As an editor, I get mountains of data, daily. Much of it is repetitive and is picked up by all of the news outlets in our industry. There is plenty of coverage of the trials, new products, M&As, deployments and contract awards. This is important, but what I want to provide is the insight behind that information.
Therefore, I try to read between the lines and discuss things that have a bit more long-term, significant impact on the various industries. Today, something came across my screen that is just that and it caught my attention.
The title of the piece was “Monetizing Connected Cars.” That, in and of itself, is not necessarily a revelation, but the data from Rethink Technology Research points to an area not often discussed – the consumer’s perspective. We all know that Elon Musk, and the rest of the think tankers, early adopters, and most of Silicon Valley live for “connect-ability.” But what about the millions of rank and file workers to whom the connected car is just something they do not care about. That was the deep dive in this piece.
With all the hoopla surrounding connected cars, the data from the report notes that only about 16 percent of drivers who own cars with connect-ability have actually taken advantage of the pay services that connected cars offer. And Rethink makes the, rather bold, statement that this segment is a “a multi-billion dollar, seven-year, loss leader” – that is what caught my attention.
We are not talking smart cars here, just services such as emergency assistance, stolen vehicle locator, roadside assistance, automatic collision notification, Onstar, and the like. Such services typically cost between $100 and $300 per year, in various package configurations. This does not include any media services, which are usually sold singularly.
The report indicates that auto manufacturers are expected to foot the bill for the bill of materials (BOM) it will take to bring these, and other paid data offering to the vehicles’ composition. The hardware costs are expected to be in the vicinity of $2 billion a year. The connectivity costs around $11 billion. That makes the price of entry, for these major automakers, around $13 billion just for connectivity. And, that doesn’t include the hardware for the smart vehicle to everything (V2X) segment. Add that, and the total is almost $15 billion.
With such a poor showing of interest by the consumer, so far at least, these players have some tough decisions to make. Are they really going to swallow that $15 billion? – especially with where the adoption numbers are, currently.
One can always throw out colloquialisms such as build it and they will come. However, the road to fame and fortune is strewn with players who thought that would be the case. So what does the future really hold for such platforms?
There are several areas of discussion. One, of course, is build the cost into the vehicle with pay as you go services. At 16 percent adoption, that may not be met with a lot of enthusiasm (there is, of course, the option to hide it in the vehicles’ cost). That would be easier to do with V2X, which is seen as both safety feature as well as life enhancements.
However, the real challenge here is the consumers’ interest. Some of this has been around for a while and trends can be spotted. So the fact that it has not moved much higher than 16 percent, today, is a bit concerning. The consumer has to see value in these pay services. It does not appear that is the overwhelming case, so far.
Another option is incentives, much like the price manipulation that is so common. Buy this option and get “X” free for a year or more. Finance with us and get two years of free package A. There are many options here.
However, in the end, if the consumer does not want it and see value in it, it just will not be part of the deal.
Executive Editor/Applied Wireless Technology
His 20-plus years of editorial experience includes being the Editorial Director of Wireless Design and Development and Fiber Optic Technology, the Editor of RF Design, the Technical Editor of Communications Magazine, Cellular Business, Global Communications and a Contributing Technical Editor to Mobile Radio Technology, Satellite Communications, as well as computer-related periodicals such as Windows NT. His technical writing practice client list includes RF Industries, GLOBALFOUNDRIES, Agilent Technologies, Advanced Linear Devices, Ceitec, SA, and others. Before becoming exclusive to publishing, he was a computer consultant and regularly taught courses and seminars in applications software, hardware technology, operating systems, and electronics. Ernest’s client list has included Lucent Technologies, Jones Intercable, Qwest, City and County of Denver, TCI, Sandia National Labs, Goldman Sachs, and other businesses. His credentials include a BS, Electronic Engineering Technology; A.A.S, Electronic Digital Technology. He has held a Colorado Post-Secondary/Adult teaching credential, member of IBM’s Software Developers Assistance Program and Independent Vendor League, a Microsoft Solutions Provider Partner, and a life member of the IEEE. He has been certified as an IBM Certified OS2 consultant and trainer; WordPerfect Corporation Developer/Consultant and Lotus Development Corporation Developer/Consultant. He was also a first-class FCC technician in the early days of radio. Ernest Worthman may be contacted at: [email protected]