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1/9/2016 The CloudConnected Car Drives IoT Monetization | TechCrunch
http://techcrunch.com/2015/10/20/thecloudconnectedcardrivesiotmonetization/#.ku6xzc:saMH 1/7
The car is well on its way to becoming the
most sophisticated mobile device in the
Internet of Things (IoT), or, to use a phrase
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Posted Oct 20, 2015 by Brendan O’Brien (@brendan0606)
CRUNCH NETWORK
The Cloud-Connected Car Drives IoT Monetization
Brendan O’BrienCRUNCH NETWORK CONTRIBUTOR
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1/9/2016 The CloudConnected Car Drives IoT Monetization | TechCrunch
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that’s more to the point, the Monetization of
Things™ (MoT). Linked to the cloud by way of
wireless technologies, smart chips, onboard
computers and mobile apps, connected
vehicles are driving new business models and disrupting old ones. Here’s a look at some
of the key monetization opportunities emerging from their wake right now, as well as
some not far down the road.
The cloud-connected car of the future is here today — and growing in number. It’s a
trend fueled in large part by consumer demand. In a 2014 report by McKinsey &
Company, more than a quarter of car buyers said that Internet connectivity is more
important than features such as engine power and fuel efficiency. In the next five years,
the number of connected cars may exceed a quarter of a billion worldwide, according to
estimates by Gartner.
Not only are connected cars catching on fast, their connections are also gaining speed.
Automakers have already made 4G wireless connectivity available in some new cars,
and the feature may well become standard in most models by 2020. The combination of
Wi-Fi and IoT technology paves the way for a bevy of rich services for drivers and
passengers alike, such as enhanced navigation, real-time traffic and parking
information, streaming infotainment and integration between dashboards,
smartphones and wearable devices such as health trackers and smart watches.
New Monetization Sources
Connected cars are changing the way we get from Point A to Point B. In the process,
they’re opening new realms of monetization for carmakers, service providers and many
other travel-related industries. Revenues from connected car services are expected to
top $40 billion (U.S.) in the next five years, according to a July 2015 report from SNS
Research. Many of those proceeds will involve a range of flexible billing options,
including traditional up-front payments, subscriptions and consumption-based
recurring payment schemes.
Data plans will account for a portion of those revenues. They’ll be billed the same as any
smartphone plan today, or as simple add-ons to existing plans. However, they represent
a significant source of new income for telcos and other service providers.
Additional revenues will come from
enhanced editions of subscription
Brendan O’Brien is co-founder of cloud
billing provider Aria Systems.
How to join the network
Technology innovations will continue
1/9/2016 The CloudConnected Car Drives IoT Monetization | TechCrunch
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services, like SYNC from Ford and
EnForm from Lexus, that carmakers
have been offering for some time.
New cloud-powered versions of
these digital services provide value-added features, such as always-on access to
emergency services and roadside assistance, teen-driver monitoring and advanced
voice control.
Subscription offerings like these enhance the driving experience for consumers. And
they give automakers a ready source of ongoing revenue above and beyond the initial
purchase price, while allowing them to deepen customer relationships and enhance
customer lifetime value (CLV).
A Very Big Market Indeed
The market for cloud-based car services is potentially enormous, and extends far
beyond new models. They’re also available to more than 150 million cars built since
1996. That’s the year onboard diagnostic (OBD) ports, which are located on or near
steering columns, became mandatory in most cars made in the U.S. and Canada. This
summer, Verizon launched hum, its new aftermarket subscription service. For $14.99 it
brings a host of cloud-connected services, including accident notification, system
diagnostics and stolen vehicle locator services to any older car with an OBD port.
ODB ports are in fact becoming the entry point for a rapidly growing number of cloud-
connected mobile apps designed specifically for cars. While many are free, some, like
the fleet monitoring app FleetLeed, offer a potentially lucrative source of ongoing data
monetization for service providers.
Smart Connected Cars As Active Agents
Today’s new connected cars are able to interact with the world around them and with
other cloud-based systems using such IoT innovations as proximity sensors and
predictive intelligence. For example, certain Mercedes-Benz models introduced this year
can link directly to Nest, the IoT-powered smart home system, to remotely activate a
home’s temperature controls prior to arrival.
The potential for connected cars to
do even more for us is far-reaching.
to profoundly influence how we price— and pay for — cars.
Connected vehicles are driving new
1/9/2016 The CloudConnected Car Drives IoT Monetization | TechCrunch
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They’ll soon be able to check us into
hotels, notify people when we’re
running late, confirm appointments,
make dinner reservations, order
movie tickets, even pay for gas and parking — all on their own and without intervention.
Enhanced services such as these will likely entail subscription- or usage-based billing
mechanisms.
Disruptive Forces In Play
From a monetization standpoint, three disruptive trends, made possible in part through
IoT innovations, have the potential to dramatically upend business models for personal
transportation.
Car Sharing. Real-time access to car availability and mobile connectivity are accelerating
the adoption of car-sharing, which customers pay for on a consumption basis. By 2030,
as many as 650 million people worldwide could be using some form of car or ride
sharing, according to projections by ABI Research. Joining ride-sharing pioneers like
Uber, rental car agencies and corporate fleet operations are getting in on the trend. So
are most major automakers. They see it as a smart way to augment traditional sales as
the concept grows in popularity.
Pay-Per-Use. One downside of car sharing is that if you want a particular car, you may
be out of luck. With a new pricing plan introduced in 2014 by Citroen in Europe, you can
own the car you want, but on a pay-per-use basis. Your monthly cost is pegged to how
much you actually drive. In other words, the car is priced, and billed, like a smartphone.
It could become a popular alternative to car sharing for low mileage or occasional
drivers, especially in the world’s burgeoning urban centers.
Direct-To-Consumer Sales. Tesla Motors sells its line of IoT-infused, all-electric vehicles
directly to its customers, a taboo that’s been in place for more than 100 years in the U.S.
In response, some states, pressured by powerful dealership lobbies, have banned the
practice. The Federal Trade Commission (FTC), on the other hand, is in favor of it. Direct
selling could be a profound game changer, requiring carmakers to build closer
customer ties over time. With direct links to cars by way of IoT, they now have a prime
venue for doing just that. They’ll be able to proactively engage customers by delivering
upgrades, maintenance services, new features and incentives for upcoming models
straight to every dashboard.
business models and disrupting old
ones.
1/9/2016 The CloudConnected Car Drives IoT Monetization | TechCrunch
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The Road Ahead
Technology innovations will continue to profoundly influence how we price — and pay
for — cars, in-vehicle digital services, auto insurance and related goods and services.
Fully autonomous vehicles are perhaps less than 10 years down the road. In the not so
distant future, entire transportation grids will be run intelligently from the cloud. There’s
no telling where such innovations will lead. One thing we know for sure, however, is that
businesses will need to monetize with greater agility if they wish to cash in on the
compelling revenue opportunities from the Internet of Cars.
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