Exploring the Connected Car
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1 Cognizant Insights Exploring the Connected Car Emerging technologies and industry ecosystems are enabling automotive makers to deliver an immersive information experience that transcends the boundaries of traditional vehicular transport. Executive Summary Over the last few years, automotive electronics and wireless technologies have grown by leaps and bounds. 1 Advancement in these technologies, combined with device convergence and changing lifestyle demands, are enabling the automobile to extend the driving experience beyond traditional vehicle transport. In summary, the car is becoming an extension of consumer individuality, as many drivers expect to: Have the same experience and connectivity when on the move as in their personal and professional lives. Gain green solutions that preserve the environment in socially responsible ways. Achieve benefits through networked industries (e.g., telematics for insurance). To fulfill such demands, an increasing number of solutions are providing vehicle-to-infrastructure communication (V2I) and vehicle-to-vehicle communication (V2V), which are services that allow automobiles to continuously exchange information with the environment through which they pass. The car s connection to the surrounding world is a game changer that is growing beyond traditional in-vehicle infotainment. Moreover, this trend presents a huge opportunity for an emerging ecosystem of companies from automakers and OEMs, through banking and financial services and insurance providers and retailers to generate new streams of linear and nonlinear revenue, all the while providing a unique experience to customers. This game-changing concept is called the connected car. It can be aptly defined as a vehicle using mechatronics, telematics and artificial intelligence technologies to interact with the environment to provide greater safety, comfort, entertainment and, importantly, a connected-life experience. The car, in essence, becomes an information hub on the connection information highway (i.e., the mobile Internet), with built-in intelligence to conform to user needs and circumstances. Examples of connected-car functionality include: When the phone rings, the music goes silent so the driver is able to communicate effectively. When approaching a traffic hazard, the navigation system provides a warning on what lies ahead. When the car transmits data for remote monitoring of performance or maintenance needs, the mechanic or dealer can call the vehicle in before the driver even notices there is a problem. When the car sends real-time data about a crash, along with the location, emergency teams can assist without an alert from the passengers. cognizant insights november 2012
2 Benefit per Vehicle per Year Traffic guidance, navigation, emergency services Location-based services, PAYD, PHYD V2V, V2I 11% Lower traffic, fuel, repair, insurance costs Less congestion More personal/professional productivity Reduced service, warranty costs New profit streams Fewer accidents, improved safety Lower traffic/road/ toll operations cost CO2 reduction 21% 29% 39% PAYD: Pay As You Drive PHYD: Pay How You Drive (a more behavioral-based program than PAYD) Vehicle users Auto OEMs Societal impact Service providers Source: Cisco Internet Business Systems Group, Automotive, Research & Economics Practices, 2011 Figure 1 The connected car promises improved quality of life to consumers and society at large, thus opening a wide area of business opportunity for various stakeholders, such as vehicle users, auto OEMs and service providers (see Figure 1). The Connected Car: From Concept to Reality Until recently, the connected car existed only at a conceptual level, or it was enabled through feature pilot implementations. Today, however, key trends and growth enablers (depicted in Figure 2) are pushing industry players to define roadmaps for implementing the connected car. OEMs such as Audi (A6), BMW (328i), Toyota (Tacoma), Ford (Fiesta) and Lexus (GS 450h) have even launched models with variants of connected car features to be available in the next year. These trends are fueled by explosive growth in the smartphone market and wireless-enabled devices (see Figure 3). In addition to these developments, mobile apps and cloud solutions are taking telematics applications to the next level. (For more on this topic, see our recent report, The New Auto Insurance Ecosystem: Telematics, Mobility and the Connected Car ). Other factors influencing the growth of connected cars include changes in regulations for city and road tolling, new young-driver monitoring Growth Drivers for the Connected Car Pervasive Access Customers increasingly willing to trade personal information for free content. Customers expecting seamless on-the-go experience. Provides access to consumer when not driving. Personalized Experience Increasing emphasis on personalization and customization. Personalized content, information, media feeds. Car adapts to driver. Security Protects passengers, economic driving, reduced traffic rule violation. Penetration of safety and security solutions in new vehicles will rise from 10.2% in 2012 to 49% in (Source: ABI Research) Devices and Integration By 2016, 25% of cars will have remote monitoring control systems. (Source: isuppli) Use of smartphones while driving. Mobile, speech integration. Integrate with automotive human-machine interfaces. Use downloadable third-party apps. Younger Generation Greater emphasis on productivity, practicality and fun. Need for social connection. Connectivity Growth in Internet and smartphone users. Enables traffic optimization, shared rides, connected life applications. Upsurge in apps, cloud application hosting. Figure 2 cognizant insights 2
3 Smartphone Growth Forecast , Smartphone shipments Percentage of total cellphone shipments Source: HS isuppli August 2011 Figure % 50% 40% 30% 20% 10% 0% programs, laws restricting the use of handheld mobile devices while driving, and flat rate data packages for mobile networks. OEMs and Tier 1 suppliers are responding by developing the basic building blocks and initial applications enabled by these technologies, which are focused on navigation, safety and remote operation. Building blocks include Internet connectivity within the car, secure connectivity, integration with mobile, integration with back-end business systems and personal data through the cloud. Current applications include remote diagnostic, maintenance, information about driver habits, video on-demand, audio storage, emergency reporting for accident handling, traffic management and sophisticated navigation and trip planning systems. Potential applications also extend far beyond these current capabilities (see Figure 4). What s Hot, What s Not Drivers, as well as government, academic and business stakeholders, will ultimately determine which connected-car capabilities will succeed in the marketplace and how quickly these trends will become commonplace. The following are some examples of connected-car capabilities catching on among businesses, consumers and other organizations: Diverse devices plugged into a vehicle s onboard diagnostics (OBD) port transmit driving patterns and vehicle data directly to back offices. Insurance carriers can build on this driving data and offer new usage-based insurance (UBI) products, such as pay-as-youdrive or pay-how-you-drive. Innovative urban mobility programs such as Intelligent Transport System programs in Europe and the U.S. are yielding results. 2 Application Canvas Navigation Entertainment Remote Applications Electric Vehicle Safety Get directions, maps in real time. Mobile Internet: Points of interest, broader info on the move. Congestion/accident alerts/re-routing advice, weather/road condition alerts. Preferred routes within city /parking guidance. Journey planner. Access/play music, videos/movies/tv, games. Internet radio. Social networking, chat. Trip information, schedules. Seat adjustments. Personalization. Internet services. Remote door lock/ unlock. Remote appliance Car tracking. Theft alerts. Geo-fencing. Nearest charging station with tariff information. Scheduling a charging slot. Home charging. Estimate driving range, battery charge status. Carbon footprint. Speed, distance advice. Lateral collision warning, cooperative lane change, merging assistance. Traffic sign violation warnings. Car breakdown warning. Automatic call for assistance in the event of a crash (i.e., ecall), breakdown rescue. Integrated car safety. Vehicle Management Fleet Management OEM Dealer, Service Center Industries Maintenance notification alerts to individuals, garages. Remote diagnostics. bcall (breakdown call). Driver performance analysis. Tracking and tracing, delivery notifications. Optimal routing and journey Performance analysis. Trip records. Virtual trainer. Alerts and reports. Fuel/energy Resting time violation. Spare parts, logistics Field analysis and issue identification. Vehicle lifecycle Brand improvement. Integration with business systems. Customer profiling. Warranty, logistics, inventory. Service appointment, check-in. Mobile workforce. Promotions/product demos. Product info/ guidelines. Lifestyle profiling. Insurance (pay per use). Retail: Online shopping, alerts. Advance toll applications. Intelligent transport systems. Telemedicine. Banking transactions. Figure 4 cognizant insights 3
4 The automotive industry is embracing mobility and cloud technologies to create seamless on-the-go experiences, such as advanced navigation, video streaming from a home playlist, social connect, etc. Industry-level consortia (e.g., Car Connectivity Consortium, GENIVI, National VII Coalition, CVIS, etc.) and research universities (e.g., Stanford, Imperial College, etc.) are defining standards, open platforms and common methodologies, as well as providing core research on several driving elements, such as autonomous driving (e.g., Google Car), automotive mobile apps, electric vehicles, advanced telematics, etc. Cross-industry applications are enabling electronic toll, traffic safety and electric vehicle charging. Meanwhile, the industry also faces the following connected-car issues and challenges: Consumers are reluctant to pay additional costs 3 associated with embedded connectivity and view their smartphones as the solution to many of their in-car connectivity needs. No business model has yet resulted in customer acceptance, sustainability or willingness to pay. A lack of security in OBD ports and intravehicle networks is posing severe challenges to V2V and V2I programs. A plethora of technologies, including wider proliferation of interoperability and open platforms, is missing. Looking Down the Road There will be more than $20 billion in market opportunity by through connectivity solutions and embedded telematics. The connected car has struggled to take off, but the inflection point is just around the corner. It won t be long before the car becomes an integral part of the Internet community. Already, emergency, tracking and remote operation services are in place and may soon be superseded by V2V and V2I technologies that will help millions of cars inter-communicate on traffic, safety issues and real-time information. This development will render transportation safer, as Quick Take Around the Bend The connected car promises tremendous benefits for various constituencies. Here are a few: Mobile Network Operators New business models, such as bundled subscription services, incremental services, targeted sales, etc. Additional revenue by redefining customer interaction. Add-on services beyond communication and entertainment. Regulatory-driven solutions. Customers Monetary savings. Enhanced productivity. Improved safety. On-the-go experience. Green solutions. More fun, socialization and entertainment. Value-added services: pay-per-use insurance, driveability-based warranty, points of interest. OEMs & Tier-1s New business models, such as upfront revenue, pay-per-use, etc. Real-time traceability. Better remote management, field services and inventory control. Improved safety for vehicles. Improved customer understanding through lifestyle profiling. Brand improvement through unique user experience. Service Providers New revenue streams through consulting, platform-based services, system integration, etc. System integration using social, mobile, analytics and cloud (SMAC). Back-office integration. Customer data Embedded services. Pan-industry convergent solutions. cognizant insights 4
5 well as more entertaining, efficient and environmental. Pan-industry applications, such as payby-insurance and advance tolling, will pave the way for further networked industry applications. In our view, the connected car business will thrive on the aforementioned enablers if automotive majors, wireless carriers and engineering IT service providers form effective partnerships to build open platforms using technologies such as LTE broadband, HTML5, virtual network computing and cloud computing. Going forward, players across the ecosystem should be mindful of the following: A growing number of telematics mandates are being introduced by governments for services such as the European Union s ecall initiative or stolen vehicle tracking. Integration of advanced driver assist systems with V2V and V2I communication holds the promise of reducing crashes. The separation of services between smartphones and onboard communication devices will also reduce complexity with respect to connectivity provisioning. Future connected car services may require the combination of two or more wireless data communication technologies. The development of sophisticated and integrated human machine interfaces to avoid driver distractions will become more viable as more cooperative systems become available. Footnotes 1 By 2014, 43% of new cars will support embedded telematics, according to ABI Research. According to Juniper Research, more than 92 million vehicles with Internet connectivity will be on the road by A major milestone in ITS-related standardization has been achieved through the publication by ETSI of the European Standard for ITS Communications Architecture. 3 According to an Alcatel-Lucent Europe Survey in 2009, European consumers would pay a standalone monthly fee of 27 for LTE-connected car service, while consumers in France are willing to pay 30 per month Every Car Connected: Forecasting the Growth and Opportunity, GSMA, February References Andreas Mai and Dirk Schlesinger, Connected Vehicles: Service Providers at a Crossroads, Cisco Internet Business Solutions Group, April Andreas Mai and Dirk Schlesinger, Connected Vehicles: From Building Cars to Selling Personal Travel Time Well-Spent, Cisco Internet Business Solutions Group, April More Than 50 Billion Connected Devices, Ericsson, February Connecting Cars: The Technology Roadmap, GSMA, February Connected Cars: Business Model Innovation, GSMA, May New Services Enabled by the Connected Car, SMART, European Union, cognizant insights 5
6 About the Authors Vivek Diwanji is a Principal Architect with Cognizant s Engineering and Manufacturing Solutions Business Unit. He has 15-plus years of experience in applied research and innovative solutions and has worked in various domains, such as medical devices, automotive, process control and defense. Vivek is author of several technical publications, and his research interests include intelligent systems, AI applications, advanced controls and optimization. He has a master s in electrical engineering from Tennessee Tech. Vivek can be reached at Vivek.Diwanji@cognizant.com. Nilesh Karmarkar is a Principal Architect with Cognizant s Engineering and Manufacturing Solutions Business Unit. He has 15-plus years of experience developing and architecting solutions and products in plant automation and automotive domains. Nilesh has worked in areas of real-time control and monitoring applications, automated test systems, simulation frameworks, redundant system designs and supervisory control and data acquisition application development. He has a master s in electrical engineering from VJTI in Mumbai, India. Nilesh can be reached at Nilesh.Karmarkar@cognizant.com. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 150,400 employees as of September 30, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at or follow us on Twitter: Cognizant. World Headquarters 500 Frank W. Burr Blvd. Teaneck, NJ USA Phone: Fax: Toll Free: inquiry@cognizant.com European Headquarters 1 Kingdom Street Paddington Central London W2 6BD Phone: +44 (0) Fax: +44 (0) infouk@cognizant.com India Operations Headquarters #5/535, Old Mahabalipuram Road Okkiyam Pettai, Thoraipakkam Chennai, India Phone: +91 (0) Fax: +91 (0) inquiryindia@cognizant.com Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.
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