How Will the Auto Industry Capitalize on the Internet of Things?
The “Internet of Things” is a very broad term, but think of it this way: in the future, all of our devices could talk to one another, enabling new ways to interact with the world around us. According to ABI Research, there will be more than 30 billion devices connected to the Internet of Things (IoT) by 2020. The devices included in this vision aren’t just smartphones and tablets; potentially, just about anything that can connect to the Internet and transmit data wirelessly can be considered a “device”: one’s home, one’s office, and even one’s car.
Nearly everyone in the auto industry agrees that a sea change is coming five or 10 or 15 years from now—nobody is sure exactly how the timeline will unfold—when connected cars will talk to each other or the Internet infrastructure while sending and receiving data from the cloud. Already, related technologies are being used in cars to help keep drivers in the proper lane, guide parallel parking, and determine insurance rates by monitoring drivers, though not in a very widespread way.
Like the consumer electronics industry has done, automakers want to use the interconnectivity of devices to offer more attractive products and features to their customers. Mining the data from connected cars is potentially very lucrative, and the auto industry hopes for a big slice of the profits. As complicated as it can be to harness data from vehicles, the chance to use data and connectivity to make cars smarter, safer, more efficient—and even, perhaps, able to manage smartphone apps—is too powerful for automakers to resist.
But to deliver on this vision, observers say, car companies will have to break down the walls of competition and secrecy in an unprecedented way—and work together to develop common usage standards, which currently don’t exist. The auto industry has to agree internally (and with stakeholders) to collaborate in order to streamline data mining and enable outside developers to access software. This is a drastic change for a business used to strict secrecy and cutthroat competition.
Indeed, there’s plenty of uncertainty for the auto industry surrounding automotive IoT, so I spoke with some key people at the GENIVI Alliance’s open automotive conference held outside of Detroit in October. GENIVI is a non-profit industry group crusading for the broad adoption of an open-source development platform for in-vehicle infotainment. The conference attracted thought leaders from around the world in the realm of connected autos, and the agenda was dominated by how cars fit into the Internet of Things: What are the opportunities, challenges, and trends on the horizon? Will the auto industry be able to collaborate to the degree necessary to develop truly connected cars without killing competition?
Joel Hoffmann, Intel’s automotive strategist and a GENIVI member, is one person working to strengthen collaboration surrounding the connected car.“The Internet of Things in cars is inevitable—it’s just a matter of time,” Hoffmann says. When it comes to the subject of one of the conference sessions—“IoT: game changer or game over”—Hoffmann says he doesn’t believe the Internet of Things is necessarily either one. “The point of the session was to debate how the industry will deal with the coming challenges and opportunities,” he says. “If [automakers] don’t figure out a way to embrace it, they’ll be out of the infotainment business. The car industry doesn’t want to give up that business opportunity.”
Some of the breathless anticipation of an Internet of Things future might be “a little overblown,” he admits. Though lots of people might want their cars to sync up with the rest of the devices in their homes one day, not many are spending the money to do it yet. And if the prospect of smartphone-like infotainment is too daunting for the auto industry—the safety regulations automakers are required to abide by complicate things considerably—Hoffmann suggests they could concentrate their resources toward developing driver-centric or safety features. “People will pay for safer cars—that’s been proven,” he says.
Smartphone makers have figured out a way to monetize connectivity through advertising and collecting “actionable” data, and automakers seem eager to do the same. In vehicles, however, Hoffmann says there’s no single entity to simply analyze the data, let alone monetize it. “The car makers have plenty of space to bring new ideas to the table, even if that means giving up some of it to Google or Apple,” he says. “You can’t do IoT without collaboration and an agreement on standards. Current suppliers and OEMs [original equipment manufacturers] have to be more open. If they don’t collaborate and open up, someone else, like Silicon Valley, will take over. But the car industry doesn’t have to look at it as a threat. It’s an opportunity.”
Doug Gilman, an automotive analyst for Frost & Sullivan, is also keenly interested in how the auto industry adapts to an Internet of Things world. For a new vehicle today, he says, up to 25 percent of its value consists of electronics, and by 2020, that percentage will increase to nearly 45 percent—and that’s a conservative estimate.
“Collaboration is a huge must for the auto industry,” Gilman says. He compares the innards of today’s car to that of the modern airplane. “The cockpit of an airplane is one of the most advanced electrical systems out there. Airlines collaborated to build it, but you don’t see this in the auto industry.”
Like Hoffman, Gilman agrees that a major challenge for car companies is how to make 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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