With the millennials becoming more and more concerned about connectivity, the smartphone-driven automotive revolution is inevitable. The automotive OEMs who will win in this space will be those who can keep pace with their continuously evolving roles of the IoT connected world and yet are flexible enough to meet the demands of the next generation drivers. What needs to be seen is how the automotive OEMs will go beyond their current roles to where they make smartphones a core mobility offering to deliver the increasingly personalized information-centric experience to its customers. Irrespective of the role of the OEM, the IoT revolution driving smartphone-based connectivity in the automotive industry is too big an opportunity to miss.

1. | |July 2016
20CIOReview
Smartphones
Friend or Foe for
Automotive OEMs?
A
round the world of automotive, a new
wave of device-to-device connectivity
is shaking up the industry. The
phenomenon will have a ripple effect
on most of the connected segments—
technology, software, manufacturing, telecom and
networking. At the heart of this change, is the Internet
of Things (IoT)—along with the evolving sharing-
based economy, the consumption model, changing
consumer preference, declining ownership economy
and the rise of social, mobile, analytics and cloud
computing. The connected cars of tomorrow will
become an essential node in this web of connectivity.
Today most of the industrial IoT use cases
are targeted at the top end market (1–5 percent).
Similarly, in the automotive industry, only seven
percent of the new cars sold, primarily targeted at
the high-end market, are connected and IoT-enabled
while remaining 93 percent cars sold for the mid-
range and low-end market are still unconnected. The
auto OEMs, suppliers and technology providers need
to take a disciplined dual approach to reduce this gap
between the high-end and low-end markets, paving
the way to a macro-economic paradigm shift in the
automotive industry.
While, a top down cost reduction approach
will likely always be a factor to size the market,
smartphone-based connectivity is the solution that
allows a bottom up IoT revolution for the automotive
market. Smartphones can help auto OEMs fast track
the IoT adoption for remaining 93 percent of the
unconnected cars sold each year. The IoT capability
can be enabled in all the cars with minimum effort from
the automotive OEMs by integrating a smartphone-
based app with the car functionalities.
Indeed, the smartphone revolution will mark a
paradigm shift in the automotive industry. The big
question is: Will this game changing technology act
as a friend or foe for the industry as a whole?
The advantages are obvious. The evolution of
smartphone-based automotive will transform the
automotive business model from ‘sell, forget and
pray’ to the innovative customer-centric ‘car-as-
a-service’ model, where auto OEMs can generate
subscription-based revenue through aftermarket
smartphone applications such as infotainment, apps
and map updates over the lifecycle of the vehicle. The
new business model has the potential to transform
transportation into a service in which a user’s major
needs are met over one interface (smartphone of
By Mahbubul Alam, CTO/CMO, Movimento Group
Mahbubul Alam
CXO INSIGHTS

2. | |July 2016
21CIOReview
the user) by the service provider. It will cater to the demands
of millennials who prefer consumption-based culture over an
ownership-based culture. The smartphone will become an enabler
for consumers as well as OEMs to make car-sharing services as
a part of the overall Transportation as a Service (TAAS) offering.
Today, the automotive market is driven more by choice and
connectivity than mechanical engineering. Smartphones will
allow OEMs, service providers and insurance providers to gain
an in-depth insight of their customers’ behavior, thus giving
them an opportunity to enhance user comfort with personalized
functionalities such as personal navigation, points of interest, and
other location-based services. Customers can update their car’s
functionality, customize the skin of the car’s display, create their
own car profiles on cloud, download their profiles by tethering
their existing smartphone to the car and access their personal
contacts, playlists and in-car settings preferences at the click of
a button.
Customer will have the flexibility to transfer their virtual
car profile to a rental car while insurance providers can use
driving behavior data to move from an aftermarket dongle to a
smartphone-based app as a means of enabling the usage based
insurance market.
Smartphone-based connectivity is reinventing the way the
cars are manufactured, sold and driven. In order to develop a
sustainable and customer-centric model, the OEMs need to have
a direct interaction with the owner of the car. Smartphone in-
vehicle apps can capture data, which can be used by OEMs to
develop a smartphone strategy for the lifecycle management of
those cars with no embedded connectivity. It will also allow the
OEMs to develop apps and services to make every unconnected
car connected.
As IOT transforms the automotive, new set of services
will bring new challenges. The integration of smartphone with
in-vehicle systems poses a real challenge for the automotive
OEMs. The short lifespan of smartphones enables them to
quickly adopt new apps and networking advancements like 4G.
Considering that the car hardware has a longer lifecycle than
mobiles devices, OEMs will have to find ways to improve the
lifecycle of infotainment/navigation systems through over-the-
air software updates.
However, in the growing IOT-enabled, big data world;
delivering world-class systems depends on the effective use
of software at every stage while meeting strict data security
and privacy requirements. Hence, OEMs should focus on
participating in the overall ecosystem to fully realize the
benefits of third-party partners while providing information
without causing driver distractions. The evolving relationship
between the OEMs and the software providers is a significant
step toward this evolution.
With the millennials becoming more and more concerned
about connectivity, the smartphone-driven automotive
revolution is inevitable. The automotive OEMs who will
win in this space will be those who can keep pace with their
continuously evolving roles of the IoT connected world
and yet are flexible enough to meet the demands of the
next generation drivers. What needs to be seen is how the
automotive OEMs will go beyond their current roles to where
they make smartphones a core mobility offering to deliver
the increasingly personalized information-centric experience
to their customers. Irrespective of the role of the OEM, the
IoT revolution driving smartphone-based connectivity in the
automotive industry is too big an opportunity to miss.
"
The evolution of smartphone-
based automotive updates will
transform the automotive business
model from ‘sell, forget and pray’
to an innovative customer-centric,
car-as-a-service model