Your car vs your smartphone: the battle for digital services

According to Radio Free Mobile's founder Richard Windsor, consumers will be buying a lot fewer cars in the next 25 years. That could be a third or as little as half of what they do now, in the worst-case scenario.

“Not a single OEM could survive that,” he told HERE360. The only answer is to find a new revenue stream — and the best opportunity is to be the main provider of the digital services that are coming to the car.

But to do that, they need to create a digital environment that the user wants to engage in, and not just switch off and use their smartphone instead.

“The challenge is that at the moment, no one wants to engage digitally with their vehicle. They would rather use their smartphone,” Windsor said.

There has been much talk in the industry of the software-defined vehicle. In contrast to hardware-defined vehicles with the chips in the components themselves, the software in a software-defined vehicle is saved in a central repository. That means it can be updated and integrated into other things, creating the potential for new services.

However, progress toward this has been slow.

“The hardware-defined vehicle is the equivalent of having one smartphone for every app that you use. That means you carry around 150 smartphones with you every day,” says Windsor. He believes the industry will have reached a halfway house, where software has been removed from the hardware but everything is not yet fully integrated, by 2026.

In the meantime, technology companies such as Google and Apple could muscle their way in before automakers have a chance to seize this opportunity for themselves.

Obstacles ahead

An example Windsor gives is the digital music service Spotify. “It is important for Spotify, considering that people spend a lot of time in their cars, to be present in the vehicle,” he said. “They have two options: write the app to the head unit, or go in with Apple or Google through the smartphone. To do the former, they would have to create 26 different versions of their app.”

Little wonder then that they go with the smartphone option, which only requires development for Android and Apple.

OEMs are hampered, in Windsor's view, by their four-year design cycle. “You need to be able to upgrade various hardware components halfway through the lifecycle of the vehicle,” he said. They are not software companies, and in many cases, have been slow to adapt to these new demands.

A fragmented approach toward software development has caused further problems. Most build using the Yocto project, a system of tools and modules that allow you to customize automotive-grade Linux to your own specification. “Instead of interoperability, the Yocto Project equals fragmentation, because they give you the tools to make the software different from everyone else's.”

This has led to the difficulty described in the Spotify example.

 

 

Read more: This is what the dashboard of the future looks like

Read more: This is what the dashboard of the future looks like

Possible pathways

Some OEMs are rising to the challenge. CARIAD, the software powerhouse of Volkswagen, is one example. “The idea was to strip out all the software assets from VW and effectively create a start-up,” Windsor said.

Harman has created Harman Ready Upgrade. It contains the digital cockpit and in-vehicle-infotainment system and can be replaced halfway through the lifecycle of a vehicle.

Windsor said automakers do have some advantages. Embedded systems can ultimately offer a better experience to consumers than using their smartphones. “There are multiple screens now in vehicles. You can integrate the experience across the instrument cluster, passenger seat, rear seat entertainment, etc, whereas with a smartphone you are fairly limited as to what you can do. You don't integrate with any of the other parts of the car,” he explained.

And there is a range of opportunities to make money with digital services. These include transportation-related services, such as smart parking services. For a monthly subscription, users could get a reserved parking space and directions there as part of their navigation.

Digital advertising, targeted to the consumer, is another service. Windsor said there will also be many others that we cannot imagine yet, in much the same way that an iPhone now offers a myriad of apps that Steve Jobs did not anticipate when he launched the first model.

However, this all depends on automakers getting the technology right at this crucial time.

“The most urgent thing they need to do is to figure out a way to create a user experience that is engaging, fun to use, easy to set up, consistent from one vehicle to another and allows third parties to develop apps,” Windsor said.

“Fix that, and you are on the road to recovery.”