Global 2015: THOUGHT LEADERSHIP | CONNECTIVITY
New data features drive car-purchasing decisions
The connected car is arriving fast, no doubt because it offers so many benefits to so many different stakeholders. Put simply, the connected car is a vehicle that collects and shares digital data in ways that improve the safety, convenience and comfort of its passengers. It enables consumers to feed their appetite for constant connectivity, interfacing via voice, email and apps to deliver a wholly personalized car experience.
The level and sophistication of these connectivity features is a decisive factor for tech-savvy buyers deciding which brand and model to choose. Increasingly car buyers prioritize car connectivity features over other aspects such as engine power or fuel efficiency.
Others benefit too: urban planners and local governments gain from smart mobility and reduced congestion; safety campaigners are promised huge reductions in traffic accidents; green campaigners get cuts in CO2 emissions through smoother traffic flows; insurance providers can customize rates according to driving habits; and rental services are able to roll out new pay-per-use business models.
Disruption and opportunity
The potential of the connected car has changed the landscape of brand competition in the auto world. Companies with no role in the automotive category just a few years ago have now become key actors. In a bid to control the critical human-machine interface, digital players have adapted their smartphone platforms to driver specific needs. Telecom players see the installation of SIM cards in new vehicles as the gateway to the next wave of growth. Even some Tier 2 OEM suppliers are attempting to develop direct relationships with consumers in a bid to break free of auto manufacturer mediated success.
Each new player brings value to the consumer-auto brand equation and each stands to take a significant part of the profit pie as a result. The challenge for auto manufacturers is that that the auto market is unlikely to grow fast enough to generate the financial returns desired by old and new industry players alike. In consequence each manufacturer is attempting to carve out its own position in the connected world. Each is steering a complex path between efforts to protect its traditional, central role in the value chain, and opening up their platforms to third party technology and telecoms players that have their own powerful brand appeal for consumers.
While vehicle manufacturers and technology players wrestle for control, new mobility businesses have bloomed by meeting consumer needs head-on. The connectedness of modern life has been leveraged to enable a wide variety of new mobility services to prosper. Mobile devices have become the seamless integrator of travel management across road, rail, sea and air. Car sharing and car-pooling have been taken to new levels. Access to limousine and taxi services has changed beyond all recognition. It’s now even possible to rapidly identify in real-time, scarce parking spaces in busy city centers.
Open sourcing and Uber example point the way
Uber’s business model, which connects riders to drivers via an app, illustrates how a laser-like focus on delivering an excellent consumer experience can create considerable value. The app is easy to access and download and it delivers a completely new user experience. Instead of facing the hassle of hailing a cab, users are able to spend their time productively and can even track their taxi during its journey to collect them.
Uber has grown exponentially since its 2009 launch, doubling its size every six months and expanding to cover over 50 countries. The business model is instructive: its technology platform is easy for multiple devices to access and can be easily integrated with other, third party apps; the platform will connect to any app the consumer finds value in.
This flexible, adaptive approach is unlocking value in multiple aspects of consumer life. Businesses are creating value by embracing the open source model in web-based photo albums, personal finance management systems, cross-platform software for recording and editing sounds, password management and many other areas of daily life.
It is the ability of vehicles to connect to one another that supports every other aspect of their potential. Cars that can communicate using a common technological standard have far more sources
of data available to help guide their drivers and keep them
safe, than those that can only use their own bespoke channels. Manufacturers should consider following the open source model and concentrate on forging strategic partnerships that enable data sharing. That is where the most value lies for consumers and therefore is the single biggest opportunity for automotive brands.
IMPERATIVES FOR SUCCESS
- Worry less about ownership and more about enabling the most consumer value.
- Be nimble in a digital space that is fast moving and unpredictable. New apps that capture consumer interest are constantly emerging.
- Enable integration with the widest range of services. The brands that provide the most flexible and adaptable interface will win the connected car race.