Digital Car - Sitting ducks pt. II
The best infotainment unit is the one in the pocket
A car maker with a future is a car maker that realises how vital its data is and pays the buyers of its vehicles for the right to use it. This also has the added benefit of creating a relationship with the buyer of the vehicle which is something car companies have not really bothered with to date. The latest survey from IHS examines the technology that consumers are and are not willing to pay for when they buy a new vehicle.
The data shows that consumers across the world are most willing to pay for a sunroof and rear seat entertainment systems with things like telematics and in-car Wi-Fi trailing significantly.
The survey also revealed that consumers expect technology in vehicles to evolve as quickly as it does in mobile devices. This creates an enormous problem for an industry with a 4 to 5 year design cycle where even the top end infotainment systems costing thousands of dollars are using hardware that is 5 years out of date. The result is that they can be outperformed by a $150 Android device. This means that the user is likely to have a better digital experience in a top of the range vehicle with a cheap smartphone rather than with the infotainment unit.
This strongly encourages the user to access his Digital Life with a smartphone in the vehicle rather than to use the infotainment unit. This is the last thing every car maker needs.
Users still buy cars based on performance, form factor, safety and economy but increasingly digital services will play a part in the user’s decision of which car they buy. If the infotainment unit is not being used and everything is being done on a smartphone then the digital battle will have already been lost and cars will have moved closer to being commodities.
Furthermore, the automotive industry has its strategy with regard to telematics completely back to front. Instead of forcing users to pay for telematics, they should be giving users a discount or free services for agreeing to grant access to the data that these systems generate. Using digital ecosystems as a benchmark, car companies could give users meaningful discounts on the price of the vehicle and still end up with higher revenues and margins. This is because the data that these vehicles generate could be very valuable to other companies who provide services based on collecting data. For example, using cars as weather or traffic probes would cut down on the need to install expensive infrastructure.
However, to be valuable, all cars need to be generating this data and while car makers continue to charge users for this feature, penetration will remain low leaving the door open for disruptors. One only has to delve very briefly into the world of start-ups to see this disruption coming. For example, many start-ups are providing their automotive related digital services on smartphones and not infotainment units and there is significant development of technology that could by-pass the car companies entirely. For example, a quick tour of the automotive section of a technology trade show revealed two companies that use vibration to work out exactly what is happening within the vehicle rather than use the traditional sensors. One of these claimed that it could, using 10 vibration sensors on a helicopter, completely replace the 160 sensors currently being used. This data could easily be relayed to a smartphone app and cut the car companies out from the only data source which remains proprietary to them.
We found these start-ups on the stands of the very companies which they intend to disrupt, further reinforcing our opinion that most of the automotive industry still has its head in the sand. Instead automakers should be aggressively moving to obviate the reason to be bypassed by making their infotainment units and sensor data easy to use and readily available with simple APIs. While, this reality persists, the automotive industry remains a sitting duck for the ecosystem companies who have long understood the value of that which the car industry seems to ignore.
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