When the term Connected Car is referred to, what most often comes to our minds is a car that is intelligent, that is connected to a virtual force which empowers it to run its many functions autonomously while serving the needs of drivers and ensuring a great experience for everyone along every journey. This is basically what the Connected Car aims to achieve, though achieving this will require some revolutionary changes not only in automotive technologies, but also in telecommunications and IT.
The Connected Car we have today has achieved the goal of bringing the Internet onboard. Why Internet, one may ask. And why are people willing to pay for the service? Internet powers the vehicle in many ways, simply because it creates the connection to the 'Cloud of Everything' ie to real-time database or feed that will be managing and controlling the vehicle remotely. To create Intelligence in the car, one can either pre-program the car with all the information and logics it requires within it's operating system and local storage, or alternatively, host all these in the Cloud and deliver these to the vehicle via wireless connectivity as and when the relevant applications are run. Intelligence, of course, is all about providing the driver with real-time information be it traffic updates, weather information, digital content such as news, movies and music as well as delivery of assistance, navigation help and system software upgrades, which leverages real-time data collection, processing and analytics, which means that Internet connectivity to the vehicle is a must.
LTE Connection to the Car
Hence, bringing Internet into the car is what all the talk about the Connected Car was about these past 2 years, and various competing technologies made their debut globally, driven by initiatives by key players in this market. The most popular means of bringing Internet connection to the car comes from the Mobile Network Operators(MNOs), simply because powering a car's mobile Internet connection works exactly the same as powering a mobile device. 4G LTE Connected Car plans were rolled out in succession late last year and early this year, with MNOs bundling these as part of their shared plans or rolling them out on a stand-alone basis. These rollouts were customized to the local markets and user needs, and recent examples include Telstra's M2M connectivity for Tesla Model S cars, AT&T's Data Plans for Audi and Vodafone New Zealand's Global SIM and M2M platform agreement with BMW.
What followed MNOs' foray into the Connected Car business were various deals which were signed by them and automakers. The MNO-automaker model saw the latter taking an active role in the choice of content and services delivered to the Connected Car. Apart from providing a host of applications for managing and controlling the vehicle functions, automakers partnered content providers, for example, those providing navigation, music streaming, local search apps and news channels, such that all these content can be bundled as part of their Connected Car platform offering. The trend culminated in a notable acquisition in August this year by AUDI AG, BMW Group and Daimler, which via a consortium, paid EUR2.8 billion to acquire HERE, the digital mapping and location services company that will enable these automakers to deliver enhanced driver experience on their Connected Cars.
Tethering
The other means of delivering the Internet is via the smartphone, a method referred to as 'tethering'. This technology, deployed by the likes of Mirrorlink, Android Auto and Apple's CarPlay allows users to plug in their smartphones to their car's dashboard, connecting their cars to the Internet via the interface projected by their smartphones onto the digital screens in their cars. In this model, the automakers work with smartphone makers, developing connected car platforms that are compatible with the Operating Systems of today's major smartphone brands. The smartphone makers of course have a bigger say in the selection of content and apps that can be accessed by the driver, with MNOs having almost no influence. In this model too, the automaker either provides a separate embedded connectivity for managing the vehicle's telematics or leverages the Internet connection provided via the devices onboard to update its vehicles' systems and support its telematics services.
Wi-Fi Hotspot In The Car
These two models combined with in-vehicle Wi-Fi can turn the vehicle into a Wi-Fi hotspot, and unconnected devices can enjoy Internet access levaraging the Wi-Fi service.
The other option to connect the car is the innovative, yet hassle-free means of plugging purpose-built devices that communicate directly with the car's operating system (via the OBD), and are able to provide services ranging from safety to security, to tracking, navigation and location based services via cloud-based applications that can be accessed online or via a mobile apps. Examples of such solutions are those provided by Mojio, Geotab, Zubie, Verizon's Hum and EE's Buzzard 2.
Finally, there are newer connectivity technologies deployed by MNOs to connect today's cars including the LTE eMBMS Multicast technology which Verizon is deploying to power telematics and location-based services solutions for the Connected Car. These newer technologies will enable MNOs to deliver connectivity at a fraction of the cost incurred on cellular especially for broadcasting, mass software upgrades and location specific broadcasting services.
With connectivity now becoming less of a novelty, and back to the goal of creating the Intelligent vehicle, the focus in recent months has been on the services that are enabled by the Internet in the car. The connected car market is expected to be worth US$132 billion by 2019, according to a report by Transparency Market Research. Surely connectivity itself will not be generating this level of income, unless it unleashes an explosive growth in various services that can now be delivered to the car.
The growth in connected car services, namely vehicle management, journey management, entertainment and safety, has now become a key area of interest, with MNOs, content providers and automakers alike acquiring and developing various content platforms that enable them to bundle their traditional offerings with Connected Car services.
Among these service areas, one that has been around the longest is vehicle management which relates to telematics, and which works via the vehicle's operating system, enabling drivers to receive updates on the condition of the vehicle, including various vehicle components such as the engine, which can help pre-empt drivers on potential issues. The journey management on the other hand, is more driver- and location-focused, providing information about the journey, navigation help, traffic updates, R&R information, fuel updates, and a variety of location-based offers. Journey management also helps enterprises in managing their fleet, by making it easy for companies to monitor, manage and audit the journeys made by drivers.
Entertainment is probably the most interesting area of growth in the Connected Car segment, simply because it is the only area that took-off side by side with the Connected Car. Embedded Internet connectivity that was already present before the era of the Connected Car saw 'silent' communication between the vehicle and the cloud that it was sending and receiving information from, while the era of Connected Car made driver services the focal point of connectivity. The driver is therefore able to access the data that is being sent and received by the car and is also able to select and source the content he wants, from the wide range of applications enabled on the Connected Car platform. With the phenomenal growth in web-based digital content including videos, music and social media, and online apps that allow this content to be accessible across a wide range of Operating Systems and hence devices, in-vehicle entertainment has pushed the take-up on Connected Car services significantly.
Safety and vehicle protection have also created a strong demand for in-vehicle connectivity, which includes protection from theft, location tracking, driver behaviour analysis, emergency response etc. Today's connected car platforms feature applications that enable drivers to ensure that their cars are safe, and that they have ready access to assistance and allow various safety parameters to be configured to help drivers keep within the safety limits. An example of this is the ready-to-embed, cyber security solution suite for automobiles and aftermarket connectivity platforms such as OBD-II devices provided by Argus Cyber Security, which recently raised US$26 million. Argus' solution deploys Deep Packet Inspection (DPI) and Big Data technologies to deliver future-proof, adaptable protection against new threats as they emerge, keeping vehicles safe for their entire life span.
In a study by AT&T Drive Studio (AT&T's connected car innovation center) and Ericsson, based on the survey responses of potential car buyers in United States, Germany, Brazil, Mexico and China in July 2015, three out of every four consumers said that they consider connected car services an important feature in their next car purchase. Infact, 78% of car buyers said that they would delay a purchase by one year to buy a car with connected car services from their preferred brand. More interestingly, the study showed that consumers prefer to add their connected car wireless connectivity to a shared data plan, pointing to MNOs' opportunities across the various segments within the Connected Car value chain as they continue developing their Connected Car platforms, applications and connectivity technologies to rapidly grow their revenues from the lucrative Connected Car market.
