IoT and Cars. Spark-Plugs and Revenues

|September 27, 2016 0
Image courtesy of digitalart at freedigitalphotos
There’s more than souped-up infotainment to the sound of cash registers ringing in and around wheels of the future. OTA updates in Cloud, location services, ride sharing, internet radio, Wi-Fi access, connected services, autotomised services and multi-dimensional payment models – if you thought you knew how auto-makers drive revenues, take a U turn here.

Pratima H

CALIFORNIA, USA: Why are the likes of Ford, Audi and GM doing things they never could have thought of before? Why are heavy vehicles and mobile telematics as much in the IoT fray as their passenger-wheel counterparts? Most importantly, is the next big buck going to come from inside the vehicle or outside of it – and from whose wallet?

As many as 250 million vehicles to be connected by 2020! Consumer spends on in-vehicle connectivity to double! Gartner’s estimates are perhaps underlining the big wave that is already kissing the shores of our everyday world, and soon enough they would be making a huge splash around automotives.

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Now what remains to be deduced is where exactly would this IoT tide send out new ripples – the core car market, the parallel track of Uber, Ola, Zipcar etc or even the digital ecosystem that is going to take up more boot space in the auto industry of the future?

As hard as it is to believe now, one of these ripples could be actually huge and almost a 360 degree spin when we think of revenues. From the post-Uber world disruptors to pre-Uber world car majors and fleet owners on a different highway, almost every player is now strapping the seat belts off a new word – Revenues.

It’s hardly a word to complain about and most industry players – whether in the main seat or on the fringes – would love the idea of IoT igniting new and more revenue tracks. This could be a new and exciting blip on their radar though. Or not?

We share a front-row seat with Brendan O’Brien, Co-founder and Chief Evangelist at Aria Systems, and try to understand how exactly would this era of IoT transpire for auto-makers and other industry participants, whether it is those famous bonnets, some heavy vehicles or the TaaS brigade? Specially when a car-maker has an entirely different lifecycle, constraint-bag and mind-set than a typical software-maker?

 

Revenue and services via technology in auto industry: how disruptive would a car-maker’s business model have to get here?

In order for today’s automakers to become tomorrow’s mobility solution providers, their new business models absolutely have to be quite different from what they are doing now. Automakers can continue to be the fleet providers to the disruptive forces in the market like Zipcar, Lyft, and Uber. They can add on connected car services.

But in order to really stay ahead of the curve, they will have to become a disruptive force themselves, developing recurring revenue models that provide the choices in mobility services, connected car features, purchase alternatives, and soon, autotomised services, that consumers are demanding. They cannot continue to outsource this innovation.

How easy would it be for automakers to align their business ecosystem, design strategies and product lifecycles to those from the software guys?

It is not going to be easy for automakers to match the design cycles and lifecycles of the tech industry. For one, it takes much longer to design a car than, say, a Smartphone. Second, you cannot release a car that is not nearly perfect—not only are there myriad safety concerns, but consumers do not take bugs in cars lightly. They call them defects, they are unacceptable, and it’s unlikely that people will take the early-adopter mindset that it’s OK to deal with a few bugs to be on the cutting-edge anytime soon.

Third, cars have much longer lives than most technologies—the average age of a car on the road in the U.S. is 11.3 years old, so it has to be good. There are some solutions, though. First, hosting services in the cloud and enabling Over the Air (OTA) updates will help keep cars up to date and manufacturer-born services current and online.

Any examples that you can cite to establish the revenue proposition and its use in the real world? Any observations on what OnStar, Android Auto, and AppleCarPlay are doing?

Well, we need to be clear that significant recurring revenue streams will not be realized only from souped-up infotainment systems. However, systems that connect seamlessly with our mobile devices are in high demand,—and nobody has yet been able to perfect it—CarPlay and Android auto gets us closer.

Seamless tethering and hand-offs with mobile devices (and soon, our entire personal IoT ecosystems) can be a boon to automakers that want to monetize the trove of data that will become available from this circle of connections that will be completed by connected vehicles.

What about the customer side of this model? Would they pay?

This all depends on the involvement of OEMs (Original Equipment Manufacturers), but in the end, the consumers themselves will make that decision for themselves. You need to provide customers with multi-dimensional choices—when to pay, how to pay, what to pay for, subscription and usage models that fit their lifestyles—and if you don’t provide it, consumers will flock to whomever provides the ultimate level of multidimensional choice and flexibility.

Brendan O’Brien

Brendan O’Brien

Would interoperability, accuracy, and latency be big kinks to consider?

Yes, but there are solutions that address all of these concerns. This is exactly why we’re now offering Aria for Connected Vehicles, so OEMs, third-party device manufacturers, and service providers can rapidly create, introduce, test, and scale a wide variety of IoT and digital offerings. It facilitates usage monitoring, monetization, and billing of on-board diagnostics (ODB) data streams at both the IoT platform and application levels, and it integrates with technology ecosystems like: smartphone apps, entitlement/provisioning systems, payment processors, as well as existing accounting/GL systems.

And the cloud technology is fully scalable and capable of handling virtually any level of usage. This will allow companies that traditionally dealt in one-time transactions to capitalize on these new recurring revenue streams.

It is an incredibly exciting time in all of the connected vehicle sectors, and the way we think about driving will likely change much faster than we could have imagined just a few years ago.

What are you trying to do with Aria’s new solution in this new realm?

It is fair to say that we introduced the world to cloud billing, and innovated database-driven, enterprise-grade web applications – before the concept of “cloud” was even on the horizon. Leading the recurring-revenue revolution charge, the company is empowering enterprises by enabling information systems and new business models to secure predictive revenue streams while improving business processes.

We have unveiled ‘Aria for Connected Vehicles,’ a cloud-based monetization offering for IoT enabled connected cars, heavy equipment, on-demand transportation as a service, telematics, and post-sale/lease add-on services.

The idea is to enable automakers and service providers to rapidly create, introduce, test and scale a wide variety of IoT and digital offerings.

Can you explain the proposition for other segments of the industry – like heavy vehicles, transportation as a service (TaaS) and autonomous vehicles?

Usage-based monetization models and IoT integrations are already popping up in the heavy equipment industry with leaders like Caterpillar and John Deere using the technology in many different ways. This will be a fast-growing sector, and we have yet to see its breath. As far as TaaS and autonomous vehicles go, just take a look at recent actions by Audi, General Motors and Ford. Audi is currently offering two different types of ‘lifestyle access’ programs including on-demand cars, and pooled usage. Ford just picked up San Francisco crowd sourced-commuting company Chariot (which uses Ford vehicles), and they have also promised fully-autonomous vehicles by 2021.

The autonomous cars from Ford will only be offered (at least initially) as a commercial mobility service, and not for traditional purchase, pointing to a shift to usage-based, recurring revenue models. General Motors is also getting into the autonomous ridesharing fray, and they say they will be launching a fully autonomous vehicle with its partner Lyft in about five years.

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