Who Owns the Road? the Iot-Connected Car of Today—And Tomorrow About the Authors
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Who owns the road? The IoT-connected car of today—and tomorrow About the authors Simon Ninan is a senior manager with Deloitte Consulting LLP and a subject-matter expert on the Internet of Things and the connected vehicle. He works with senior executives from global market leading companies to define and implement product, customer-experience, and business-model strategies for the setup and transformation of wireless-enabled businesses, particularly in emerging high-tech areas. Over the last decade, he has spent a significant amount of time working in the con- nected vehicle space and has witnessed firsthand the evolution of in-vehicle technologies and their supporting ecosystems. He also co-authored the paper “Acceleration of the connected experience: Vehicle connectivity and evolving customer expectations” in 2014. Bharath Gangula is subject matter specialist and research lead in the automotive and manufactur- ing space for Deloitte Services LP. He is the co-author of, among other articles and reports, “3D opportunity in the automotive industry,” “High-performance manufacturers,” “The changing nature of mobility,” “Cracking the genetic code of high-performing manufacturers,” and “Help wanted: American manufacturing competitiveness and the looming skills gap.” Matthias von Alten is a senior manager with Deloitte Consulting GmbH and one of our global senior automotive experts, with more than 14 years, automotive industry and 10 years, consulting experience. His client projects are focused on strategy and implementation regarding brand- and product-related topics as well as corporate planning and sales and marketing management. Brenna Sniderman is a senior manager and subject-matter specialist for Deloitte Services LP, focused on cross-industry themes and trends. Deloitte’s Internet of Things practice enables organizations to identify where the IoT can potentially create value in their industry and develop strategies to capture that value, utilizing IoT for operational benefit. To learn more about Deloitte’s IoT practice, visit http://www2.deloitte.com/us/en/pages/tech- nology-media-and-telecommunications/topics/the-internet-of-things.html. Read more of our research and thought leadership on the IoT at http://dupress.com/ collection/internet-of-things. Contents Executive summary | 2 Revolutions per minute: A balancing act | 3 Dare to DAIR: The R&D era | 4 OnStar and its constellation: The embedded era | 4 On-the-go: The infotainment era | 6 The onramp to tomorrow: The V2X era | 7 A crowded or empty driver’s seat? The new mobility era | 8 Who’s gonna drive you home? | 11 Endnotes | 13 Who owns the road? Executive summary UR cars have been connected for years, Analysts differ in their estimates, but all Oin ways that by now seem routine: They agree that the prospects are staggering. Gartner seamlessly link to our smartphones, register predicts that by 2020, more than 250 mil- real-time traffic alerts, stream our Spotify play- lion vehicles will be connected globally, with lists, and offer emergency roadside assistance the number of installed connectivity units in at the touch of a button. Indeed, automakers vehicles worldwide increasing by 67 percent began linking vehicles to information streams and consumer spend on in-vehicle connec- back in the early days of the Internet. When it tivity doubling. Deloitte’s consumer research comes to connecting drivers and technology, suggests that the drivers of the next genera- the auto industry has a longer and richer track tion want their cars to act as smartphones on record than any other sector.1 wheels, like to remain connected and produc- True, automakers have yet to turn the “con- tive while on the go, consider fully connected nected car” into a significant revenue genera- vehicles among the most beneficial futuristic tor or a key driver of vehicle sales: Despite technologies, and are ready to pay a size- two decades of TV ads promoting advances able amount for a vehicle that meets all their in in-vehicle connected services, drivers technology needs and wants.4 We expect the have resisted paying extra for those features, impacts on the industry to be transforma- either not understanding the new technolo- tional, not incremental. gies or simply seeing little value in the services As ever, new opportunities bring fresh offered.2 But this—and a great deal more—is challenges. As IoT technologies and services about to change. transform the automobile, the ecosystem is Indeed, the auto industry is on the brink witnessing a steady influx of new players and of a revolution, and the driving force is the the continued evolution of the roles of key suite of technologies known as the Internet stakeholders and the balance of power among of Things (IoT). With IoT applications— them. Of particular interest is the evolving grounded in advances in everything from relationship between automakers and software sensors to artificial intelligence to big-data providers. Each has a viable claim on the driv- analysis—all manner of objects, from wrist- er’s seat in the rapidly changing auto-industry watches to road signs, can be not only con- ecosystem, even as each new generation of nected but also “smart.” And both industry services promises to throw into question just insiders and everyday drivers will soon see a how long whoever might have their hands on fundamentally different world of mobility.3 the wheel can keep them there. 2 The IoT-connected car of today—and tomorrow Revolutions per minute: A balancing act HE connected car has evolved in distinct models and supporting technologies. That’s Tstages, or phases, over the last few decades why the best way to fully perceive the com- that show advances in both technology and plexity of the playing field is to use the past as the ecosystem in which that technology func- prologue, tracking the evolution of the con- tions. At each stage, not only are new features nected car from its earliest stages to where it and services added to the growing connected is today and where it’s going. Figure 1 outlines car product portfolio, but also new ecosystem these phases of evolution. players as well as, in many cases, new business Figure 1. Phases of evolution of the connected car The V2X era 2012–ongoing Examples: Tesla app, Nissan Nismo, Progressive Snapshot 03 The embedded era 1995–2002 04 Examples: GM Onstar The new mobility era 2020–ongoing 01 Examples: Tesla Autopilot, The infotainment era self-driving initiatives by 2007–2012 Google, Audi, Daimler 02 Examples: Ford SYNC, Kia UVO, GM MyLink The R&D era 1966–1995 00 Examples: GM’s DAIR system Graphic: Deloitte University Press | DUPress.com 3 Who owns the road? Dare to DAIR: The R&D era OnStar and its constellation: Since as far back as the mid-1960s, auto- The embedded era makers have looked for ways to enhance the driving experience with information. General When GPS technologies were opened Motors’ Driver Aid, Information and Routing up to civilian use in 1996, GM announced (DAIR) initiative sought to provide everything OnStar in collaboration with EDS and Hughes from directions to current road conditions and Electronics.6 As originally introduced, every accident reports.5 Far ahead of its time, DAIR connected car would have a digital commu- never got out of the R&D stage, mostly because nication module (DCM), essentially a phone the technology of the day simply wasn’t up to embedded in the vehicle, responsible for the task. Punch cards provided information for communicating information wirelessly to a turn-by-turn directions; radio relay stations telematics service provider (TSP) or the auto- and magnetic sensors buried in roads commu- maker itself. In a breakthrough we categorize nicated additional data. For such a system to be as Phase 1, this connected the car to informa- useful, it would have required ubiquitous avail- tion and services from the outside world to ability—in other words, deployment on roads enable a safer and easier driving experience. across the country or, at least, a substantial OnStar’s success is clear in terms of its abil- geographical scale—at the time, cost-prohib- ity to effectively push the right kinds of infor- itive and commercially unworkable, which is mation around the Value Loop. For example, why we classify DAIR as Phase 0, a connected safety services leverage sensors embedded in car before connections truly existed. the vehicle—aggregating information that the Conceptually, however, we can think about car creates and communicates associated with this effort in terms of how the information cre- safety-related events and emergency situa- ates value and therefore assess DAIR in those tions. Navigation services use GPS technology terms. The Information Value Loop describes to ascertain the auto’s location. Analysis of the stages through which information must the information enables the provider to use pass to create value, the technologies required augmented-behavior technologies to act on the to push information around the loop, and the customer’s behalf—from dispatching emer- characteristics of the data that drive value (see gency services to the site of a crashed vehicle to inset on page 5). providing live concierge services over the in- By connecting the vehicle with in-road sen- vehicle phone.7 The timeliness, reliability, and sors, DAIR created and communicated infor- accuracy of information are the most critical mation, analyzing it to provide an augmented value drivers, due to the importance of rapid response—action—in the form of navigation response in emergency situations and the legal and traffic information. In closed test environ- implications of safety failures.8 ments, the value was visible as information The automotive ecosystem was becoming completed the trip around the value loop. At more than just the car and its maker.