MWC poses an existential question to automotive manufacturers
Connected cars have been a big theme at MWC this year, echoing what we saw at CES back in January (the two trade shows are starting to show remarkable similarities).
In Barcelona we’ve seen Nissan Renault announce a connected car launching in 2016 able to autonomously drive in traffic jams (subject to regulatory approval), AT&T combining connected car and smart home technology. Volvo have announced a system which detects rapid deceleration, skidding and other signs of danger, sends the data to their cloud and shares the information of potential hazards to other cars travelling the same stretch of road. Connected media players offering social media and entertainment services are old news. Today we saw a radical, autonomous car with lean-back seats that swivel round so the occupants can watch a 32” TV screen while the car drives itself. It was more living room than getting from A to B.
Cars are not only becoming connected, they’re networking. It is, of course, huge volumes of data crunching that makes all this possible.
The fundamentals of car production (i.e. chassis, composite materials, drive train etc.) are all changing – modular platform designs cross different models, advanced alloys are reducing weight and internal combustion is making way for electric power and fuel cells. But the pace of change in this aspect of car production is glacial compared to the software and tech that is being developed in the endeavour to make cars more driver and passenger friendly through offering an ever bewildering array of driver aids, infotainment and new experiences.
The words ‘a fundamental shift’ often preface statements on changing industries. We hear them a lot these days, sometimes in rather too trite a manner. But it is nowhere more true than in automotive. And the shift that is occurring is two fold:
Firstly, automotive design is moving from an industrial process to a technological process, certainly the bits that drivers most notice in their in-car experience. In turn, this means that Moore’s Law applies – broadly, computing power doubles every 18 months and prices for processing power tumble. So we can expect to see connected and networked cars become the norm over the next 5 to 10 years, far more quickly than we’ll see the adoption of new power trains and fuels.
Secondly, cars are becoming media platforms. They will eventually drive and park themselves, allowing its passengers to make a different use of their time – working, communicating, watching TV, shopping etc. Being exposed to more advertising even...
It is telling that much of this tech is being developed, not by the automotive manufacturers, but by software firms – Apple Car Play is a well known example, Qualcomm showed some very swish kit in a connected Maserati in Barcelona and there are many more. One of the quietly impressive things we saw yesterday, which is live and already in 2 million vehicles, was VNC Automotive (a Cambridge based software firm) showcasing new telematics and a concierge service within enhanced infotainment software. They wouldn’t tell us which marques their software was in, only that they would announce more partnerships…
Software will be a huge factor in product and brand development in automotive, and most OEM’s (original equipment manufacturers) don’t historically have this expertise. As Carlos Ghosn, CEO of Nissan Renault observed this week at MWC, an automotive company’s competitive landscape is changing. He acknowledged and welcomed the need for collaboration in the development of future cars and is already teaming up with Silicon Valley firms, even NASA.
So we can expect cross-sector alliances being forged and merger & acquisition activity bringing together the car marques of old and the technology firms of tomorrow to make new kinds of companies. That there has been speculative hype about Apple buying Tesla is indicative.
All this makes me think of the story of White Star Lines. The best summary of their plight and how it's relevant to car makers today (and many others) can be found here.
What we're seeing then in Barcelona this week poses an existential question for car makers: what business are they in? Are they in the entertainment business? Or are they in the moving people from A to B business? Or something else altogether? The answer to this question will determine their long-term strategy, brand and product development and the alliances they build.
Chief digital strategy officer EMEA
Tel: +44 7525 952219