Last month I had the opportunity to spend the week at Mobile World Congress held, conveniently enough, in my second home town of Barcelona, Spain. Mobile World Congress (MWC) is the largest exhibition in the world for the mobile industry, so it's quite telling that there was so much around the vehicle experience showcased this year. At this year's show, there were 101,000 attendees from 200+ countries and over 2,200 companies exhibiting. It was also the 5th straight year for Ford keynote participation.
Mobile technology is evolving quickly, and customers are expecting their automotive experience to match the quality of their smartphone experience.
One key takeaway for me is that connected cars are definitely here and now, but no one has yet created the "must-have" connected car experience. The value proposition of the "connected car" is strong for automakers, mobile operators, and customers...all of whom benefit when investments in vehicle connectivity and smartphone integration platforms are leveraged in innovative ways. In theory, it's a win-win-win...in practice though, there is no breakout product or service experience in this space yet. There hasn't been the "Windows 95" or "iPhone" moment yet. There is clearly customer demand though. The market for new cars is up and these are, by and large, the same people who are driving demand for constant connectivity because of their increased dependency on technology.
Things to keep your eye on for 2016
eSIM - A number of automotive and transportation companies have announced support for the GSMA Embedded SIM Specification. This is going to allow automakers to remotely provision connectivity over the air to vehicles, regardless of their mobile operator or where the vehicles are manufactured. This will be a major change that is going to dramatically accelerate growth in the connected car market.
What should we keep our eye on: We will not see any big moves this year, but keep your eye on the ever growing list of adopters.
Connectivity Enablers - Samsung showed off "Connect Auto" at MWC. It is a small device that does not connect directly to the driver's smartphone via Bluetooth. Instead, it makes use of an onboard 4G data connection to beam gathered data and location info to a cloud-based service that analyses these data and uses it to provide functions such as "Find My Car" (i.e., real-time GPS), travel logs and expense reports for professional road warriors, usage-based insurance, and other safety features. It also gives the driver eco driving assistance and time on the road as well as price per gallon. This little device launches Q2 in the U.S. with AT&T as its first partner, and globally by Q3.
What should we keep our eye on: Samsung, and other consumer electronics players, want to bring the car into their ecosystem. We will likely see similar offerings from others in the near future.
First Movers - Spanish auto-maker SEAT has partnered with Samsung and SAP to target the very specific use case of parking. Using the car's own navigation system, a driver can find open parking spaces (useful in dense urban environments) and pay for them using Samsung Pay. SAP is hoping parking operators buy into their technology for tying all of this together.
What should we keep our eye on: While there is no official launch date for SEAT's connected car vision, we will likely see signals from other automakers and partners testing the waters. As noted earlier, the value proposition is simply too big for incumbents as well as new players to ignore, but everyone is still figuring out how to work together and will be truly game changing versus simply incremental (which automakers are already pretty good at).
Virtual Showrooms - Fiat Chrysler Automobiles has unveiled a prototype of an immersive car sales application. Other automakers are experimenting with this approach as well; e.g., Audi has "Audi City" in London, Nissan has partnered with Google for theirs, Jeep, and even Ferrari has their "Virtual Showroom App". Some might see these as more gimmicky than anything substantive, but it's clear that automakers want to transform the buying experience for both the sales people and the customer.
What should we keep our eye on: The way people sell and buy cars will change. The Virtual Showroom approach is a signal of this, but it's probably more style over substance at this point. We should continue to look for the experiences that are truly integrating the sales process into this experience and not just an app that people use to pretend they're looking at a real car. The goal should be to create new business opportunities and solve any problems that customers have with the current process.
Ford Smart Mobility - Ford deserves special recognition because out of everyone they are really going all in on this transformation. Not only have they had a keynote spot at MWC for the past 5 years, but they introduced a new automotive brand at this year's congress. CEO Mark Fields stated during his keynote at MWC that the company is in the midst of a major transformation from an automaker to an automotive and mobility company. Their focus areas are: connectivity, mobility, autonomous vehicles, customer experience, and data and analytics. They are really serious about transforming everything their company is about to become an indispensable part of their customer's mobile ecosystem.
"We will do for the auto industry what iTunes did for the music industry."-CEO, Mark Fields
Ford has assembled a team of dedicated digital experts, designers, and anthropologists to study experience leaders in other industries (e.g., Nespresso, Rip Curl, Nike Digital, etc.) in order to explore how Ford might transform itself. This is radical for the automotive industry, which typical is very inward and benchmarking focused.
What should we keep our eye on: Ford is building out its own ecosystem for connectivity. This is beyond having a 4G modem onboard. It's about taking the iTunes model and applying it to automotive, so what might we glean from this?
iTunes is largely responsible for the breakout success of the original iPod. Yes, the iPod had dramatic industrial design for the time and other hardware oriented aspects going for it, but managing music was a huge pain and iTunes was the first application that came along that really solved that problem. iTunes became the spider in the web for the continuous rollout of new products and new product categories by Apple throughout the 00's and teens. The iTunes ecosystem became more valuable with each new Apple device I invested in, and as such this drove what has become known as the Apple "Halo" effect. This is what Ford wants to do, and to be fair it's probably what everyone wants to do, but Ford is clearly investing in this in ways that other automakers are not. Yet.
The connected car ecosystem will bring the winning OEM the following benefits:
Customer Retention: Lifelong relationships with customers build around the cloud, and happy customers who love their stunning in-car user experience.
Higher Sales: Vehicles that are uniquely differentiated via connected features will attract customers from a wide variety of demographics. The connected car ecosystem also provides the winner with the groundwork around which future additional revenue streams will be found.
Greater Margins: Mechanically, all cars are quite good nowadays. They're all pretty reliable and drive pretty well, so in this respect the mechanical dimension of car performance is more or less commoditized. To improve pricing power requires brand differentiation by the OEM's and if you're not doing this via the mechanical aspects of your vehicle lineup then it makes sense that you would look to connectivity, software, and the overall customer experience.
Application Platforms: Designing connected experiences for the vehicle from the ground up opens up lots of interesting opportunities that either are not as viable if starting with the smartphone, or are vastly improved when integrated tightly into the vehicle. For example, MyBoxMan is a social shipping community that has been shown along with the new FordSync3. It's a crowd-sourced shipping app that allows you to deliver packages if you're driving around town, or to send packages cheaper and faster than regular mail. The potential for this application platform approach to grow for automotive brands is really interesting and big potential game changer. It's also why I believe that, ultimately, Apple Car Play and Android Auto are provisional solutions and that auto brands do not want to give this away, whether they know it now or not.
Connecting the dots
Automotive brands are in a time of great change. New players (e.g, Google, Apple, Samsung, etc.) are displacing incumbents (Continental, Visteon, Garmin, Delphi, etc.). The opportunities are huge for doing things differently, but it's a matter of choices about what to do and what not to do. It's about what you, as the automotive brand, want to be in the 21st century versus what you were in the 20th.
Ford is already out in front of this new future by assimilating lessons learned from the last 16 years of consumer electronics, mobile, and cloud services, and experimenting with how to apply it to their business. Other automakers need to understand how to frame their strategy and where to invest in their connected customer experience.
Automakers already have an entrenched advantage and control in areas such as diagnostics and maintenance, emergency and safety, and intelligent driving. The battle ground is going to be over the areas of: productivity, information services, traffic and navigation, and infotainment. Mobility eCommerce might be the biggest prize of all, given all of the payment touch points a typical driver has during the course of their day.
