8. Challenges and Implications
Despite innovative solutions that are currently deployed in the automotive industry, especially in Fleet Management where trucks are being tracked and data collected, there are numerous challenges and implications involved with IoT deployment that will be discussed below.
8.1. Complexity and Costs
Increased environmental concerns and safety standards will inevitably raise the complexity of a vehicle as well as the costs involved. OEMs will have to develop powertrain technologies with lower-emission of gases and this requires a lot of investment. With those concerns, they come with regulatory processes and approvals. Apart from these pressures, OEMs need to differentiate on other features while trying to obtain some economic value from the process to stay competitive.
8.2. Competition
Competition among businesses within the Automotive IoT ecosystem is like any other business or ecosystem - a potential challenge faced by all parties involved. Although Apple’s CarPlay helps carmakers develop ready-made solutions they otherwise would not have the resources to invest in, Ford, GM, Volkswagen and other car companies will be competing amongst one another. In other words, just as Apple is a threat to Google, both of their entry into automotive is also a potential threat to OEMs for connected app solutions with existing OS support using Android and iOS.
Furthermore, since Android OS is the dominant platform for many smartphones, OEMs are hesitant to adopt Android as a base operating system because of many business risks involved as Google is the sole owner and licensor of the platform. From the perspective of OEMs, there
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is competition as well as limitations as Google manages the release of upgrades, content and schedules which could affect an automotive company’s product release cycle.
Table 3 Competition Among Different Platforms
8.3. Lack of Standardization
A key challenge in the Automotive IoT industry is the numerous communication standards including LTE, Wi-Fi, Bluetooth, ZigBee, Z-Wave and more. Although alliances like the Industrial Internet Consortium, the Open Interconnect Consortium and others are trying to
“standardize communication protocols, there is not any unified way. Without standard technology, it is difficult for businesses to provide a standardized solution.
According to other sources that with 25 billion devices connected to the Internet in 2015 and an expected 50 billion by 2020, too many standards have and will continue to cause a lot of time
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and effort among OEM and platform suppliers because products need to be designed based on its specific application programming interface (API). It also causes a lot of confusion to the customer as not all services will actually work. If tethering is not seamless for the end-user, the negative experience could result in a lot of frustration. Therefore, problems with interoperability for carmakers could very likely dissuade consumers from using connected car services altogether.
8.4. Privacy
Despite a lot of new benefits of a connected car, consumers have concerns about security and data privacy. For example, when mobile devices are connected to the car infotainment system via the Internet, vehicles become a big source of data for manufacturers, marketers, insurance providers, and even the government, which ultimately means, an easy target for hackers. In a study, 37% of respondents would not consider a connected car in fear of vehicles “getting hacked.” Now all consumers know about the collection of data from their cars, but those who do know, have concerns about where and to whom their personal data is being shared. It is quite troubling that a driver’s location data can be collected by a third party, showing which restaurants he or she has been to.
Although some consumers want connectivity, others have indicated the unwillingness of paying for connectivity features because of privacy concerns. Data encryption, authentication and data channel access controls are the major IoT data security components that need to be guarded and regulations need to be in place as to what extent data can be collected by third parties and whether data can be obtained without prior knowledge or consent of the driver.
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Figure 12 Consumer Survey of Privacy Concerns
8.5. Time-to-Market
Unlike most IoT strategies, the cycle for developing vehicles is much longer compared to other products including the deployment of IoT devices and services. A car design from concept to show takes about three years in total. It becomes extremely difficult for electronic manufacturers to accommodate such a timeline while ensuring that new designs are up to date.
The result is speeding new designs to market every year. Software developers have an even shorter turnaround time to accommodate car manufacturers and may take just a few months or even weeks to launch. Therefore, the time to market with cars is significantly different compared to telematics hardware and software services, and when deployment happens, time-to-market becomes even longer.
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The evolution of digital technology has disrupted many industries, ultimately changing consumer behavior and making significant impact on business models. Automotive IoT has in some ways, “shaken up” existing markets. Although these businesses may not necessarily make money until many years later, investments have been made by industry players to create new partnerships, markets and solutions to enhance the connected car.
9.1. Top Services as Revenue Drivers
Although connected safety features are currently bringing in the most revenue, safety services will slowly lose its spot for the connected car as the top revenue maker to driver-assistance services. Alerting customers of dangerous road conditions and severe weather, entertainment services will still be important but another most popular feature of a connected car is in-vehicle Infotainment. The deployment of Infotainment involves not just the car manufacturer and the end-user but also mobile network operators, application developers, content providers and marketers. The ecosystem is enlarged to include those innovative services as a company’s core product offering or complementary service.
Not all consumers agree on how they want to pay for connectivity services because not every driver is willing to receive car advertising even if it means getting free basic services in exchange. Consumer expectations and needs vary greatly. Because of differences, marketers and application software developers have good opportunities to tap into the connected car market to meet customer requirements.
9.2. Selecting the Right Model
The potential revenue streams for connected car services are huge. Today, businesses need to