-Through an OEM’s Lens
It would not be an overstatement to say that the Indian telematics industry has reached its watershed moment. The combination of changing Indian macro and micro economic, political and business scenarios has given the impetus for embracing this technology, with more and more OEMs and after market players trying to take advantage, to enable their customers have a better control over their businesses. It would also be appropriate to state that the ecosystem players have also reached a maturity level sufficient enough to offer the “connected experience” seamlessly to the automotive customer.
The benefits of Telematics solutions have already been proven beyond doubt in the Commercial Vehicles industry. Today the fleet operators already see the direct benefits in terms of efficient operations and savings in the spending by virtue of the basic features of Tracking and Tracing of the vehicles and better route optimization and monitoring. There are many aftermarket players today in India offering variety of solutions to different customers. The standard features that are popular today are vehicle tracking, reports, navigation, fuel level monitoring & driver performance
management. With the electronification of the vehicles, it is now possible to monitor the vehicle condition and the driving behavior through the signals captured from various ECUs (electronic control units) inside the vehicle. Telematics being the basic enabler inside the Connected Vehicles, the digitization of the vehicle opens up possibilities for much more information
exchange From & To the vehicles in the form of Live Traffic updates, weather/other live updates, Accident alerts, Location based content, Vehicle health and Entertainment to name a few but not limited to these. With all these possibilities opening up, the market
is now suddenly staring at the potential that the Connected Vehicles can deliver either in terms of the Information content, or safety or productivity. The Connected Vehicles are set to become an integrated part of the lifestyle by combining various technologies inside and outside the vehicles and giving the customers a wholesome experience while driving.
This however opens up a completely new set of challenges in how the solutions are created and delivered. Unlike the conventional Telematics Solutions where fitting a black box inside the vehicle and providing a backend connectivity would enable a certain set of features, in order to leverage the potential of the Connected Vehicles a complete ecosystem needs to be working in tandem to ensure the delivery of the right solutions by integrating various technologies comprising of the Telematics devices, Infotainment devices, Mobile phones and the Cloud. This also has an impact on the business models where instead of a one-time payment, it is moving towards a service based model and the end-to-end Service delivery capability of the ecosystem will make or break the game.
Let us delve upon an OEM perspective trying to understand the challenges and opportunities.
As a quick recap into the underlying ecosystem and technology architecture,the connectivity box, the server or more flexibly the cloud, the communication link and the navigational satellites form the enabling elements. The web browser and the mobile based applications form the visualization aids. With these in place, the top two applications in the commercial vehicle segment turn out to be vehicle tracking and navigation. Driver and vehicle performance management are other potential ones. Interestingly, the needs of the personal segment customers revolve around emergency services, vehicle safety and entertainment. In the last few years, networking and social connect during driving have become essential needs, primarily dictated by the youth, immersed in their gadget and gizmo universes! In today’s world, customer loyalty is short lived and the requirements, ever changing.
The in-car infotainment is more often seen as the gateway to the outside world and also as an extension of the customers’ mobile phone within the vehicle. Many a time, the in-car experience is judged by the quality and content offered by the infotainment system. Hence, from an OEM standpoint the connected offering comprises of the in-car experience and the enablement of connectivity to the external world. This means that the infotainment and telematics solutions are becoming increasingly inseparable, together defining the connected experience.
That being said, the domination of the ubiquitous Smartphone with its plethora of features is turning out to be a formidable contender challenging the conventional wisdom of having an inbuilt solution in the vehicles! Consumer electronics despite their technology prowess bring with them the risk of obsolescence. The automotive OEMS have to battle with the consumer industry where longevity is just around a year and face intriguing challenges. To have short lived electronic devices factory fitted or not becomes the million dollar question. Vehicles having a minimum lifespan of five years, need to battle with technology obsolescence, shorter time to markets, reduced customer loyalty and enormous cost pressures. Over and above these, today’s ambitious OEMs are also on the hunt for additional revenue streams, reduction and diversification of risk, organic growth, and expansion through new partnerships, sustainable cash flow methods and margin improvisations in the short, medium and long terms.
Let us take a quick dive into the challenges confronting the automotive OEMs. OEMs especially in India face a unique dilemma. While they have aspirations to be global benchmarks, the cost competitive DNA leaves them struggling between the choices of either having global supplier pools or nurturing homegrown local supplier bases.
Especially in the connected arena, there are very few electronic suppliers who are hooked to OEMs. Majority of them cater to the aftermarket segments. While having local supplier manufacturing units give OEMs better control over the quality and logistic aspects, units manufactured exclusively in India are very limited. This leaves them at the mercy of currency fluctuations. Again, due to the multiplicity of players in the ecosystem, assigning clear liability in the event of failure, also becomes challenging.
The number of nations offering their own navigational satellites for tracking applications is on the rise. Apart from the popular GPS, GLONASS of Russia, Galileo in Europe, Beidou in China are becoming popular in their respective nations. India is also gearing up with its own league of Indian Regional Navigational Satellite Systems (IRNSS). These have several implications, right from the hardware suppliers of navigational satellite receivers being ready to be compatible with different systems and also on the preparedness for specific receivers in nations which impose the usage of only their satellites!
While we have already touched upon the way mobile phones are revolutionizing our life styles, the customer expectations on seamless compatibility of their mobile phones in the vehicles, are more or less considered a mandate. To have a vehicle infotainment system or for that matter, even a charging slot in a vehicle, compatible with all the countless numbers and models of phones available in the market is a daunting task. And, the same vehicle would have to adapt itself to the phones of all the members of a single family! The smartphone users are exposed to a variety of Apps and prefer the same being available for use inside the vehicle too, which calls for the need to provide a seamless integration between the vehicle and the smartphone. Having spoken about smartphone integration, the ever updated and evanescent operating systems and their compatibilities to vehicles are another Achilles heel! It is yet to be seen
which of the existing Mobile Operating System integration solutions among Apple CarPlay, Android Auto or MirrorLink would score with the customers.
Another vital link in the connected ecosystem, are the telecom service providers. Connectivity and coverage are the major hurdles in this domain. It becomes difficult for the OEM to zero in on one telecom service provider because of uneven network coverage across states and the domination of certain players in certain states. While telecom providers sense the potential, it might not untrue to state that they have also not equipped themselves with bandwidth planning activities and to offer on par quality of services, for situations when the connected solutions become full blown, with thousands of vehicles on the roads. The changing technology of 2G,3G and LTE have their own share in the hardware capabilities and compatibilities.
On the other end of the spectrum lie the server / cloud providers. In the event of a switch over from one type of connected device to another for various reasons, device integration with the cloud becomes a cause of concern. While the possibilities are endless with data analytics over the cloud, storage and persistence of data is the biggest frontier to be tackled. Industry is abuzz with the popular jargon of the “Big Data” problem. Load forecasting and bandwidth allocation are other stuff that cloud providers have to keep themselves busy with!
Gone are the days, when customers would be satisfied with track and trace type of applications. What kind of content and value added services are presented in a connected offering, is what differentiates and determines a make-or-break offering. This means huge opportunities for the OEMs to create revenue streams with third party content generators and aggregators, if leveraged appropriately. Advertising, insurance, location based services and traffic content might be cited as few opportunities for exploration.
A discussion on connected solutions would not be complete without understanding the diversity of today’s customer. To begin with, customers manifest themselves with different mission objectives. There are the personal and commercial vehicle customers, individual and enterprise customers and the owner driven and chauffeur driven customers. In the entire pyramid, customers capable and wanting to embrace the technology, lie all the way from the bottom to the top. Today, the technology has the potential to proliferate and deliver benefits to the entire mobility portfolio starting from the two wheelers, through passenger vehicles to the commercial vehicles space. A cross section of the customer base from the electric car owner to the operator of a construction vehicle, have unequivocally expressed the willingness to absorb the technology, considering the potential benefits. Indian customers have never been technology averse and in fact, India is becoming the proving grounds for all the frugal technologies which is evident from the way multi-nationals flock to India with their “Made for India” solutions. The Government is also taking initiatives to leverage on this technology to improve the services and efficiency of the public transportation systems. Mahindra Reva e2O, the successful Indian electric vehicle is a live example a fully connected vehicle that is delivering value to its customers.
It can be categorically stated that the strong message coming from the customers, is that of willingness. We have also seen that the ecosystem players, despite short term challenges and technology setbacks are gearing up in their own individual ways. But to nail it down, the “Connected Experience” calls for a “collective responsibility”! It is the time for the ecosystem players to get together, to play the Grand symphony in unison and leverage the power of India, with its multifarious opportunities.