Gotta Get Connected

“Connectivity is a basic human need,” Andrea Sroczynski, head of Global Automotive at Telenor, told the more than 1,100 participants at the Telematics Munich 2014 conference. In just six words, he neatly summed up the astonishing sea change in human and social behavior that the technology has provoked in the short time since June 2007, when the first iPhone was released.

Just how rapidly connectivity services have grown since then was illustrated by something else Sroczynski said: “There are now more connected things than people living on Earth.”

Impressive as this datum is, it is merely the tip of the iceberg to come. According to Floris van de Klashorst, vice president of Connected Driving at HERE, 95% of all the devices that? will eventually be connected are not connected today. In addition, Martin Rosell, managing director, Wireless Car, says that of an estimated one billion cars on the road worldwide, only about 20 to 25 million, or 2% to 2.5%, are connected vehicles that were connected by OEMs.

And in his book The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism, the writer Jeremy Rifkin estimates that by the year 2030 there will be 100 trillion sensors connected to the Internet.

These facts and predictions suggest that, on the one hand, the ecosystem is still at the beginning of a long growth and learning curve and, on the other hand, the potential for connectivity in general and the connected car in particular is enormous.

The young space is still fragmented, with most companies still tending their own walled gardens and basing their business models on yesterday’s business cases. What is needed is a single unifying vision that ties the various ecosystems together and puts everyone on the same page. And that vision has already been articulated. It is called the Internet of Things (IoT).

IoT, or The Promised Land

In her presentation, on the second day of Telematics Munich 2014, Sroczynski used an eye-opening example to illustrate her point that the IoT can—and probably will—connect practically everything and has vast potential bring benefits to both consumers and manufacturers.

“There are more and more things getting connected,” she said, and showed a slide of a connected basketball equipped with “super-nice sensors inside,” which she used to demonstrate how ubiquitous connectivity is not only disrupting lifestyles, but “is also a changer of business.”

“It’s the same as a normal basketball, but you can track the way you are playing,” she said. “You can make challenges with your friends and partners.” But most important for the manufacturer of the basketball is that “you can upsell things.”

In this case, connectivity exemplifies “the trend going from product to services,” Sroczynski said, “which is helping to get people stuck to your brand.” It also leads to the creation of new revenue models because the basketball enables the producer to add bonus services via connectivity, such as special training classes by established basketball stars.

She asserts this will create a community centered around the connected product and for which the manufacturer will provide a system and, of necessity, services that create brand loyalty.

Sroczynski might have gone further. The connectivity can also help track the scores of the customer’s favorite team and the performances of his or her favorite players. It’s also easy to envisage online competitions or a social network of basketball fan clubs communicating with each other via an app.

Sroczynski then quoted Stefan Olander, vice president of Digital Sports at Nike, who’d said, “Before, the product was the user experience. Now it’s the starting point.”

The same will apply to an automobile. “At one point, a new car is really exciting, but then it’s just a commodity,” she said. “But it is something else if you have nice services, [such as] if I go to the dealer and he knows exactly what I want to have. Time is critical for all of us, so if the service can help you save time and make our life easier, this makes it very interesting for people.”

Using connectivity to provide services has many advantages for OEMs, Sroczynski maintained, including cost savings, especially on maintenance; increased business; and increased revenues from new business models.

“Now is the time for it,” she said. And to prove it, Sroczynski made available the results of a survey taken by Telenor of 100 Swedish companies from different industries. The survey found that an impressive 77% of these companies said they would take advantage of connectivity in the next two years.

“They’re going for it,” she said. She added that cost savings were no longer the most prominent business reason for connecting with the IoT. “The primary reason [they gave] was that they wanted to improve their service to the customer, but also for themselves. To make it more efficient.”

She concluded that the “service idea” had become embedded in the minds of many companies, so much so that 60% of the companies in the survey said that this was a game-changer, that being connected would change their business.

Sroczynski said the strategy going forward, for car OEMs and other companies, is: “You definitely have to have a vision of where you want to go. But I also say, you should start simple.”

“Digital is a mindset,” she said. “It’s no longer a question of technology. You must transform your business; but that also means that you have to transform your company. If you?are a product company, you don’t have contact [with your customers]. But if you have a service, people expect 24/7 services from you. You require different skills.”

But this is precisely what is preventing many companies?from taking the plunge. David Green, marketing development director at Volvo, said, “We are definitely seeing business cases for Big Data, and there are huge ones out there…For example, we can see how people use their cars. That is valuable data.”

He went on to say that Volvo, no doubt like many other OEMs, was reluctant to take the plunge with data because it was potentially too disruptive. “There are a lot of ideas out there, but we have a great deal of trouble implementing them. It’s a big mindset shift to go from producing cars to producing services. The big question is, how much money can you get out of it?”

But Sroczynski was adamant that carmakers must stop being timid. “You just have to start,” she said. “If you wait, nothing will happen. You have to have guts. No guts, no glory.”

Jörg Lützner, head of Services and Commercial Vehicles, Interior Electronic Solutions at Continental Automotive, agrees. He said, “You have to have the guts to start something and build it up step by step. We all have to take the plunge. We all have to take certain risks.”

One prominent car OEM that has taken the plunge into connected services is Mercedes. Ralf Lamberti, director of Telematics, Infotainment and Cabin E/E, at Daimler, introduced the brand’s new Mercedes me service at the Munich conference.

It offers a broad range of existing and future services all bundled together and made available to its customers on a digital platform. The standard services currently available to drivers include maintenance and breakdown management, eCall, accident recovery and remote diagnosis.

Additionally, there are online services that allow customers to connect to their vehicles anytime and anywhere. This makes it possible, for example, to preheat the vehicle from a mobile device and enter the estimated departure time, ensuring that the car is at the desired temperature at the right time. The solution also offers real-time traffic information via TomTom.

“We will build on this architecture and add more and more services,” Lamberti said, citing remote door unlock, geo fencing and vehicle tracking, among others. In addition, customers will be able to locate their vehicle from a mobile device and be guided to it via a map.

Mercedes drivers will also be able to retrieve a variety of data from the vehicle, such as tire pressure, fuel level and remaining mileage and average fuel consumption.

“The car, being a part of the Internet of Things, you can also turn on and off various systems—you can interact with the car,” Lombardi said. “You can pre-configure air condition and battery loading, for example.

And looking down the road, the Mercedes executive added, “We are done with bringing the Internet to the car. The next big challenge will be bringing the car to the Internet.”

For all the latest on the connected car in a connected world check out TU-Automotive Detroit 2015 (June 3-4). 

 


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