A decade ago, a phrase that ended with ‘on your phone’ had limited meaning. If someone asked who won the game last night or what the capital of Ghana was, and you said you were using your phone to check, you would sound crazy. But today the ‘phone’ has leaped away from its old definition, becoming an entirely new object. And now, the same thing is happening to cars.
As vehicles become more connected, they become more than just modes of transportation. The Internet of Cars will make them tools for entertainment, for consumption and for consumerism. These changes will be accompanied by an avalanche of data, which, if applied properly, can help manufacturers and Tier-1 suppliers better understand driver behavior, consumer behavior, and the intersection between the two — offering an unprecedented number of revenue opportunities.
Understanding the Internet of Cars
The Internet of Cars is an offshoot of the Internet of Things (IoT) – the vast web of connected devices that will soon stretch across the world. The IoT revolution is already underway:
- By 2020, 90% of all cars will be connected.
- The smart home industry generated $79 billion worth of revenue last year, a number that is projected to continuously grow.
- By 2019, there are expected to be 173.4 million wearable devices in use around the world, nearly an increase of 100 million since 2015.
These wearable devices, especially fitness trackers and smartphone accessories (like wireless earbuds) are particularly illustrative for the automotive industry. These tiny devices can be used not just to track heart rate, but to communicate, gather information and transmit data.
When we talk about wearables — or the connected car, or the smart home, or the wired city — we are not talking about one monolithic computer. We are talking about devices made up of hundreds of sensors. Right now, for instance, cars have between 60 to 100 electronic modules including many sensors; that number is projected to increase to about 200 sensors per car by 2020.
All of these sensors produce their own sets of data. In the near future, each one will communicate to companion sensors in other cars, to different parts of the infrastructure, to complementary parts of the smart home and to a variety of wearable devices. Every single connection offers revenue-generating potential for OEMs who are prepared to harness this big data explosion.
How Does the Internet of Cars Provide New Revenue Opportunities?
There are many applications that can be built from the avalanche of data that OEMs and suppliers will soon be receiving. Drivers might start to receive emails or dashboard notifications alerting them to discounts on items that they might be interested in. They might get more notifications when they drive past a store that sells them. Their driving behavior also provides OEMs with insights on how the user experience can be enhanced, which might in turn point to the direction of the over-the-air updates that the OEM sends to continuously improve their vehicles.
But this still barely scratches the surface. Every single driver will be recording megabytes, gigabytes or even terabytes of data daily — everything from how well they drive to where they are going, what their interests are and what they want to buy for themselves, their cars, and their homes.
Consider the monetization possibilities of:
- Connecting with a smart home: One frequently mentioned aspect of the smart home is the smart refrigerator, which can determine when you are running out of, say, eggs. If connected with the car, the fridge can send the infotainment system a message that alerts the driver to this need, while letting you know which store is offering the best deal — and which one is most convenient to your current route — an attractive convenience feature for customers.
- Sales through wearables: These devices can provide a powerful avenue for advertising. If a pedestrian is intrigued by one of the vehicle models, they can instantly request and receive information, including special discounts. Watching a car’s in-person performance is more persuasive than any ad, and having content that is based on augmented reality and tailored specifically for smart glasses can help OEMs make an immediate deep connection with customers.
- Connecting with industry partners: Right now, if the “check engine” light turns on, drivers know it could indicate any one of a dozen problems, which is unnerving. But if the car transmits a full readout of what is wrong, plus directions to a service partner who can fix the issue (a local mechanic, for example), they will be saved a lot of time and anxiety. The mechanic could also receive alerts that a car will be coming in, allowing time to prepare and to send an estimate of time and repair costs. The OEM that can establish an easy way to solve problems is one that customers are likely to flock toward.
There are, of course, privacy issues inherent in this type of data collection, but at the end of the day, it is no different than what is already collected when customers browse Amazon or surf the web – if someone searches for quality suitcases, they will start receiving suitcase ads. It has become an expected part of our connected lifestyle.
Automakers already have a demonstrated interest in protecting consumer privacy. Data does not need to be shared or sold in order to be monetized, OEMs can set up internal programs to harness data just for the promotion of their own goods and services (or the services of select Tier-1 partners). It is not just about turning the car into a vehicle for delivering advertisements; it is about employing complex data visualization and analysis techniques to improve the experience of the end user so that customers can find the right upgrades and services for their cars and their lives.
In the past, all this was generally out of an OEM’s reach. Once the car was off the lot, there were very few opportunities to continue working with the car owner. But soon, every byte of data will provide that opportunity. OEMs who adapt to the coming avalanche of data can become synonymous with the connected car — much like Apple’s dominance of the smartphone. Soon, people will not blink an eye when someone says, “I bought this product with my car.” Being the first to be associated with this coming transformation should be the goal of every OEM.
As the auto industry is changed by technological and economic currents, OEMs and Tier-1 manufacturers will need to partner with technological specialists to thrive in the era of the software defined car. Movimento’s expertise is rooted in our background as an automotive company. This has allowed us to create the technological platform that underpins the future of the software driven and self-driven car. Connect with us today to learn more about how we can work together.