6 Ways OEMs Can Prepare For the Demand of Connected Car Services

June 11, 2015  |  By Michael O'Shea  |       

connected-car-services

The connected car is heading for mass-market penetration. Where connected car services are only 10 percent of the market today, they are expected to grow to cover 90 percent of the market by 2020. OEMs need to stay on top of changing market conditions and anticipate what’s coming in connected car services to stay ahead of demand.

Here are just a few ways that OEMs can prepare themselves for the coming boom in connected cars:

1.    Safety and maintenance first.

Consumer awareness surrounding connected cars is high, especially as carmakers add new electronic safety features like smart brakes to the latest models. Seventy-three percent of drivers consider safety and diagnostics the most important features in the connected car, and most consumers (60 percent) want to access safety and maintenance features through the dashboard head unit. Consumers also want to access automobile diagnostics using handheld devices, like their smartphones and tablets, to check the car’s operations before leaving on a trip.

As part of this trend, more consumers are concerned with using connected car services to lower their insurance rates. They are starting to shop for solutions that support usage-based monitoring for insurance.

2.    More sophisticated smartphone integration

Bluetooth integration for phone support and linking music from your smartphone has been around for some time. In fact, fifty percent of car buyers see the ability to tether a smartphone as an important influence in their automotive buying decision.

Now that consumers have a taste of handheld device integration they want more. As noted, access to safety features seems to be high on the list, including smartphone alerts if the car is moved or vandalized. They also want easy access to all their phone functions such as social media from the in-dash infotainment system, and many are waiting for more sophisticated voice command features.

OEMs will need to be able to offer both full-featured infotainment interfaces as well as smartphone interfaces to meet customer demands.

3.       Direct Internet access.

Experts also see an evolution in Web and Internet support as part of connected car services. Today, the connection is indirect. The smartphone connects the driver to the Internet through an indirect connection through the infotainment tether. Integrating high-bandwidth Internet support directly into the car via the smartphone opens up new possibilities for obtaining telemetry data, better security, and more. Direct Internet access may be used for Infotainment functions too, although the phone's data plan may be better leveraged for streaming web audio, navigation and other functions due to the limited bandwidth available with the current generation of direct Internet solutions in cars.

This is going to mean updating the infotainment head units to handle Internet access. Drivers will want to interact with their car just as they interact with their smartphone, and for safety reasons the interface has to be simple. That’s why OEMs are looking at expanding voice controls. Consumers are going to start looking for a seamless experience whether they are interacting with their smartphone or their car. That is going to mean closer collaboration between OEMs and smartphone developers.

4.      The Internet of Cars

Building Internet services directly into connected car services means become directly connected nodes on the Web. They become part of the Internet of Things, which opens some interesting possibilities.

5.      Commercial Opportunities

As with smartphones, for example, smarter integration to the vehicle can improve things such as geographic tracking. With cellphone technology, marketers are experimenting with location-based advertising, such as your smartphone sending you a coupon when you walk by a pizzeria. The same technology can be applied to connected car services. These features could include drive through ordering/pickup, user-based insurance integrated into the car, vehicle health reports, and OEM CRM opportunities. Some visionaries are also looking at geo-fencing where the car’s location can trigger an event such as an advertisement or alert.

6.       Find more talent.

The convergence of technologies is creating a shift in the technology needed to support connected services market. New players are entering the market and new talents are needed to bring together automotive design, infotainment systems, Internet software, consumer electronics, telecommunications, and mobile application development.

According to research from SpenserStuart, one-third of automotive OEMs underestimate what is required for the new generation of connected car services. The best way to prepare is start looking for the right talent now:

“Lasting competitive advantage will belong to those businesses which invest in identifying, developing, acquiring and integrating the best talent available, both inside and outside the organization — from software engineers all the way up to the CIO and CMO.”

Right now, it is difficult for OEMs to predict the exact direction the connected car market is taking. Their best defense is to be prepared by finding the right partners capable of delivering new connected car services, whatever they may be. This is going to require finding the right expertise and finding new ways to work with industry outsiders. The future of connected car services is about technology convergence, and that means revamping partnership agreements and hiring strategies to handle whatever the future may bring.

 

Topics: Automotive Trends

Michael O'Shea

Michael O’Shea is the Founder and CEO of Abalta Technologies. He is responsible for all aspects of executive management of Abalta and a direct participant in many client engagements, particularly in management advisory projects.

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