物聯網 (IoT): 將為汽車產業打造一個全新的商業模式 - 政大學術集成

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(1)國立政治大學商學院國際經營管理英語碩士學位學程 International MBA Program College of Commerce National Chengchi University. 碩士論文政治. 大. 立Master’s Thesis. ‧. ‧ 國. 學 sit. y. Nat. 物聯網 (IoT): 將為汽車產業打造一個全新的商業模式. er. io. An Analysis of IoT and How it is Shaping New Business Models. a. n. v i in thel Automotive Industry n C hengchi U. Student: Helen Lo Advisor: Professor Foo Nin Ho. 中華民國一〇四年六月 June 2015.

(2) 物聯網 (IoT): 將為汽車產業打造一個全新的商業模式 An Analysis of IoT and How it is Shaping New Business Models in the Automotive Industry. 研究生：駱傳倫. Student: Helen Lo. 指導教授：何富年. 立. Advisor: Professor Foo Nin Ho 治政大. ‧ 國. 學 ‧. 國立政治大學. y. Nat. 商學院國際經營管理英語碩士學位學程. n. er. io. al. sit. 碩士論文. Ch. A Thesis. i n U. v. i Program e n g c hMBA Submitted to International National Chengchi University in partial fulfillment of the Requirements for the degree of Master in Business Administration 中華民國一〇四年六月 June 2016.

(3) Acknowledgements I would like to express my gratitude to my Advisor, Professor Foo Nin Ho, for his time and support in guiding me through the process of successfully completing my thesis. He has been a tremendously patient, knowledgeable and encouraging Professor and Advisor. I have learned so much from him not only in his class but also when he guided me on how to approach my research from a big picture point of view and helped me to improve the contents of my paper. It has certainly been both a pleasure and honor working with him.. 立. 政治大. I would also like to Isreal Gogol, my classmate, for his help in sharing with me valuable. ‧ 國. 學. resources and giving me useful advice while I was preparing for my thesis. Based on his industry knowledge on IoT, I have gained a lot of insight on what he has written in the past. ‧. and have incorporated some information to make my final thesis more thorough.. y. Nat. er. io. sit. Last but not least, I appreciate the entire faculty and staff members from the NCCU IMBA program that has been extremely helpful in making my academic journey a positive and. al. n. successful one.. Ch. engchi. i. i n U. v.

(4) Abstract An Analysis of IoT and How it is Shaping New Business Models in the Automotive Industry By Helen Lo We are living in an era of the “Internet of Things” as we are more than ever connected to the Internet with our smartphones, tablets, PCs, and etc. With technological advancement in terms. 治政 of increased broadband coverage and changes in customer 大behavior, more and more “things” 立 will be connected in retail, infrastructure, home and office buildings, and etc. The ‧ 國. 學. communication of devices opens up new business opportunities with increased involvement. ‧. of services including IT, financial, data analytics, media, and etc.. Nat. sit. y. Smart mobility is on the rise, specifically with the Connected Car. Vehicle owners and. n. al. er. io. potential consumers are interested in having connectivity inside a car in addition to services. i n U. v. that give them access to applications for information, content and entertainment. With many. Ch. engchi. benefits and opportunities in the Automotive IoT field, stakeholders within the IoT ecosystem including service providers, software developers, automakers, hardware manufacturers, and etc. can reap a great deal of revenue through unique business models that require strategic partnerships, technological innovation and value-added services to deliver to the customer.. Keywords: Internet of Things, Automotive, IoT Ecosystem, Value-added Services, Business Models.. ii.

(5) TABLE OF CONTENTS. 2.. Introduction ...................................................................................................................... 1 1.1.. Purpose of Report ....................................................................................................... 2. 1.2.. Scope of Research ....................................................................................................... 2. 1.3.. Research Approach ..................................................................................................... 2. 政治大. Overview of Information Communications Technology ............................................... 3 2.1.. 立. Evolution of IoT .......................................................................................................... 4. 學. ‧ 國. 1.. 2.1.1. Definition of IoT ..................................................................................................... 4 History of IoT ............................................................................................................. 5. 2.3.. Current State of IoT .................................................................................................... 6. 2.4.. In the Near Future ...................................................................................................... 8. ‧. 2.2.. n. al. er. io. sit. y. Nat. 3.. Ch. i n U. v. Automotive and M2M Solutions ................................................................................... 10 3.1.. engchi. Phases in Automotive IoT ......................................................................................... 12. 3.1.1. The Passive Monitoring Phase ............................................................................. 12 3.1.2. The Interaction Phase ........................................................................................... 13 3.1.3. The Ambient Awareness Phase ............................................................................. 13 3.1.4. The Automation Phase .......................................................................................... 13 3.2.. The Sensitive Car ...................................................................................................... 13. 3.3.. The Connected Car ................................................................................................... 14. iii.

(6) 4.1.. Mobile Hotspot ......................................................................................................... 17. 4.2.. Over-the-Air Updates ............................................................................................... 17. 4.3.. Infotainment .............................................................................................................. 18. 4.4.. Safety and Security ................................................................................................... 18. 4.5.. Usage-based Insurance ............................................................................................ 19. 5.1.. Freemium Business Model ........................................................................................ 22. 5.2.. Customer Loyalty Business Model ........................................................................... 22. 5.3.. Hidden Revenue Business Model .............................................................................. 22. 5.4.. Leveraging Customer Data Business Model ............................................................ 23. 5.5.. Open Business / Open Source Business Model......................................................... 24. 5.6.. Orchestration Business Model .................................................................................. 24. 5.7.. Pay Per Use / Car Sharing Business Model ............................................................. 24. 5.8.. Solutions Provider Business Model .......................................................................... 25. 政治大 Analysis of Automotive IoT Business Models .............................................................. 21 立. 學. ‧. io. sit. y. Nat. n. al. er. 5.. Value Added Services in Automotive IoT ..................................................................... 17. ‧ 國. 4.. Ch. engchi. i n U. v. 6.. Tech-Giants Entering Automotive IoT ......................................................................... 27. 7.. Taiwan’s Big-Small Approach ....................................................................................... 29. 8.. Challenges and Implications .......................................................................................... 31 8.1.. Complexity and Costs ............................................................................................... 31. iv.

(7) 8.2.. Competition .............................................................................................................. 31. 8.3.. Lack of Standardization ............................................................................................ 32. 8.4.. Privacy ...................................................................................................................... 33. 8.5.. Time-to-Market ......................................................................................................... 34. 9.. Conclusions ..................................................................................................................... 35 9.1. 9.2.. Top Services as Revenue Drivers .............................................................................. 35. 政治大 Selecting the Right Model ......................................................................................... 35 立. Collaborate or Die Ecosystem .................................................................................. 36. 9.4.. Define the Value Proposition .................................................................................... 38. ‧ 國. ‧. Potential Opportunities in Automotive IoT.............................................................. 39. sit. y. Nat. 10.. 學. 9.3.. io. n. al. er. 10.1. Embedded versus Tethered ....................................................................................... 39. i n U. v. 10.2. Automotive Aftermarket Products ............................................................................. 39. Ch. engchi. 10.3. Converging Technologies ......................................................................................... 40 10.3.1.. Vehicle-to-Home (V2H) ................................................................................... 41. 10.3.2.. Vehicle-to-Grid (V2G)...................................................................................... 41. 10.3.3.. Vehicle-to-Infrastructure (V2I) ......................................................................... 41. 10.3.4.. Vehicle-to-Retail (V2R) .................................................................................... 41. 10.4. The Driverless Car ................................................................................................... 42 10.5. Emerging Markets .................................................................................................... 44 10.6. Growth Opportunities in Small Vehicles................................................................... 45. v.

(8) 10.7. IoT Growth Opportunities ........................................................................................ 46 11.. Recommendations....................................................................................................... 48. 12.. References.................................................................................................................... 54. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. vi. i n U. v.

(9) List of Figures and Tables Figure 1 Number of Connected Devices Per Person .............................................................. 6. Figure 2 An Example of a Connected Home .......................................................................... 7. Figure 3 Cars with Network Solutions versus Traditional Cars ........................................ 12. Figure 4 Diagram of Embedded Sensors .............................................................................. 14. 治政大 Figure 5 Diagram of a Connected Vehicle ............................................................................ 16 立 ‧ 國. 學. Figure 6 Survey: 80% of Consumers Expect Connected Services in the Car ................... 18. ‧. Figure 7 Example of Automotive Brands with Safety Control Features ........................... 19. Nat. er. io. sit. y. Figure 8 Example of UBI and Changes in Consumer Behavior Overtime ....................... 20. Figure 9 Select Players in the Automotive Ecosystem ......................................................... 21. n. al. Ch. engchi. i n U. v. Figure 10 Connected Cars Becoming Big Data Platforms .................................................. 23 Figure 11 Chart Depicting Vodafone’s Complete Solution to Customer ........................... 26. Figure 12 Consumer Survey of Privacy Concerns............................................................... 34. Figure 13 Consumer Survey of Privacy Concerns............................................................... 36. Figure 14 IoT Ecosystem ........................................................................................................ 37. Figure 15 The Process of Defining a Clear Value Proposition ............................................ 38. vii.

(10) Figure 16 Overview of Four Converging Technologies in Automotive .............................. 40. Figure 17 Deployment of Converging Technologies ............................................................ 42. Figure 18 The Future of Autonomous Cars ......................................................................... 43. Figure 19 Profit Growth in BRIC and RoW Markets ......................................................... 44. Figure 20 Small Cars Show Big Potential ............................................................................ 46. 政治大 Figure 21 IoT Across Different Industries ............................................................................ 47 立. ‧ 國. 學. Figure 22 Example of Different Payment Offerings by OEMS .......................................... 49. ‧. Figure 23 Strategic Positioning of Third-Party Businesses ................................................ 50. y. Nat. al. er. io. sit. Figure 24 Questions to Consider to Deliver Value ............................................................... 50. v. n. Figure 25 Value Creation and Value Capture ...................................................................... 53. Ch. engchi. i n U. Figure 26 Recap of Huge Potential in Connect Car Market .............................................. 53. Table 1 Difference between IoT and the Internet .................................................................. 8. Table 2 Key Automotive M2M Services................................................................................ 11. Table 3 Competition Among Different Platforms ................................................................ 32. viii.

(11) Executive Summary Imagine being able to get from one place to another without having to physically drive or have on-demand access to different cars without ever owning them. What if people who own vehicles could be automatically navigated to safer and faster alternative routes or be able to save on insurance premiums because good driving skills are computed and incentivized. What if traffic jams and accidents could be eliminated altogether? There are endless possibilities in this era of “smart mobility” or the Internet of Cars, which is ultimately an extension of the Internet of Things (IoT).. 立. 政治大. ‧ 國. 學. Today, a fundamental transformation in the Automotive IoT industry has and will continue to positively benefit everyone from automakers and peripheral businesses to customers. For. ‧. example, unique business models capitalize on the “lifetime revenue opportunity” through. Nat. sit. y. strategic partnerships between a carmaker and telecom company that bring connectivity and. n. al. er. io. content to the driver for use of services like navigation and infotainment. In turn, data is. i n U. v. captured and analyzed that can be used by retailers, marketers or insurance companies, for. Ch. engchi. instance, to charge higher premiums to those who drive frequently versus those who don’t.. This paper evaluates the connected car as a whole in how major players are working together to create value-added services including mobile hotspot, over-the-air updates, Infotainment, safety and security, and usage-based insurance. In addition to leading technologies in sensors, displays, on and off-board computing and data analytics, in-vehicle operating systems, wireless communication, M2M, speech recognition and content management, the total sum of business opportunities are tremendous. In fact, consumers show a strong interest in having connectivity features in a car like we do with smartphones and 4G connection because of our increasingly. ix.

(12) “digital lifestyles.”. These business models (Freemium, Customer Loyalty, Hidden Revenue, Customer Data, Open Business/Open Source, Orchestration, Per-Per-Use/Car Sharing, Solutions Provider) were evaluated. It is concluded that business models will expand to include a much broader set of industries that converge with other technologies in the areas of healthcare, IT, retail, infrastructure, home and office.. 政治大. Although there are challenges in terms of complexity, costs, competition, standardization,. 立. privacy and time-to-market, companies within the Automotive IoT ecosystem will be. ‧ 國. 學. successful if they choose the right model in terms of having a clearly defined value proposition and a focused revenue driver, as well as, to collaborate and form strategic partnerships with key. ‧. players that add value to the business process whether it be with large tech-giants or with startup. er. io. sit. y. Nat. companies.. al. Potential opportunities are present in embedded systems rather than tethered, converging. n. v i n C h products especially technologies, automotive aftermarket e n g c h i U in emerging markets like China. (with the most potential to deploy connected cars), and driverless cars (with Google and Apply trying to get a piece of the action in Automotive IoT).. From a high level perspective, below are key recommendations to business and technology leaders in automotive, consumer electronics, IT software developers, as well as venture capitalists and other interested parties:. 1. Business models need to be diversified to include the transfer of technology with other industries to create new solutions.. x.

(13) 2. Automobiles should not be looked at in isolation. Software developers need to offer seamless solutions. 3. Auto manufacturers should be involved in working with software developers to build apps and proprietary infotainment systems to stay competitive. 4. Explore payment options so that customers have choices (pay-per-use), which is currently not being offered but in fact is the most preferred method. 5. Get involved in public events, organizations and international alliances for networking. 政治大. opportunities in IoT.. 立. 6. Carmakers need to improve time-to-market and both hardware and software. ‧ 國. 學. developers need to be aligned with strategy to work in parallel with the production process for connectivity offerings.. ‧. 7. All 3rd-party or peripheral businesses need to be positioned strategically and that. y. Nat. sit. means having a clear purpose and selecting the most appropriate business model to. n. al. er. io. gain a business advantage.. i n U. v. 8. Invest in companies that are researching and developing autonomous and unmanned vehicles.. Ch. engchi. 9. Focus on data platform and the analytics market, as the focus going forward will be on big data.. Industry Trends and Advancements . Avis rental company acquired Zipcar car sharing company. . Tesla implemented the first over-the-air automotive software. . Intel is partnering with telecoms like Sprint to extend its reach in connected vehicles. . Apple is beginning to get involved with major carmakers xi.

(14) . Based on IDC, worldwide IoT market will grow from $655.8 billion in 2014 to $1.7 trillion in 2020, with CAGR of 16.9%. . Devices, connected and IT services will make up the majority of IoT market including modules and sensors for automotive representing close to 32% of the global market. . Open source application software and cloud-based “as a service” offerings will capture a large percentage of revenue growth in the Automotive IoT space. M2M sector will continue to play a key role in Automotive in alliance generating. 政治大. significant revenues of over $40 million globally by 2019.. 立. 學 ‧. ‧ 國 io. sit. y. Nat. n. al. er. . Ch. engchi. xii. i n U. v.

(15) 1. Introduction The Internet of Things (IoT) is not just a buzzword but is in fact the next generation of the Internet. After emailing, file sharing, e-commerce and social media, the newest Internet technology has evolved to connecting things and devices. These “things” range from sensors and security cameras to vehicles and production machines. Connected devices have resulted in data that open up new understanding of consumer behavior and have made impact on business models, in some cases, generating cost savings and additional revenue streams.. 立. 政治大. IoT is about converging the physical world with the virtual world of the Internet to create. ‧ 國. 學. benefits for both companies and consumers. It is also called, “the evolution of digital technologies.” A lot of new technologies still require improvements in integration and more. ‧. mature protocols for them to be feasible. Despite these challenges and many more involving. Nat. sit. y. issues of privacy and interoperability, there are still plenty of other IoT technologies that have. n. al. er. io. become mainstream today because of its affordability and scalability.. Ch. i n U. v. With 4.9 billion connected things in 2015, Garner Inc. predicts that the figure will increase by. engchi. 30% to reach 25 billion things by 2020, concentrated mainly in healthcare, automotive, utilities and intelligent buildings. Based on the International Telecommunications Union (ITU), 75% of the world’s population will have Internet access in 2015. According to Cisco’s Visual Networking Index, more than 3 billion smartphones and tablets will be used globally by 2017. These mobile devices are now the common interfaces within the entire IoT ecosystem.. Indeed, IoT has become a powerful force for business transformation across all industries. The connected world is and will continue to impact both end-users and businesses driven by new trends and changes in how they come together in a relationship of continuous interaction. New. 1.

(16) services will be available to complement the product to provide higher quality of life, comfort, security and fun for the consumer. Businesses too, will benefit from efficiency gains, cost savings and better allocation of resources.. 1.1.. Purpose of Report. The purpose of this paper is to help others gain insight on IoT and to provide recommendations to those whom might be interested in investing, starting up or obtaining a professional career in. 政治大 perspectives on what is driving the Internet of Things in the automotive industry. 立. this field. It is also for those within the automotive and technology sectors to gain additional. ‧ 國. 學. 1.2.. Scope of Research. This paper will first attempt to analyze IoT from a general perspective by looking at the history. ‧. and current state of IoT. Then, it will examine more specifically how IoT and value-added. y. Nat. sit. services are shaping existing and new business models in the automotive sector. The second. n. al. er. io. part of the paper will evaluate the potential opportunities for future investments in this industry. i n U. v. and provide recommendations while considering the current challenges involved in the deployment of Automotive IoT.. 1.3.. Ch. engchi. Research Approach. The Internet of Things is made up of a broad, complex and highly technical ecosystem. Due to technology being ever-changing and the abundance of past research from industry leaders, engineers and tech enthusiasts, much of the research obtained in this report was through the Internet. Information was gathered by a variety of resources online including market reports, white papers on websites and articles related to the realm of automotive and technology.. 2.

(17) 2. Overview of Information Communications Technology ICT is an acronym that stands for “Information Communications Technology,” a broad term that has become an integral part of peoples’ work, personal, and social lives. ICT includes the hardware devices and software programs that make greater access to information and communication through personal computers, digital cameras, cell phones, scanners, and etc., as well as, the services and applications associated with them, such as the Internet, video conferencing, emails and etc.. 立. 政治大. The scope of ICT capabilities is dynamic and responsive to new technological developments.. ‧ 國. 學. Therefore, the emergence of advanced Internet technologies has significantly changed the way information is exchanged and communicated in mature markets. However, in less developed. ‧. areas, populations are still underserved. While the “digital divide” exists between countries that. sit. y. Nat. “have” and “have not” access to such technologies, the United Nations and other organizations. n. al. er. io. are working with governments to actively promote ICT as an ongoing objective.. Ch. i n U. v. According to the International Data Corporation (IDC), worldwide ICT spending will grow. engchi. 3.8% in 2015 to reach $3.8 trillion, with new investment focusing on “3rd Platform technologies (cloud services, social technologies, big data), which will become the new core of ICT market growth. Broken down by geography, ICT spending in emerging markets is forecast to grow 7.1% YOY, while mature markets across the globe will reach 1.4% growth. Furthermore, wireless data will emerge as the largest and fastest growing segment of telecom spending, up 13% to $536 billion. Combined with the inventions of smart and intelligent “things” connected, IoT will continue to drive new and innovative ICT solutions in the global marketplace.. 3.

(18) 2.1.. Evolution of IoT. The Internet of Things (IoT) is rapidly changing almost everything in the way we live. Since the Internet was created, it has made a considerable impact in the way humans communicate. This section will discuss what IoT is, the history and current state of it, as well as, the future outlook of the connected world, which is also widely known as the “Internet of Everything” (IoE).. 2.1.1. Definition of IoT. 政治大 network fabric that can be sensed, controlled and programmed. IoT-enabled products employ 立 A Texas Instruments report comprehensively defines IoT as “creating an intelligent, invisible. ‧. ‧ 國. or the Internet.”. 學. embedded technology that allows them to communicate, directly or indirectly, with each other. According to the Cisco Internet Business Solutions Group (IBSG), IoT is “simply the point in. Nat. er. io. sit. y. time when more “things or objects” were connected to the Internet than people.” The technical definition based on IBM is “the network of physical objects accessed through the. al. n. v i n C h technology toUinteract with internal states or external Internet. These objects contain embedded engchi environment. In other words, when an object can sense and communicate, it changes how and where decisions are made, and who makes them.”. Perhaps a more simple definition of IoT is a device that can communicate with other devices using WiFi, radio frequency identification (RFID), quick response codes, bar codes, sensors and Bluetooth. Examples include medical devices, wearable devices, thermostats, home appliances, cars and other transmitters.. 4.

(19) 2.2.. History of IoT. The history of IoT dates back to the Massachusetts Institute of Technology (MIT) Auto-ID Center, founded in 1999, among a group working in the field of networked RFID and emerging sensing technologies. Labs from seven research universities had been specifically chosen by the center to design the architecture for IoT (Cisco).. Internet connectivity started to grow in the 1990s among enterprise and consumer markets. It. 政治大 the 2000s, Internet connectivity continued to increase among users with devices, yet these 立. was however, still limited in its use because of the not-so-strong performance of networks. In. ‧ 國. 學. devices required more human interaction and monitoring through apps and interfaces. In addition to the fact that the ratio of connected devices to the world population was relatively. ‧. low, IoT’s existence really only began until late-2000 with the introduction of smartphones.. y. Nat. sit. Based on 2003 data, dividing 500 million devices connected to the Internet by 6.3 billion people. n. al. er. io. (world population), resulted in less than one (0.08) device per person. It was not until Steve. i n U. v. Jobs, Apple CEO, introduced the first iPhone in 2007 that made the existence of smartphone. Ch. engchi. devices everywhere. In 2010, the world experienced an explosive growth of smartphones and tablet PCs, which brought the number of Internet connected devices up to 12.5 billion. The world’s human population increased to 6.8 billion, making the number of connected devices per person more than 1 (1.84) for the first time in history.. Even with the updated calculation above, the number of connected devices per person still remains low because it takes into account the entire world population, many of whom are not connected to the Internet. If the population sample is reduced to account for the number of people actually connected to the Internet (approximately 2 billion), the number of connected. 5.

(20) devices per person rises significantly to about 6 devices per person.. 立. 政治大. ‧. ‧ 國. 學 sit. y. Nat. n. al. er. io. Figure 1 Number of Connected Devices Per Person. 2.3.. Current State of IoTC. hengchi. i n U. v. The Internet of Things has significantly moved from being a futuristic vision to a market reality with a lot of potential. Today, major ICT players such as Google, Cisco, Bosch, and IBM, to name a few, have positioned themselves in the IoT landscape to make important business decisions. Machine-to-Machine (M2M) manufacturers are expecting a complete new business segment towards portable wireless devices, wearable devices and network modules. At the same time, IoT is becoming a core business focus for telecom service providers as the number of connected objects within networks have grown and continues to expand. All things considered, the market demand has increased.. 6.

(21) IoT is made up of a network of networks. Today, cars have multiple networks that control the engine, safety features and communications systems. Commercial and residential buildings also have systems that control thermostats, telephone, security, lighting and pool systems. Other control systems that are being used today include music streaming in the home, irrigation systems on a farm and much more. All of these systems are connected to the Internet through a website so that the end user can manage the functions by using a smartphone app, which acts as a personal gateway or hub to other connected things. As a result, IoT deployment is becoming. 政治大. very powerful for both industrial and consumers.. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 2 An Example of a Connected Home. So far, a lot of IoT spending is focused on intelligent embedded devices with partnerships among leading IT companies to provide the market with industry-specific solutions. For instance, Vodafone, as the world’s largest owned global network, is creating unique services by bringing together the right hardware and application, to providing infrastructure for the support of M2M businesses. In addition to lowered costs in sensors, bandwidth and processing as well 7.

(22) as the availability of wireless coverage, more devices are connected and smart enough to know what to do with new data. Table 1 Difference between IoT and the Internet. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. 2.4.. Ch. engchi. i n U. v. In the Near Future. IoT is evolving quickly as networks are more connected than ever with added benefits of security, analytics and management capabilities. IDC believes that the number of “industry disruptions” has emerged involving alternative payment networks in financial services, technologies with government and location-based services in retail – This will continue to double in the coming years.. With the European Union (EU) investing heavily in R&D in embedded systems, network. 8.

(23) technologies and operating platforms and security, Asian and American governments are also doing research on IoT, feeding more innovation and growth to the ecosystem. Enhanced by the fact that everyday users are more and more competent in using smart devices and networked applications, IoT will certainly grow with even greater potential in related technologies involving cloud computing, big data, robotics and semantic technologies.. Overall, the result of faster time-to-market, improved reliability, predictive maintenance and. 政治大. better lifecycle management will also support the proliferation of connected devices.. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 9. i n U. v.

(24) 3. Automotive and M2M Solutions The current trend in the automotive industry is M2M solutions. Machine-to-machine (M2M) enables devices to “talk” to each other, or in this case, for a car to communicate with other drivers, manufacturers, dealers and public services in real time. Other factors include M2M-enabled services that range from safety to entertainment solutions. In 2015, the EU adopted a resolution on driver safety making it a law that all new cars must be equipped with an automatic emergency call system based on M2M.. 立. 政治大. There is greater demand among drivers of automobiles for vehicle safety, comfort and. ‧ 國. 學. convenience. People want cars that are safer, more efficient and better equipped with features to drive in congested urban driving conditions. As we are highly connected in our everyday lives. ‧. with smartphones and tablets, the same is true with cars. Similarly, manufacturers, dealers,. Nat. sit. y. insurers and service providers are attempting to manage these demands while trying to ensure. al. n. improved.. er. io. costs are controlled, regulations are complied with and that the entire driver experience is. Ch. engchi. i n U. v. Faced with environmental and social pressures, the automotive industry is finding ways to reduce carbon emissions and on how to decrease traffic in the city. Furthermore, with greater competition and changes in consumer behavior, in that people are delaying car purchases or discouraged by high insurance costs and fuel and maintenance, the automotive industry is looking for new ways with the help of M2M communications (telematics) to solve these growing challenges. Fleet managers are also simplifying and automating their responsibilities using machine-to-machine (M2M) to grow their businesses and to solve problems.. 10.

(25) Table 2 Key Automotive M2M Services. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 11. i n U. v.

(26) 立. 政治大. ‧. ‧ 國. 學. Figure 3 Cars with Network Solutions versus Traditional Cars. sit. y. Nat. n. al. er. Phases in Automotive IoT. io. 3.1.. i n U. v. Based on ABI Research, Automotive IoT has evolved across four major phases: The Passive. Ch. engchi. Monitoring Phase, The Interaction Phase, The Ambient Awareness Phase, and The Automation Phase.. 3.1.1. The Passive Monitoring Phase Phase 1 – The Passive Monitoring phase includes traditional telematics capabilities like emergency calling, roadside assistance, stolen vehicle tracking and remote diagnostics. However, they are activated only after an event like a collision or a breakdown has occurred. The technology is therefore reactive and passive.. 12.

(27) 3.1.2. The Interaction Phase Phase 2 – The Interaction phase includes a remote control component and infotainment inside a vehicle through smartphone integration. The mobile device is tethered to control music, streaming video, navigation, and etc.. 3.1.3. The Ambient Awareness Phase Phase 3 – The Ambient Awareness phase allows vehicle to be aware of what is happening in the. 政治大 (V2V) and vehicle-to-infrastructure (V2I). This phase improves safety and is the beginning of 立. vicinity through Advanced Driver Assistance Systems (ADAS) sensors, vehicle-to-vehicle. ‧ 國. 學. new services such as big data that can be collected by the vehicle embedded sensors.. 3.1.4. The Automation Phase. ‧. Phase 4 – The Automation phase makes a disruptive impact on transportation through car. y. Nat. sit. sharing, Car as a Service (CaaS), and driverless cars. This is still in the introductory stage as. n. al. er. io. customers declining ownership of vehicles is just starting to happen as well as other consumer. i n U. behaviors and habits that are changing in modern society.. 3.2.. The Sensitive Car. Ch. engchi. v. The average car in the US already includes about 60 sensors that cover driving, braking and climate control systems. The car is sensitive in that it has speed sensors (VSS vehicle speed sensors) that provide input to PCM (powertrain control module) for speedometer, transmission, cruise control, and etc. Another type of common sensor is the WSS (wheel speed sensor) used for EBCM (electronic brake control module) and to operate ABS (anti-lock brake system). There are other sensors for TPMS (tire pressure monitoring system) that can alert the driver when tire pressure is low through the on-board diagnostics port (OBD II) and then send signals 13.

(28) to turn on or off control systems to ensure the safety of the car.. These systems have the potential to connect with IoT to increase safety and reduce driver distractions. Other well-known systems include road condition sensor, vehicle distance sensor, blind spot monitoring camera, drive recorder, steering angel sensor, fire detector sensor, collision detection sensor, pedestrian collision injury sensor, electronic control steering, GPS sensor, hands-free system, and etc.. 政治大. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 4 Diagram of Embedded Sensors. 3.3.. The Connected Car. The Connected Car is the presence of devices inside the car that connect with other devices within the car and/or networks and services outside the car. It optimizes vehicle operation and maintenance and provides convenience and comfort to passengers using onboard sensors and Internet connectivity.. 14.

(29) A typical car has a head-unit, infotainment unit, and in-dash system with a screen so that the driver can operate it with systems connected to it including music/audio, smartphones (iOS or Android), navigation, automotive system diagnosis (oil, tire pressure), Bluetooth (to make and receive calls through microphone and speaker), road side assistance (On Star agents to contact emergency rescue workers), voice commands and hands-free controls, parking apps, automobile diagnostics (alerting driver of service issues), 4G Wi-Fi hotspots, and Advanced Driver Assistance Systems.. 政治大 Operating systems in the car includes Airbiquity, QNX, Mirrorlink, WEBLINK and others. 立. ‧ 國. 學. There is no dominant system as some work with iPhones and others with Androids. In 2014, Apple’s CarPlay was implemented by Hyundai, Ferrari, Mercedes-Benz and Volvo. Shortly. ‧. after, Google revealed Android Auto, a system for smartphones to make voice commands and. sit. y. Nat. were also deployed in major car brands.. n. al. er. io. Technological advances have driven the automotive sector for decades but new trends in. i n U. v. vehicle connectivity will continue to increase both competition and value in the global. Ch. engchi. marketplace up to $152 billion by 2020. Major players including software companies, telecommunications, original-equipment manufacturers (OEM) and carmakers need to act now by adapting to changing consumer needs.. In fact, a study was recently conducted surveying 2000 new-car buyers from Brazil, China, Germany and the US. The findings showed 13% of buyers would not consider a car without Internet access while the majority prioritizes connectivity over existing features like engine power and fuel efficiency. (McKinsey). Currently, the GSM Association states that more than 20% of cars sold worldwide in 2015 have 15.

(30) embedded connectivity solutions. More than 50% of vehicles sold globally will be connected and by 2025, every new car sold will have some kind of connectivity. A study by SBD predicts that 10 million cars sold in 2018 will have tethered solutions, up from 2.6 million cars in 2012.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 5 Diagram of a Connected Vehicle. 16.

(31) 4. Value Added Services in Automotive IoT Product success is as important in IoT as how it is applied to new business models. Successful application means having specific value-added services that are customized for hardware to generate money. These connected car services have provided a foundation for the IoT automotive ecosystem. Below are major value-added services:. 4.1.. Mobile Hotspot. 政治大. Today, many vehicle manufacturers are introducing in-vehicle mobile hotspot capabilities that. 立. allow both drivers and passengers to stay connected while on the road. These manufacturers are. ‧ 國. 學. leveraging IoT platforms that enable connectivity via a network of mobile operators so that passengers can connect laptops, smartphones and tablets to the car to surf the Internet, use. ‧. social media websites and watch videos online. This greatly improves the in-car experience. Nat. sit. y. making drivers loyal to the car brand in terms of usage. For example, both Audi Connect and. 4.2.. al. n. models.. er. io. Ford’s Sync 3 services are powered by Blackberry’s QNX in all 30 million vehicles across 250. Ch. Over-the-Air Updates. engchi. i n U. v. Over-the-air (OTA) software updates in cars are very similar to software updates on a user’s laptop or smartphone in that the OEM is in contact with the car’s connected services wirelessly over OTA, updating and fixing software glitches. This service helps manufacturers avoid major losses in potential recalls attributed to software errors. Again, Audi offers OTA for parking and gas prices. OTA is slowly becoming an industry standard through Chrysler Uconnect, GM Onstar, Mercedes-Benz mbrace, BMW ConnectedDrive, and Toyota Entune systems.. 17.

(32) 4.3.. Infotainment. Today’s connected car manufacturers are leveraging IoT connectivity by providing a completely new interface for delivering and interacting with streaming content services like Spotify and Pandora. This benefits content providers to monetize and expand services for the connected car environment and also benefits retail stores that use IoT to give free trial services or to provide sales offers. For example, OnStar’s new AtYourService feature brings commerce directly to the car, connecting retailers to drivers while they are on the road. Online coupon. 政治大. services like RetailmeNot and Entertainment Book can deliver shopping coupons to the car’s. 立. dashboard for retailers located in the driver’s direction (TechCrunch).. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 6 Survey: 80% of Consumers Expect Connected Services in the Car. 4.4.. Safety and Security. IoT in the vehicle significantly ensures both safety and security with services that can automatically notify emergency services when an accident has occurred. The Volkswagen Car-Net has 24/7 features that alert drivers of dangerous driving conditions and notify medical personnel to respond to car accidents.. 18.

(33) 政治大. 立. ‧. ‧ 國. 學 y. Nat. al Usage-based Insurance n. 4.5.. er. io. sit. Figure 7 Example of Automotive Brands with Safety Control Features. Ch. engchi. i n U. v. Traditionally, insurance providers offered rates to drivers based on age, average mileage, accident and driving history, but with IoT, an emerging value-added service enables usage-based insurance (UBI), that efficiently tracks a person’s driving behavior to establish a more customized and personalized insurance rate plan. A device is deployed in a vehicle that collects data including speed, brake activity, time of day the car is driven, and etc. This information is collected and analyzed and rates are then customized for each driver, thereby, incentivizing safe drivers by reducing their premiums. Allstate, a major insurance company in the US has partnered with Airbiquity, a provider of connected vehicle services, to develop additional offerings like Roadside Assistance programs that also leverage driving behavior. 19.

(34) data.. Overall, IoT is not just about getting service to the car, but about getting usage and non-usage information that can be tracked and collected from those services. It prompts the driver to try new features, upgrade a service and even buy (outside of the car environment) additional products and/or services indirectly marketed via IoT. In fact, IoT has become a “strategic platform” to help deliver and monetize these value-added services.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 8 Example of UBI and Changes in Consumer Behavior Overtime. 20.

(35) 5. Analysis of Automotive IoT Business Models Business opportunities have expanded in many ways since the growth of IoT. As previous discussed, business models with value-added services within a “smart car” has greatly changed car manufacturers’ relationships with customers. There is no doubt that the vehicle is turning into a powerful hub creating important partnerships among the IoT Ecosystem. OEMs are providing hardware to bring best solutions: Additional M2M components are contributing to the platform; software developers are delivering customer-centric applications; peripheral. 治政 services are enhancing the experience of the user; service 大providers have the infrastructure to 立 offer unique services and a complete solution; and data capabilities are optimized by analysts ‧ 國. 學. and marketers among insurance companies; gas companies and media and entertainment. ‧. sectors. How IoT is affecting model business will be discussed below.. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 9 Select Players in the Automotive Ecosystem. 21.

(36) 5.1.. Freemium Business Model. Infotainment services in the car may give away a basic version of an offering for free in turn, persuading customers to pay for the premium version or upgrading to additional services. This “freemium” business model attempts to attract a high volume of customers to the company but make money from the small number of people who end up paying for premium versions, and generating revenue while canceling out the income lost from the free offerings. In this case, the Internet would be the distribution channel for digital services and could also result in long-term subscription-based models.. 立. ‧ 國. Customer Loyalty Business Model. 學. 5.2.. 政治大. Connected services are strengthening the car manufacturers’ relationships with their customers.. ‧. Customers are thereby retained and loyalty enhanced when they are assured a value beyond the. sit. y. Nat. actual product (vehicle) with value-added services. Revenue streams are continuous throughout. io. er. the life of the vehicle as manufacturers can monitor customer experiences in real-time while driving on the road. This makes the customer “voluntarily bound” to the company. The goal is. al. n. v i n C hproduct quality Uand investigating enhancing engchi. to increase loyalty by. potential post-sale. opportunities such as repair and maintenance requirements for the car. The “emotional connection” is rewarding for both parties.. 5.3.. Hidden Revenue Business Model. Infotainment helps to generate financing through advertising as either a main source of income for the content provider of the car or an extra source of income. These advertisements come from a third party where “attracted customers” are of value to the advertisers who fund the offering. For example, Onstar has a new AtYourService feature that brings commerce directly to the car, connecting retailers to passengers. Online coupon services can almost magically 22.

(37) appear on the car’s dashboard showing retail advertisements located in the vicinity of the driver. All three parties benefit – the customer, the content provider and the retailer.. 5.4.. Leveraging Customer Data Business Model. New value is created in a connected car allowing companies to collect customer data and then using it in ways that benefit the company, customer and interested third party. Much like data being obtained through the usage of Facebook or Amazon, in which they leverage for own. 政治大 manufacturers and service providers are generating revenue when they implement this same 立 purposes of selling relevant products or pertinent data directly to other companies, automotive. ‧ 國. 學. type of business model. Auto partners have a lot of data in terms of demographics, what type of people are buying certain types of cars, what content users enjoy, etc. Offers can then target. ‧. existing or new customers with the use of vehicle and driver usage, preferences and other data.. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 10 Connected Cars Becoming Big Data Platforms. 23.

(38) 5.5.. Open Business / Open Source Business Model. Collaboration and partnerships within the Automotive IoT ecosystem is a main source of value creation. Companies are actively searching for innovative ways to form strategic cooperation with suppliers and customers. This open business model is and has been adopted among numerous car manufacturers by extending their businesses to software engineering. Another part of this open business model in relation to the software department is providing non-proprietary source codes to the hardware installed in the car so that it can be freely. 政治大. accessible via tethering to any driver or passenger. Money is made from the services that are. 立. complimentary to the product.. ‧ 國. 學. 5.6.. Orchestration Business Model. ‧. This is similar to forming partnerships within the ecosystem except that within this model, the. sit. y. Nat. company is focused on its core competencies. For example, value chain business operations or. io. er. segments are outsourced and actively coordinated, allowing the company to cut costs and. al. benefit from either economies of scale or increased performance in other areas that contribute to. n. v i n the bottom line. AT&T and otherC telecom are extracting revenue from content bringing U h e nplayers i h gc connected car users exclusive content such as video and games that can be streamed from the. car to personal mobile devices. They work together with Hulu and Netflix subscription services to carry out this core product offer. This type of business model can also be considered a type of “revenue sharing.”. 5.7.. Pay Per Use / Car Sharing Business Model. Insurance is a big driver for M2M applications in the automotive industry. In India, both car manufacturers and insurance companies are looking into solutions for people to pay as they drive based on factors such as distance, time and speed. Algorithmic data allows insurance 24.

(39) companies to calculate price on a daily basis. This business model, in which actual usage of the car is metered, allows customers to be able to pay on the basis of what they can afford and consume, ultimately attracting customers who wish to benefit from this flexibility. Today, car sharing is on the rise and further collaboration among auto manufacturers, rental brands and car sharing companies like Zipcar, StattAuto and GoGet have the potential to make money by promising customers personal convenience in this new age where gaining access to cars is better than owning one. Peer-to-Peer (P2P) is another type of car sharing model where a fleet. 政治大. of cars owned by the community allows the marketplace to match owners of cars that are. 立. Solutions Provider Business Model. 學. 5.8.. ‧ 國. available to other drivers to rent.. ‧. Vodafone in the UK delivers end-to-end solutions that manage the entire M2M automotive. y. Nat. deployment. They offer car manufacturers modules and devices, wireless networks, telematics. er. io. sit. services platform, data security, global delivery, logistics in billing 3rd parties, and 24-hours. al. customer support. This full coverage of service offered from consulting and design and. n. v i n Cgiving development to implementing and is U the specialized know-how given to car h e nfeedback, i h gc. manufacturers. By extending their service capabilities to customers, Vodafone and other full. service providers make revenue through this value chain. Furthermore, maintaining close relationships with customers allows them to obtain greater insight on customer habits and needs to continuously improve its products and services.. 25.

(40) 立. 政治大. ‧. ‧ 國. 學. Figure 11 Chart Depicting Vodafone’s Complete Solution to Customer. n. er. io. sit. y. Nat. al. Ch. engchi. 26. i n U. v.

(41) 6. Tech-Giants Entering Automotive IoT Both Google and Apple have put in a lot of effort to penetrate the connected vehicle platform. Apple is working with nine automakers to integrate Apple’s CarPlay product and Google is also competing to build Android Auto product in cars as well to allow drivers to access and control smartphone apps and services via voice control or push buttons.. 治政大can ask Siri for directions, listen to the Apple iOS for car takes over the screen. The driver 立 music, and make phone calls through the car’s speaker system. Users simply connect their smartphones to supported vehicles through a Lightning cable and. ‧ 國. 學. Google’s Android Auto is similar but uses MicroUSB to connect to the car and instead of. ‧. speaking to Siri, drivers can use Google’s voice search. Instead of Apple Maps, drivers will use. er. io. sit. y. Nat. Google Maps.. The plug-in systems of both Apple and Google software do not require specialized hardware.. n. al. Ch. Carmakers can quickly integrate them as a new. engchi. v i n feature to U. the car. In 2014, Ferrari,. Mercedes-Benz and Volvo announced that CarPlay would be fitted in their cars. BMW, Ford, GM, Honda, Hyundai, Jaguar, Land Rover, Kia, Mitsubishi, Nissan, Peugeot, Citroen, Subaru, Suzuki, and Toyota will be working with Apple to integrate CarPlay in the near future too. At the same time, Google is working with Audi, GM, Honda and Hyundai car manufacturers to integrate Android Auto.. Despite the clash among the two tech companies, both are similar enough that some automakers are planning to support both iOS and Android while giving customers not just one single platform but two.. 27.

(42) Apple is not just trying to sell more hardware and digital content by expanding to the car. Google is not just trying to gain consumer data through a new platform for the car to deliver ads much like the search engine. In fact, both tech giants are entering the industry of Automotive IoT by exploring beyond software and individual components and looking at self-driving vehicles or autonomous cars.. Apple is looking into understanding parts and production methods, electric and connected-car. 政治大 research phase, Apple is getting ambitious as Google has already built a prototype of a 立 technologies as well as the potential for automated driving. Although they are currently in the. ‧ 國. 學. self-driving car for Tesla Motors. Very similar to the development of the Apple Watch, Apple is taking the approach of going at it alone rather than engage in full-scale partnerships with. ‧. established car manufacturers.. y. Nat. sit. For both tech giants, entering the industry of Automotive IoT, suggests how promising the. n. al. er. io. connected car market looks and how interconnected the entire IoT ecosystem works.. Ch. engchi. 28. i n U. v.

(43) 7. Taiwan’s Big-Small Approach Taiwan tech giants are taking the opposite approach in what is called the “big-small business model.” With PC shipments showing negative growth and mobile devices reaching maturity, the high-tech sector in Taiwan sees IoT as the next big growth opportunity. Companies are trying to get into the IoT wave as they realize that hardware is declining and they need to transform if they want to survive. Their strategy is to form alliances with outside startup companies.. 立. 政治大. Acer’s new cloud business is targeted to contribute to at least half of its total profits within the. ‧ 國. 學. next five years with partnerships with Egis Technology, APEX Medical Corporation and EBM Technologies (IT medical management systems companies). Under “Build Your Own Cloud”. ‧. (BYOC Alliance), Acer is collaborating with alliance members from different fields including. Nat. sit. y. device, chipset makers, application developers, and cloud solutions providers to create IoT. n. al. er. io. connected solutions that can interoperate, also provided by other strategic partners including MediaTek, TSMC and Intel.. Ch. engchi. i n U. v. OmniVision Technologies Inc., and Silicon Valley’s AppTog startup use the BYOC platform to work with Acer. Per the General Manager of Acer’s BYOC, "Big brands often have baggage from the past. Startups have technical foundations and are able to quickly find entry points into markets. When startups go on Acer's resource platform, it's the same as getting on a boat and quickly sailing out to sea.” (Commonwealth). New services and products offered by Acer fall under the Acer Open Platform and will include hardware and cloud services for the Connected Car and Healthcare.. Qaunta Computer Inc. is also trying to get a piece of the action in the IoT market by working. 29.

(44) with fundraising platform Kickstarter and two other startups Sentri, a smart home appliances maker, and Flux, a 3D printing company (Backed by AppWorks). Although a deal was not reached due to obstacles in size and scalability, opportunities are abundant with a growing energetic entrepreneur community and the increased demand by end-users for personalized devices.. Wistron and Hon Hai are also building partnerships by directly investing in startups and. 政治大 Zillians Inc, and Hope Bay Technologies Inc., respectively – Both are hoping to strengthen their 立 providing them with manufacturing support. The two companies have bought a stake in. ‧. ‧ 國. IoT today.. 學. presence and capabilities in cloud computing and big data, which is a large part of Automotive. Matching big and small companies will be the model that will give Taiwanese electronic. y. Nat. sit. makers the advantage to capitalize future IoT opportunities. The big companies have resources;. n. al. er. io. however, working together with smaller companies for new product development in automotive. i n U. v. electronics, offers an excellent opportunity for both parties to discover new cooperative business models.. Ch. engchi. 30.

(45) 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. 政治大. vehicle as well as the costs involved. OEMs will have to develop powertrain technologies with. 立. lower-emission of gases and this requires a lot of investment. With those concerns, they come. ‧ 國. 學. 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.. y. Nat. io. sit. Competition. er. 8.2.. Competition among businesses within the Automotive IoT ecosystem is like any other business. n. al. Ch. i n U. v. or ecosystem - a potential challenge faced by all parties involved. Although Apple’s CarPlay. engchi. 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. 31.

(46) 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. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. 8.3.. Ch Lack of Standardization e. ngchi. i n U. v. 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. 32.

(47) 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.. 政治大 Despite a lot of new benefits of a connected car, consumers have concerns about security and 立 8.4.. Privacy. ‧ 國. 學. 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. sit. y. Nat. study, 37% of respondents would not consider a connected car in fear of vehicles “getting. io. er. hacked.” Now all consumers know about the collection of data from their cars, but those who. al. do know, have concerns about where and to whom their personal data is being shared. It is quite. n. v i n C hdata can be collected troubling that a driver’s location e n g c h i U 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.. 33.

(48) 立. 政治大. ‧. ‧ 國. 學 y. Nat. Time-to-Market a l. n. 8.5.. er. io. sit. Figure 12 Consumer Survey of Privacy Concerns. Ch. engchi. i n U. v. 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.. 34.

(49) 9. Conclusions 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.. 政治大. Top Services as Revenue Drivers. 立. Although connected safety features are currently bringing in the most revenue, safety services. ‧ 國. 學. 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. Nat. sit. y. Infotainment. The deployment of Infotainment involves not just the car manufacturer and the. n. al. er. io. end-user but also mobile network operators, application developers, content providers and. v. marketers. The ecosystem is enlarged to include those innovative services as a company’s core. Ch. engchi. product offering or complementary service.. i n U. 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. 35.

(50) approach and broaden their models to accommodate not just the demand for new and more sophisticated services, but on how to manage the revenue streams among the competition. It is found that a lot of business models overlap in that they are interdependent or there are opportunities to form strategic partnerships to monetize services together, for example, data collection.. Therefore, selecting appropriate business models is important to consider. Companies need to. 政治大 services they provide. For instance, one stream is where customers cover the service costs based 立 look at other players and revenue stream opportunities that can be leveraged for the existing. ‧ 國. 學. on their perceived value of the service, another is where the automaker builds the price of the service into the price of the car, a third stream is where automakers subsidize parts of the. ‧. services and the fourth kind is a mix of revenue streams from not just automakers but third. n. al. er. io. sit. y. Nat. parties, advertisers, etc. to cover the costs of service deployment.. Ch. engchi. i n U. v. Figure 13 Consumer Survey of Privacy Concerns. 9.3.. Collaborate or Die Ecosystem. The analysis of different business models and value-added implementations in Automotive IoT. 36.

(51) demonstrates that there is so many opportunities in this industry that still remain unrealized. It doesn’t just stay within Automotive, as the connected car is a “microcosm” of IoT. A networked car, truck or bus with internal sensors that can do a lot of great things can move to other IoT segments. Some of the largest IoT players include ARM, Atmel, Bosch, Cisco, Ericsson, Freescale, General Electrics, Google, IBM, Intel, Microsoft, Oracle, PTC, SAP, Texas Instruments and Qualcomm.. 政治大 model upheaval, and a ‘collaborate or die’ ecosystem.” Strategic partnerships and involvement 立 IoT is a “disruptive and transformative environment characterized by value chain, business. ‧ 國. 學. in consortiums like the Open Automotive Alliance made up of technology and auto industry leaders is vital to stay in the game.. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. Figure 14 IoT Ecosystem. 37. v.

(52) 9.4.. Define the Value Proposition. Connected services used to be a differentiator for high-end cars. However, these services are now being deployed through mid-range, mass-market models. Therefore, business models need to clearly define its value proposition to be successful. This means, understanding customer needs, fitting the appropriate services to different segments, and balancing value, cost and pricing based on what the market price is deemed successful to the owner of the vehicle.. 立. 政治大. Peugeot was positioned to make the connected car an integral part of their core offering which. ‧ 國. 學. meant, they spent the time and money to provide services for free for the lifetime of the car. On the other hand, Volvo, viewed the connected car as a way to strengthen its core offering and. ‧. strategically decided to have customers pay upfront for the cost of IoT services. All in all,. Nat. n. al. er. io. sit. y. decisions vary depending on the car brand, make and model, region and customer needs.. Ch. engchi. i n U. v. Figure 15 The Process of Defining a Clear Value Proposition. 38.

(53) 10. Potential Opportunities in Automotive IoT 10.1. Embedded versus Tethered Embedded systems will generate the most revenue and will be likely to dominate in the next five years. It is predicted that in 2018, they will account for 83% of revenues generated from connected cars, while tethered systems will generate 10% and smartphone integration systems 7% of revenue. This presents opportunities for closer collaboration with original equipment manufacturers, carmakers, and service providers to come up with a fully connected solution for a new vehicle owner.. 立. 政治大. ‧ 國. 學. 10.2. Automotive Aftermarket Products. ‧. The connected car has a significant impact on automotive aftermarket products. The global Automotive Aftermarket projected that this industry is estimated to be worth over $400 billion. y. Nat. er. io. sit. as there are a lot of suppliers that can utilize the Connected Car trend to offer replacement parts, components and accessories, electronics and systems, as well as the after-sales service of repair. n. al. Ch. i n U. v. and maintenance and other management and digital solutions support. This “secondary” market. engchi. can be in the form of add-on’s or a “do-it-yourself” element, for example, adding a tire pressure sensor to the tires and connecting it to a car’s onboard diagnostics system if the car otherwise does not have such technology. Another example would be a keyless entry system that can be developed by aftermarket suppliers and installed into a vehicle security mechanism. The consumer simply uses a smartphone for authentication purposes.. The aftersales market in China will be very important as they have the largest auto market in the world. In 2012, 19 million vehicles were sold. Although new car sales are beginning to slow. 39.

(54) down, the amount of cars being sold in the market is still a lot. In the high-end segment of cars, connectivity will be a must and the result will be opportunities after the sale.. 10.3. Converging Technologies Strategic partnerships within the automotive ecosystem are going beyond the vertical segment of vehicle-to-vehicle communications. Automotive innovation and value creation will shift to other industries with cars interacting with home, healthcare, infrastructure, retail, and etc. The. 政治大. following opportunities are adopted mainly in North American, European and Asia-Pacific. 立. regions.. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 16 Overview of Four Converging Technologies in Automotive. 40.

(55) 10.3.1.Vehicle-to-Home (V2H) Vehicle-to-Home (V2H) applications include remote home control and automation for lighting, heating and security, as well as other appliances from the car. Current V2H initiatives include Mercedes-Benz with Nest (thermostat vendor) and ADT (home security) as well as Toyota’s partnership with Panasonic.. 10.3.2.Vehicle-to-Grid (V2G). 政治大 Vehicle-to-Grid (V2G) opportunity allows electric vehicles (EV) to communicate with power 立. ‧ 國. 學. grids to gain access to recharging infrastructure and other response services, especially as wireless charging will become available on the road in the near future. Currently, GM, Toyota,. Nat. y. ‧. and Ford are actively involved in V2G projects.. er. io. sit. 10.3.3.Vehicle-to-Infrastructure (V2I). al. Vehicle-to-Infrastructure (V2I) applications allow vehicles to communicate on the road with. n. v i n C htraffic signs, parking including e n g c h i U spaces,. connected infrastructure. digital signs and bridge. structures. This “smart city” deployment involving 4G LTE networks and standardization is currently under regulatory and commercial discussion within the EU consortium.. 10.3.4.Vehicle-to-Retail (V2R) Vehicle-to-Retail (V2R) application helps vehicles get to shops and shopping centers, allowing location-based advertising and coupons to appear in the vehicle while driving nearby the closest mall. Currently, Ford announced a partnership with Domino’s Pizza to allow registered users to place orders through a voice interface in the car. Other opportunities are being explored to. 41.

(56) allow delivery companies to locate and unlock a connected vehicle to drop off an item that was purchased online.. 立. 政治大. ‧. ‧ 國. 學 y. Nat. n. al 10.4. The Driverless Car. er. io. sit. Figure 17 Deployment of Converging Technologies. Ch. engchi. i n U. v. The idea of the “driverless car” is becoming viable, as future cars are required to be equipped with technology to send warning signals to avoid collisions. GM will soon launch a Cadillac in 2017 that allows hands-free and foot-free driving in an autopilot mode called “Super Cruise.” The connected car will exchange speed and safety data with other vehicles that are equipped with this same feature. Furthermore, joint effort among the Michigan Department of Transportation, the University of Michigan and car manufacturers are developing sensors and cameras to be installed along the Metro Detroit freeways to allow cars to communicate with each other.. 42.