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Since its inception, in the beginning of the 20^th century, the automotive industry has never been exposed to a higher pressure for change than today. Currently, there are 4 primary areas of innovation. Firstly, new business models are emerging. Secondly, new technologies are being developed and introduced. Thirdly, non-automotive corporates show increasing interest in the industry, and finally the automotive start-up landscape is growing significantly (Cathles, Corwin, Kelly, & Vitale, 2015).

Alternative Business Models to the established vendor model of Original Equipment Manufacturers (OEMs, for example BMW, Volkswagen etc.) are emerging. One of the most prominent examples are ride-sharing business models, which are driven by a shift in mobility preferences from vehicle ownership to pay-per-use mobility (e.g. Uber: platform-based, and car2go: inventory based). In addition, Technological Changes are spreading within the industry (Cathles, Corwin, Kelly, & Vitale, 2015):

• Powertrain Technologies: Battery and hydrogen fuel cell electric vehicles
• Connectivity: Rapid advancements in the internet access of vehicles enables them to connect to the transportation infrastructure, as well as to other cars
• Autonomous Vehicles: enabled through developments in connectivity, radar, laser light, and GPS

Crucially, these changes do not only exclusively originate from incumbent players.

Between the 1970s and the end of the century the automotive industry was represented by a small group of approximately 43 OEMs and Tier 1s (direct suppliers of OEMs). Since the turn of the millennium however, the number of players in the automotive industry has grown to well over 1000 companies. On the one hand, Non-Automotive Corporates started to participate in the automotive industry (Singh, 2017). For example, Google is investing $30M YoY in a program for the development of autonomous vehicles. On the other hand, the number of Automotive Start-ups has increased more than twofold between 2010 and 2016 from 512 to 1355 ventures (total funding 2010: $12B; 2016: $40B) (Zinnov, 2016). To summarize, the current industry regime that has been well established for over a century might at the tipping point of a major revolution (Nunes & Downes, 2013).

What do you think, will the incumbents of the automotive industry weather the storm? Or will tech-companies and start-ups take the steering wheel? Share your thoughts!

 

References

Cathles, E., Corwin, S., Kelly, E., & Vitale, J. (2015). The Future of Mobility. Deloitte.

ira, W., & Nagle, P. (2017). Around the World Global Sales and Production Forecast. IHS Markit.

Gao, P., Kaas, H.-W., Mohr, D., Möller, T., & Wee, D. (2016). Automotive revolution – perspective towards 2030. McKinsey & Company.

Nunes, P., & Downes, L. (2013). Big Bang Disruptions Are Transforming The Automotive Industry. Forbes.

Singh, S. (2017). Intel’s Acquisition Of Mobileye: What Is Intel’s Game Plan In Automotive? Forbes.

Zinnov. (2016). Automotive Start-Up Scan. Zinnov.

 

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The potential of Smart Homes regarding energy savings, home security, and convenience are significant. But do you actually own (any) devices that automate your home? If no, why not? This post gives a short introduction on the Smart Home concept, elaborates on the major customer pain points and what companies do about it them.

The Smart Home, one field of application regarding Internet of Things (IoT) solutions, is a convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world using mobile or other devices, being interconnected through the Internet and controlling different functions at home (energy management, home security, multimedia, health-monitoring etc..). The Smart Home phenomenon is not a standalone technological product or service. Its highest potential can only be exploited as part of an ecosystem that consists of many intersections and entry points.

To the end of customer pain points, PWC (2017) conducted a customer survey. The three most relevant barriers, deterring consumers to make their home “smart”, were identified as follows:

1. The high initial investment costs are a big deterrent. More specifically, 42% of the potential consumers list price as their biggest hesitation. To reduce this hurdle, some companies offer subscription services to reduce the initial investment cost needed for the set-up of s Smart Home system.
2. Due to unstandardized communication protocols, devices from different manufacturers may not be controlled from one single platform. 32% of potential customers stated they would be much more likely to invest in Smart Home devices if their centralized, instead of individual, steering could be ensured. The communications giant Telekom, for example, has identified this hindrance factor and established Qivicon. The subsidiary strives to set-up industry standards by forming alliances with other producers of Smart Home products.
3. Furthermore 17% of respondents indicated Privacy of Data and the System Security is a major concern. More specifically, potential consumers are uncomfortable with the idea of service providers, or even governments, having access to their private behavioral data. To alleviate, service providers address consumer considerations regarding data security by locating servers in countries with strict information privacy laws. Furthermore, system security is an issue, because Smart Home devices are communicating wirelessly. Hence, the system or steering devices (mostly smartphones) can be hacked by third parties. Although, the hazard of hacker attacks is countered by improved encryption technologies, it remains difficult to rule the threat out completely.

Do you share those considerations regarding Smart Home devices? Or are other factors holding you back from purchasing? Share your thoughts!

 

 

References

Geschütze Daten in Ihrer smarten Wohnung! | Telekom. (n.d.). Retrieved October 19, 2017, from https://www.smarthome.de/stories/datensicherheit

Hive Home US – Start Your Connected Home. (n.d.). Retrieved October 19, 2017, from https://www.hivehome.com/

Maison intelligente, connectée et en sécurité – La boutique Home by SFR. (n.d.). Retrieved October 19, 2017, from https://boutique.home.sfr.fr/#offres

McKinsey (2017): There is no place like a Connected Home, 2017, McKinsey Company. Retrieved from http://www.mckinsey.com/connectedhome/

PwC (2017): “Smart home, seamless life: Unlocking a culture of convenience”, January 2017. Retrieved from http://www.pwc.com/us/en/industry/entertainment-media/publications/consumer-intelligence-series/smarthome.html

Serverstandort Deutschland – MagentaCLOUD Glossar | Telekom. (n.d.). Retrieved October 19, 2017, from https://cloud.telekom-dienste.de/glossar/server-deutschland