How Will the Auto Industry Capitalize on the Internet of Things?

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money from the data they collect—things like location, driving habits, performance issues, the types of music drivers like, and where they stop to shop, to name a few. “The privacy issue will play a big role in whether they can monetize,” he adds. “Look at OnStar—six million users and they’re still looking for a way to monetize that data. Right now, there’s not a real answer for how to do that.”

In addition to privacy concerns, there are worries about security. The automotive Internet of Things environment is potentially just as ripe for hacking as any connected entity. “Cyber security is going to be a huge risk in the coming years,” Gilman says. “With so many lines of code [in the connected car], it really opens up the liabilities. As of today, there are no specific cases of a security breach, but a study conducted at the University of Washington demonstrated these attacks are possible. The worry is that someone could turn off the power steering or the anti-lock brakes.”

But, in Gilman’s opinion, automotive IoT is hardly all doom and gloom. He sees a major opportunity in harnessing vehicle data to improve vehicle relations management—in other words, the ability of dealerships and manufacturers to retain customers.

Car companies imagine a world where the vehicle tells the driver that it’s time for the tires to be rotated or other routine maintenance to be performed, and then digitally schedules an appointment with the dealership on its own. Software on the car (or in the cloud) could do that after patching into the driver’s calendar on his smartphone. It’s an easy way to cultivate customer loyalty that involves very little work by the customer.

Meanwhile, Gilman sees both a challenge and an opportunity in the lack of personnel currently able to mine the data collected by connected cars. The IT infrastructure required to go through all that data is staggering, he says: “North America has 4,000 petabytes of data. The Chevy Volt delivers six gigabytes of data every hour. We need to train people in this specialized skill set.”

With all of the challenges that the automotive IoT is expected to bring, an automotive and web platform business group has formed within the W3C to handle what’s to come and try to hammer out a set of common standards. The W3C is the shorthand name for the World Wide Web consortium, an international community where member organizations like Apple, Google, Jaguar Land Rover, and GENIVI work with the public to develop Internet standards and “lead the Web to its full potential.”

Paul Boyes, director of telematics and standards for OpenCar, as well as the co-chair of the W3C automotive business group, says the group is made up of 100-plus participants from more than 50 companies: manufacturers, suppliers, software companies, and more. The initiative “allows for developers to get more involved, and auto manufacturers are looking at it as a way to manage data. But it’s also a way to provide an interface for car functions,” he says.

The WC3 business group is tasked with creating use cases and requirements. It creates reports, not actual standards, which are in turn recommended to the industry to mull over and decide whether to implement. Auto manufacturers want to distinguish themselves by the features they offer, he says, and if they’re also attempting to share data with outside developers, a major sticking point is how to create common interfaces that don’t infringe on intellectual property or security. “Getting a subset of data useful to developers is a challenge,” he notes.

The differences in the ways OEMs want to implement in-vehicle connectivity can also cause contention, Boyes says. “A lot of people sit back and don’t contribute. It requires drive and participation and management buy-in. It’s a big challenge.”

If a major auto manufacturer like Ford or GM opened up access beyond portals for infotainment developers, the other manufacturers would fall in line, Boyes predicts. But who goes first? “Everyone has their own initiative when it comes to HTML5, and they’re afraid of losing their competitive advantage,” he says. “However, standards have to win over proprietary information. I don’t think it’s an insurmountable challenge—it just takes time.” (As it stands now, Boyes explains, Pandora writes its in-vehicle app code 15 different times for 15 different OEMs because they all have a slightly different, proprietary interface.)

To Boyes, however, the opportunities associated with automotive IoT are too great to be ignored. The location data alone is very valuable, he points out. Manufacturers can use other data collected in vehicles to see what’s going on with cars “in the wild” and spot problems or suggest repairs, building better relationships with customers. Apps could also do things like send a coupon to drivers as they drive past a favorite restaurant or store, opening up another potential revenue stream.

There’s still the question of who builds the infrastructure needed for a car’s sensors to pass information back and forth from the cloud to local objects, like parking meters, traffic lights, or other cars. Boyes says Europe has started building its infrastructure, but the U.S. isn’t quite there yet—though it could be.

“I think you’ll see the infrastructure built in the U.S. within the next five years,” Boyes says. “The technology is already there.”

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Sarah Schmid Stevenson is the Custom Content Editor for Xconomy Insight. You can reach her at sschmid@xconomy.com. Follow @Xconomy

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3 responses to “How Will the Auto Industry Capitalize on the Internet of Things?”

  1. Be-Bound says:

    The IoT is, without the shadow of a doubt, change completely our lives and the way we do things. Connected cars are a very good example of all that can be done on the subject. However this will all happen if we have a connection continuity in all areas not covered by data network (3G, 4G etc…).

    • Sebastien Latapie says:

      Completely agree, the scope of opportunity that this is creating is tremendous, and kind of overwhelming to take in at once.

      Getting everyone to collaborate is not going to be easy, but is such a critical first step. I hope they avoid the mistakes made with infotainment systems. Looking at the infotainment systems, they are all garbage compared to what is available in the consumer tech industry. Why can’t I simply sync my phone and use Google maps instead of their proprietary system.

      As for the connectivity issue, it would be neat to have something operate like Fire Chat, enabling cars to communicate with each other even in the absence of 3G/4G.

  2. Joel Hoffmann says:

    I’d say connectivity is important, but look at how many people use tablets without constant connectivity. If cars wait for that, it will NEVER happen. There is no business model that justifies putting cell towers in remote rural location, around mountainous (and stunning) roadways. What IoT means is cooperation and agreement, not to just make standards, but to use them by developing software. That’s how Apple and Google are succeeding.