-Service offerings, OEMs must cling to brand affinity elevation more than ever as a bulwark to the looming threat of commoditization.

Additional recurring revenues will come from bringing connected car features to millions of older cars through services like Verizon’s Hum and T-Mobile’s SyncUP DRIVE. To handle the revenue sharing and micropayments and to provide better customer service, MNOs must address the beast in the back office—legacy business systems that are not up to the task.

In-Car Technology

It’s no secret that automakers don’t develop or build many of the parts that go into their cars. They rely on thousands of suppliers to accomplish the complex feat of building a car, and in-car tech is no exception. In fact, it’s becoming the rule.

On the heels of major infotainment flops that have frustrated drivers and tanked reliability ratings, automakers are now turning to the tech industry for help. Instead of homegrown solutions that only “kind of” work with mobile devices, we’re seeing more device-oriented systems like Android Auto and Apple CarPlay occupying in-car screens. And if it’s not obviously Apple or Android, you can probably bet that your infotainment system is powered by a Microsoft-connected vehicle platform.

Connected cars offer third-party providers like Apple and Google an enormous venue for market expansion. They can offer new products and services geared specifically to driving scenarios, while enabling their customers to have consistent experiences whether at home, in the car, on foot, or at work. 

Outside of infotainment, tech companies are already betting big on connected/autonomous vehicles. For example, Intel just made a $15.3 billion-dollar takeover bid for autonomous car tech firm Mobileye. The chipmaker’s massive investment in connected cars along with autonomous car development from Google and Apple reveals just how important the connected car market is for the tech sector.

Mobility Solutions

You can forget about traditional financing, leasing, and dealerships right now. The writing is on the wall for traditional purchase models. While nobody who has ever bought a car will be sad to see them go, millennials will be pleased to never have to deal with an automobile acquisition infrastructure that has never appealed to them.

Car- and ride-sharing companies, for a time, looked to be the big disruptor for the auto industry. Consumers that would normally be buying cars could now get a ride or use a car via a fleeting interaction with an app that yielded the instant gratification endemically desired in a mobile world. This threatened to upend the brand affinity that automakers rely on so heavily, as the users of these services know the brands of Zipcar, Lyft, and Chariot, and cared not a lick about Chevrolet, Ford, and Toyota.

Automakers have caught on and made big investments and even launched successful mobility services. Ford bought vanpooling company Chariot and now has a separate division, Ford Mobility LLC, just for mobility services and autonomous car development. General Motors bought $500 million worth of Lyft and has a hit on its hands with its Maven car service. Audi, BMW, and Cadillac have luxury car on-demand services—the list goes on and on.

SaaS Providers

Very few players in the burgeoning connected car market have the back-office capabilities, either technically or socially, to monetize these services, share revenue with partners, or provide any sort of effective data-based customer service. All participants will need , for the first time, the ability to dynamically track and charge for services on a consumption basis, including vehicle usage, data consumption, and application access, while ensuring that revenues are efficiently recognized and distributed in multi-party service engagements. These players will all need the ability to quickly reconfigure pricing and packaging and perform A/B testing of new offers. In addition, carmakers and communications companies have a lot of ground to make up to capture connected car data and use it efficiently (and respectfully!) to improve their offerings and elevate the customer satisfaction necessary to retain these newly-tethered consumers. For all these participants, SaaS-based cloud services can help their businesses adapt to the accelerated development cycles and increasing customer demands required of connected cars by eliminating the technical and organizational friction inherently imposed by old-school, on-premise back office solutions.

The tip of the iceberg

These examples provide only a small glimpse of the many arenas involved in monetizing the connected car. Software, hardware, advanced driver assistance systems (ADAS), systems integration, wireless technologies, data analytics, self-driving car enablement, each has their own monetization potential and growing throngs of motivated players. For many participants, staying in the race will require strategic partnerships, mergers, and acquisitions. Those who wish to win will need four things in spades—digital agility, resourcefulness, robust best-of-breed partnerships, and an unwavering commitment to speed-to-market.

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Brendan O'Brien

About the Author

About the Author: Brendan O'Brien is Chief Innovation Officer and Co-founder at Aria Systems. In 2002 he introduced the world to cloud billing, and innovated database-driven, enterprise-grade web applications before the concept of “cloud” was on the horizon. O’Brien is the industry’s foremost thinker on IoT and recurring revenue: enabling new business models, providing multi-dimensional customer choice, and ultimately increasing revenue. The number-one ranked cloud-billing provider, Aria, empowers enterprises to monetize a wider variety of product offerings, retain their customers for longer periods of time, and grow recurring revenue at scale. Trained as a professional stage actor and classical tenor, in the mid ‘90s Brendan realized coding paid better than acting. .

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