Moving connected vehicles into mass market

Your car may not be giving you dinner suggestions or the news of the day, but according to Per Simonsen, CEO of Telenor Connexion, the services and facilities that make customers choose one certain car over another, could soon be digital, rather than based on size or appearance.

Telenor Connexion supplies connectivity to the car industry

Telenor Connexion is working closely with several car and truck manufacturers to integrate connectivity into vehicles. Connexion is the leading connectivity supplier in the automotive industry, with customers such as Nissan, Daimler, Scania, Hitachi and Volvo.

On Thursday, 17 February, during the Mobile World Congress in Barcelona, Per Simonsen participated in a session on embedded mobile (M2M), discussing how to move connected devices into the mass market.

In his presentation, he pointed to three factors that will drive M2M (telematics) deployments in vehicles during 2011 and beyond:

A need to strengthen customer loyalty and retention

First, car manufacturers have come to realize that they need to utilise technology in a new way to create stronger bindings to their end-customers. Access to information about a vehicle and how it is being used (where, when, status and diagnostics) can be turned into critical intelligence to provide proactive support and advice. This can form the basis for a lasting relation to the owner.Â

“To secure bindings and for aftermarket sales and services, and to strengthen customer loyalty and retention, is of key importance to the manufacturers. Traditionally more than 50 per cent of the car revenue stem from services, repair and supply of spare parts. And now, deregulation in the EU and other markets have opened up for more competition in this sector,” said Simonsen.

Connectivity a prerequisite in electric vehicles and plug-in hybrids

The second driving force is the overall development of electric cars and plug-in hybrids. Even though it might not be a mass market for many years, this development is forcing car manufacturers to look further into the connected car area. This will also spread to traditional cars.

“The interesting thing about e-vehicles and plug-in hybrids is that connectivity and data communication is an imperative part of the whole solution. Range anxiety is considered one of the main barriers for people moving to buy an electric car. New infrastructure (charging stations) and real-time information about availability, booking possibility and payment methods is a prerequisite for the success of electric cars. Thus, both the vehicles and the infrastructure require connectivity,” Simonsen commented.

Differentiating services will be digital

Finally, the various car manufacturers will need to develop differentiating services. The main differentiators are brand and price.

Digital services in and outside of the car

Today, a new, interesting opportunity is emerging: Digital services in and outside the car. Many of these services are enabled by telematics solutions allowing access to vehicle and driver information. One example is Fiat ecoDrive. They have been successful in developing a global eco-community built upon the way you are driving, attempting to educate driver to minimize fuel consumption and environmental impact. Another is GM Onstar and Volvo OnCall, both offering roadside assistance, remote door unlock, navigation, stolen vehicle tracking, etc. In many of these services, connectivity is a core competence. This also means that there is a trend of merging car technology and consumer electronics.

The two main paths of the M2M future

“For mobile operators this also means that telematics will no longer be an isolated black box (the traditional M2M scenario). Deployment of M2M in vehicles will follow two main paths: one for car-centric services such as ecall (a service that automatically sends a distress call after a car accident), diagnostics and so on. The other for user-centric services such as infotainment, messaging, navigation etc, in many cases realized via applications in the end-users smartphone, seamlessly integrated to the car dashboard, speakers, etc,” said Simonsen.

“Traffic volumes and business models between these paths will differ substantially. More open platforms from car manufacturers will enable third party development and more cross-industry cooperation, for example between the electric car industry and the utility industry. Mobile operators play an important role in making this happen,” he concluded.