IMS Blog

Planning for the Future of the Connected Car

If we look at technology through history, and use the recent evolution of the smartphone as a gauge, we can see the close correlation of disruption patterns between cars and telecom. This correlation can allow us to anticipate the trajectory in which the connected car industry will inevitably follow.

In the next few years consumers will expect car connectivity as a standard feature in all vehicles, much like back-up cameras and navigation systems are available in vehicles today. Connectivity will encompass Bluetooth, WiFi, and cellular networks such as 4G/LTE. With this expectation and evolution will come a variety of revenue generating opportunities for automakers. OEMs should be poised and ready to form relationships with mobile carriers and Tier ones, to establish control points and hold on to their share of the connected car market.

Because of the complexity and deep integration of all devices in a connected vehicle, the consumer lifecycle will be longer than that of a smartphone. That being said, the lifecycle of smartphones is also now increasing due to the growing complexity of innovations.

Although there is much to compare between the two industries, it is by no means the same. The disruption of the connected car industry will be different in several critical ways. For example:

  • Power – Phones are constricted in size relating to the size of battery required to run them, as well, many apps using the camera and GPS functions tend to drain battery life incredibly fast. In a car there is no such concern; many applications would run perfectly with virtually no effect on the car battery.
  • Processing- Cars can contain a portable data centre, without relying on external processing in the cloud, like a phone.
  • Risks- security is the number one concern with connected vehicles. There is a lot of work to be done to enable connected cars to be protected from hackers and computer errors. Unlike with a phone hacking, the implications for a car can result in physical harm.

The value of the connected car will primarily be concentrated in the software and applications versus the hardware. The role of mobility, software, and services is critical, they will form the framework for experiences, powered by analytics, data and connectivity. Revenue channels will be generated through new forms of innovative content delivery through the systems of the connected car.

Like fuel and maintenance, consumers will start to fund connectivity of their vehicles as a recurring expense, which can occur through various touch points. The possibilities of revenue generation through connected cars are endless like when drivers are filling up gas, they could pay via a connected car wallet.

The future of connected cars inevitably includes bundling of mobile, car and home connectivity for app, data and entertainment services for an integrated user experience. Innovation carriers will need to perfect an in-car user experience that will be exciting for consumers, in order to be successful. We are poised for a future, where no car will be unconnected. It is forecasted that by 2020 there will be 250 million connected cars on the road. Creative methods for revenue generation will be key, and the industry player that acts the fastest, and assume the leadership role in the market will be poised for a long-term win and industry influencer.

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