Acceleration in connectivity
The technological changes in autonomy have led to new
and extraordinarily resourceful players in connectivity,
competitors who are forcing an accelerated pace of
innovation for connected vehicles.
Predictable innovations
Over time, we expect to see fleets of connected vehicles
working with telecom and wireless companies to create
a comprehensive infrastructure—one that supports the
anticipated demand for consumer access, navigational
accuracy, and the immense amounts of data required to be
streamed to and from every vehicle.
We expect to see
fleets of connected
vehicles working with
telecom and wireless
companies.
Cars will connect with the infrastructure and stream
telematics information about traffic, road conditions, and
lane speeds. Vehicles will constantly self-identify, monitor
the surrounding environment for hazards and potential
threats, and adjust navigation and guidance to address
those dangers. Automakers will collect data to monitor the
individual status of a car or to fix problems in a particular
model preemptively.
Passengers will be able to access streaming data feeds
for entertainment and to utilize their handheld devices for
on-the-move data streaming. They will also use their cell
phones to locate their cars, turn them on, or assess their
repair status. These innovations will, of course, greatly
improve the driving experience of the consumer, produce
greater safety, and increase longevity for the car.
Together these innovations will dramatically enhance
connectivity between the car and external networks;
connectivity that passengers use for entertainment
and communication; connectivity between the car’s
internal systems; and security for all connectivity. Each
of these changes will require high-speed ubiquity in the
communications environment.
Enter the new players
These predictable innovations are only the beginning
of changes in connectivity because of what this new
communications environment attracts. Many aggressive
players are now entering the connectivity space. A short
list includes not only makers of chips, pipes, receivers, and
software, but also data aggregators and content providers.
The sheer number and power of these players will drive
phenomenal, fast-paced innovation that could arrive in
cars at any time. Since many of these innovations may not
come from the auto industry, automakers will need to work
closely with those driving changes.
Economies of scale and changing competitive
advantage
Automakers will be facing players whose economy of scale
and investment capacity is significantly higher than theirs.
The Apples and Googles of the world produce hundreds
of millions of units rather than the millions of units the
car industry manufactures. According to Gartner, global
smartphone manufacturers sold 1.245 billion units in 2014.
That same year, the auto industry sold 87 million cars.
These big players in the connectivity space can amortize
their research and development budgets over a far
larger base than automakers can. They are also free to
spend more than car manufacturers, who must devote
considerable R&D dollars to maintaining the Robust
Industrial Machine.
Embedded connectivity versus hybrid and nomadic
devices: Vigilance required
That advantage in scale is especially important since the
auto industry’s embedded devices must compete against
hybrid and nomadic ones. It makes decisions especially
difficult, requiring great awareness of changes in the
ecosystem and an ability to respond flexibly and fast.
Of course the connected car has some elements that
are better served by embedded technology, especially
telematics and vehicle configuration. For other connectivity
elements, however, the industry must pay careful attention
or risk losing a competitive advantage. Hybrid and nomadic
devices are more readily innovated and more able to
respond to consumer expectations nimbly.
With three different kinds of connectivity devices
undergoing innovation, there is also greater possibility that
consumers’ unmet needs may increase and change in a
number of unpredictable directions. One effect this may
have will be diversifying the idea of premium performance
based on demographics, as we suspect may happen in
mobility-on-demand. Airlines already sense this change
and are debating whether they should provide embedded
entertainment devices or set-ups to which consumers’
devices tether—hybrids. Consumer demand may well drive
them and the auto industry in a few directions. Targeted,
mission-specific performance may be the wave of the
future in connectivity.
24
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered
trademarks or trademarks of KPMG International. NDPPS 404853