Connected Car Market Outlook
A connected car is one that incorporates onboard sensors, Internet connectivity, and electronic products or gadgets such as smartphones, music players and to connect with networks outside the vehicle. The technology currently gaining traction for enabling connected car are driver assistance system, short-range communications, remote diagnostics, predictive intelligence, on-board diagnostics. Onboard navigation and Bluetooth systems have been featured in the cars from quite some time. In the present scenario, driver assistance system, short-range communications, remote diagnostics, on-board diagnostics, the in-car electronics smartphone applications to operate via the car dashboard and vice versa. New features have started to appear with active ongoing development in the industry. The automotive industry is still lagging behind with regard to connected car concept integration, and it is expected to take few years for the industry to evolve as the regulations are expected to cause a hindrance for the growth of the connected platform.
Consumers have high expectations with respect to connected devices. The consumers are comparing their handheld devices with in-car electronics. The connected car will open up opportunities for the allied industries to bank on. Industries will converge to open a new set of revenue streams. For instance, insurance companies will enter the market with an aim to charge a premium based on driving patterns. In addition, the advertising companies will enter the market by collaborating with location-based service providers, further allowing them to display ads on the dashboard based on the user location and search results.
There are clear cut opportunities for the successful deployment of connected cars. However, as the new features and business models are introduced, it will take time for the market to realize its real potential. The automakers who are still not active in the development of products for the connected car will lag behind in the battle for supremacy. Moreover, there are not many regulations at present, but with the advancement in technology and the growing consumer awareness about the pitfalls of sharing personal and location-based information, stringent regulations will come into play. This will further require companies to develop solutions that comply with these regulations and policies.
The automakers and suppliers are increasingly paying attention to all the features, especially with respect to navigation and diagnostics, and the developers are focusing on developing safe and easy-to-use solutions to provide the users with the best possible operational experience. The smartphone companies have a huge potential in this arena. Products with better UX design are expected to win the race in the long term.
Smartphone providers such as Apple and Google are expected to play a critical role in the connected and autonomous car segments. The smartphone companies are expected to disrupt the industry with their unique application- and design-related features. With respect to their proprietary technology, smartphone companies have the ability to merge the automotive platform with in-vehicle applications.
It is impossible to ignore the entry of smartphone companies given their market share in the smartphone industry. The automakers are also planning to implement their own branding strategies with regard to infotainment systems. As data will be the key source of the revenue stream in the future, if the smartphone companies such as Apple and Google enter the market, the automotive industry will be driven on the terms of smartphone companies. Thus, it is crucial for automakers to introduce their own connectivity solutions.
Today’s consumers expect smartphone-like experience inside the car. This end user demand will reduce the profitability for the Tier 1 suppliers and automakers. As the tier 1 suppliers and automakers are already incurring the costs for hardware, telematics solutions and free trial period, providing the smartphone-like experience will incur an additional cost. To focus on customer retention and brand loyalty, the automakers need to appease the consumer by rolling out innovative human-machine interfaces. This will further incur additional cost in the vehicle ownership. Thus, to address this challenge, the companies need to opt for open source platforms, which will further allow them to create a solution across a brand without incurring any additional development cost burden on the consumer.
There is a multitude of challenges which include migration of the proprietary system to open source, creating a free platform for the third party to create applications. This will further increase the safety issues and cybersecurity risk. The automakers further need to come up with the certification to allow the usage of individual applications on their platform.