IoT Blog
IoT Blog

Top 3 Keys for Automakers to Succeed in Connected Services

by Andreas Kohn, Director of Marketing, Automotive Solutions
In a recent report, Disruptive trends that will transform the auto industry, McKinsey & Company examines how the dynamics of emerging markets, sustainability policies and changing consumer preferences will affect technology trends in the automotive industry. Technology-based innovations, the report claims, could drive new business models that expand revenues by up to 30% – or up to $USD 1.5 trillion. At the same time, the accelerating speed of innovation means shorter life cycles for mobile solutions; this creates consumer expectations for similar advances in their cars and increases demand for upgradable features. 

Connectivity is one of the disruptive trends identified in the report. The Internet of Things (IoT) is enabling telematics-centric applications that will transform the fundamental relationship between auto manufacturers and vehicle owners. When automakers are no longer just a supplier but become a partner to their end customers, they can explore avenues for new services and new sources of revenue. At a time when global car sales are slowing, it’s crucial to find new business models and value-added services to help close the revenue gap.

Embedded connectivity enables services, such as crisis assist, stolen vehicle services, navigation, traffic assistance, infotainment, and usage-based insurance. Only 10% of new cars sold today come with embedded connectivity.  By 2020, this figure is projected to grow to 30%, and the most competitive automakers will be integrating applications with big data collected from vehicles to offer high-value connected services.

How much automakers can capitalize on this opportunity could come down to a few key considerations, including:

Choosing the right cellular technologies

Given that a vehicle lifetime ranges from 10 to 15 years, the automotive industry faces a unique challenge when it comes to building connected solutions: selecting the technologies best able to accommodate the evolving cellular landscape. Auto manufacturers, telematics equipment and service providers must consider network flexibility, coverage, ongoing development, and ongoing service management of vehicles in the field.

In keeping with best practices, this translates into using the latest technology available. LTE modules that are backwards compatible with 2G/3G offer the flexibility needed as carriers phase out 2G/3G cellular network infrastructures and upgrade to 4G/LTE.  Select SIMs that come pre-certified with multiple operator agreements for the widest-possible seamless coverage in a given region.

Ensuring the deployment is cost-effective and future-proof

Beyond customer experience, however, deployments for the IoT must be cost-effective. This begins at the development stage and ends with service management for vehicles out in the field.

Fast-paced changes in technologies, subscriber services, and market demands make it impractical to integrate solutions using proprietary products. Solution providers will achieve better ROI by building services on a common open source application framework that supports multiple platforms. Software built developed on such a framework is highly reusable, easier to develop, and gets to market faster.

Moving to the cloud

The final best practice is to move to a cloud-based management platform for efficient deployment and services management. Auto manufacturers can simplify software maintenance through secure, over-the-air delivery of software fixes, updates and new functionality. An IoT-centric platform would also have the ability to manage subscriptions, operator agreements, and provide end-to-end security.

By selecting the right technologies now, automakers can be more innovative, build closer relationships with customers, and create new business models. To learn more, read our new white paper, A New Business Model for the Connected Car.

Download White Paper