The advent of the connected car age will profoundly affect the automotive industry, not least in the relationship between automakers and car users when data comes into play. Whoever controls the data will control a new form of relationship with car users, with the promise of reaping the resulting financial rewards. So how do OEMs ensure that their current customer relationships carry through to this always-on, data-focused environment?
This is a question OEMs and Tier 1s often ask me. I always respond by telling them to consider very carefully what happened to the mobile industry. In my view, automakers and Tier 1s are fortunate to have examples from other sectors as they plan their next steps towards the always-on connected car.
If automakers do not control the user data and relationships, then there is a very real risk that they simply end up providing ‘devices’ for the operating system and connected services to sit in
The mobile industry has been turned on its head over the last 15-20 years. Mobile is a huge market, and according to CCS Insight’s Ben Wood, more than 1.6 billion mobile phones are expected to be sold in 2021. But despite this, LG, once a huge player, has announced its departure from mobile in a move that has not come as a great surprise to anyone.
LG simply found it impossible to differentiate enough in a market dominated by Apple and Android, the latter successfully driving the user experience in phones from several device manufacturers. Samsung has done extremely well to carve out a niche at the top end of the market alongside the iPhone. For manufacturers like LG, who lost the battle to own the data, there was not much left to provide real differentiation other than price. Meanwhile, mobile operators such as Vodafone have lost control of user relationships over which they once had complete ownership through their portals, previously the most popular access point to the internet on mobile devices.
Whoever controls the data will control a new form of relationship with car users, with the promise of reaping the resulting financial rewards
I’m sure you can see where I’m going with this. If automakers do not control the user data and relationships, then there is a very real risk that they simply end up providing ‘devices’ for the operating system and connected services to sit in. If this happens, then the OEMs will find it increasingly hard to differentiate, which will only be exacerbated when electric vehicles (EVs) become more widespread, and the engine is removed. There will be more pressure on them to find differentiators within the car as a result.
Don’t get me wrong—when it comes to the big software companies in automotive today, I would not advise against working with them. Quite the opposite, in fact. There are technologies and operating systems that are already ingrained in the fabric of our connected lives, and OEMs and Tier 1s could place themselves at a disadvantage by not embracing their use in the car. At the same time, they must think carefully about data ownership if they are to avoid the harsh lessons of LG and so many others. But, with the right approach, there is every reason for automakers to be optimistic.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Dr. Neale Foster is Chief Executive at ACCESS Europe
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