How Can Automakers Compete with the Rise of the Smartphone?

Peter Mui


Peter contributes his thought leadership and works within a business development role at ICS. As a consummate entrepreneur, his experiences led him to the early days at O’Reilly Media and then onto various positions at several startup companies. As an MIT graduate, he founded the MIT Entrepreneurs Club, co-founded the MIT $100K Entrepreneurial Competition and currently resides in the San Francisco Bay Area.

By Peter Mui | Thursday, June 4, 2015

Automakers have long strived to make their in-car experiences unique and distinctive: not just in an effort to distinguish themselves from their competitors, but also to distinguish their low-end car models from their luxury models. The low-end to high-end distinction has been important to them for two reasons:

  • The in-car experience is an integral part of the automakers’ customer loyalty strategy and customer upgrade strategy: if you like the car you own now you are more likely to favor that brand again when you trade in or trade up.
  • The auto industry makes most of its profit from their high-end models, so appealing to luxury model buyers is critical and as such, making the interior experience of the car elegant and distinctive is important.

So it’s important for automakers to offer a world-class user experience in the car. However, the auto industry’s control of its own in-car experience, at least with the most visible technology dependent components such as the radio / music player and navigation system, is now under pressure from smartphones.

Through snazzy touchscreen interfaces and broad capabilities via apps, smartphones and the underlying smartphone OSes and ecosystems (like Google’s Android and Apple iOS) make the automobile’s interfaces seem dated, both in look and feel and in functionality. For example, when the mapping software on the smartphone has 1) dynamically updated maps, 2) live traffic info and 3) real-time rerouting, receiving (and paying for!) an annual map update on a CD from an auto manufacturer seems archaic by comparison.

In addition, smartphone OS vendors aren’t standing around. They also recognize the importance of catering to the in-car experience and many have already developed their own auto-specific offerings. Both Google (with Android Auto) and Apple (with CarPlay) are courting auto manufacturers aggressively to adopt their respective auto-oriented systems. Some auto manufacturers are offering these smartphone platforms in low-end cars, but are hesitant to include them in their high-end, flagship models. They’d essentially be ceding control of the in-car user experience to these companies.

Compounding the problem is a fundamental demographic shift: fewer young adults perceive personal automobile ownership as important as smartphone ownership. With the rise of smartphone-enabled taxi alternatives (Uber, Lyft, and BlaBlaBla) and car rental alternatives (www.relayrides.com) cars are increasingly viewed as an interchangeable component of a “transportation as a service” ecosystem.

It seems like an intractable quandary: given the rise of the smartphone, competition from mobile OS vendors, shifting demographics and new enabling apps, what’s an auto manufacturer to do? The answer: they need to leverage the advantages a car platform has over a phone platform, for example:

  • More consistent, reliable power from a much larger battery
  • More sensitive antennas and better RF connectivity overall
  • Control of the entire environment around the person (e.g. providing tactile feedback)
  • FM radio, with the potential for a great sound system tuned to the vehicle interior
  • Greater on-board computing power (enabling local speech recognition, streaming video, predictive content buffering)
  • Opportunity for real knobs and switches as appropriate (for example the volume knob)

In essence, the auto manufacturers have to make the in-car experience so compelling that using a smartphone in a car is an afterthought.

This isn’t going to be an easy task for auto manufacturers as they’re in a highly regulated, highly safety-conscious environment with long lead times to market.  Driver distraction and driver safety are the primary concerns. In contrast, in the smartphone industry even six-month product cycles seem long. An app crash on your phone typically can’t cause an automobile crash.

However, making the in-car experience completely subsume the smartphone experience seems to be the auto manufacturers’ best chance at winning against the smartphone juggernaut. The automobile has advantages as a platform and the auto manufacturers have to leverage those advantages fully.

 

 

 

 

 

 

 



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