Mobile service providers wondering what it will take to avoid commoditization in the years ahead can draw some important clues from the fast-growing ng Connect Program, where new collaborative approaches to business models now include an effort to drive momentum in the connected-car arena.
Launched in February by Alcatel-Lucent the multi-industry ng initiative has drawn 26 participating companies on the premise that the days of service providers' nearly sole reliance on subscriptions and end-user based transactions are coming to an end. "We believe the market is changing to a two-sided business model that also looks up the value chain toward applications developers and content creators," says Chris Carfagnini, director of emerging media and technology at Alcatel-Lucent.
But the many potential players in the value chain are not necessarily aware that 4G mobile technology has overcome bandwidth and latency issues to the point where these new business models are possible. "We looked at that and realized we needed to help operators bring compelling, rich new experiences to the market by identifying who's playing in the digital value chain and making them aware of the new opportunities," Carfagnini says. "We discovered there's tremendous interest from all sides in collaborating to build new applications and services that might otherwise be overlooked."
The ng program has drawn network, device, applications, automotive and content suppliers to development of pre-integrated services in five areas: consumer media and entertainment, digital signage, automotive connectivity, cloud computing, enterprise collaboration and e-health care. Some of the better-known players include Atlantic Records, HP, Samsung, Toyota Motor Sales USA, Sound Blaster supplier Creative, mobile social media firm BuzzMedia, Sanyo products supplier Kyocera Communications and embedded-OS supplier QNX.
"What's different about ng Connect is that we're creating proofs of concepts with technology solutions operating over real end-to-end networking environments," Carfagnini says. "We're letting people touch and play with these applications and feed back to us what's valuable and what's not, which will help us to solidify the value chain for commercial rollouts,"
Alcatel-Lucent is operating demonstration facilities in Ottawa, Dallas, Murray Hill, N.J., Stuttgart, Germany, Paris and Villaceaux, France where participants' customers and investment backers can witness the full scope of what can be done with these pre-integrated solutions. So far nine collaborative demonstrations have been organized by various combinations of ng Connect members.
In a prime example of the complex ecosystem partnerships that are likely to drive service providers' new 4G revenue opportunities, the program's latest initiative, LTE Car Connect, engages Toyota, QNX, Alcatel-Lucent, Atlantic Records, widget supplier chumby and Kabillion, a provider of multimedia content for children. "With the introduction of the LTE Connected Car concept, the automobile is poised to become the latest mobile platform," asserts Derek Kuhn, vice president for emerging technology and media at Alcatel-Lucent.
The connected-car concept has been building for some time in conjunction with telematics, where internal and external communications systems combine to deliver information about car performance, road and traffic conditions and location at a much higher level of sophistication and utility than was possible in the past. For example, Ford's new Sync navigation system allows drivers to use voice commands to input destinations and then provides audio as well as visually displayed "turn-by-turn" traffic-optimized directions, including notifications about accidents, road closures and other obstacles.
Telematics has also been widely used in stolen vehicle recovery, notes Joe Bedolla, automotive business development director at TeleVav, the supplier of Ford's Sync platform and many other mobile-delivered location-based applications. "Studies show that in-vehicle telematics can increase the recovery rate of stolen vehicles from 62 percent to 80 percent," Bedolla says in a recent blog.
But these applications are just the beginning, he adds. "We know consumers want further integration between their vehicle and their connected devices around features other than safety and security," he says. "For example, they want integration between their phone-based navigation system and their vehicle rather than two separate systems. We believe the future includes more integration of the mobile environment in the car, improved driver access to information in a safe manner and a true cooperation between onboard vehicle devices and consumer devices."
Many mobile infrastructure suppliers have been making this point at recent trade shows,
where cars outfitted with LTE or WiMAX connectivity and jerry-rigged screens have become commonplace. The ng LTE Connected Car project takes all this to a new level with a Toyota Prius that has been customized by the manufacturer with built-in touchscreens, radio equipment and other assets supporting a wide range of telematic, entertainment and other applications.
"Information, entertainment content and essential data such as traffic updates and the location of preferred retail outlets or service centers can be easily accessed through the use of high bandwidth connectivity, cloud-based interactive applications and the next generation of innovative in-car computing platforms," Kuhn says. To accommodate such capabilities the collaborators in the project have created an app platform similar to the one for the iPhone with a set-up that turns the car into a Wi-Fi hot spot, plays movies on demand and lets passengers compete in multi-player games.
Exploiting the low latency and high-bandwidth of LTE to accommodate access to apps stored in the cloud rather than just the car is a key to the future of the connected car business, Carfagnini notes. "Today auto-centric mobile services don't exist beyond GPS and voice," he says. "Built-in connectivity through the cloud with high bandwidth opens up a whole new market."
The software platform provided by QNX is the heart of the ng cloud-based system. It supports all the infotainment applications, including the real-time operating system, touchscreen user interfaces, streaming media players for YouTube and Pandora, navigation system with Google local search, Bluetooth and portable device connectivity, multimedia playback, hands-free integration, climate controls, Adobe Flash games, application store technology and a virtual mechanic.
Toyota is the first car manufacturer to participate in the connected-car project with ng, but there are many other automotive firms poised to step into the connected car game, Carfagnini notes. "Major OEM car manufacturers are very much involved and reviewing this," he says, adding that another Prius is being prepared for demos at the Mobile World Congress in Barcelona and other European events next year. Stateside, the concept will be demo'd at CES, CTIA Wireless and other shows as well as at various private events.
In-house research shows that 50 percent of surveyed consumers find the connected car concept to be "highly appealing" and that over 22 percent are willing to pay for such services, Carfagnini notes. "This research was done without the consumers having any first-hand experience of the connected car," he adds.
As a result, Alcatel-Lucent is convinced there's huge money-making potential for all participants, including service providers, auto dealers and manufacturers and suppliers of content and applications. Along with opening a fourth screen for established applications, the unique in-car environment provides a whole new range of applications and service capabilities.
For example, he suggests e-commerce and advertising applications associated with location awareness represent new revenue streams for all players. Electronic sell through for movie and game suppliers, maintenance scheduling apps that more tightly link customers to dealers and extensions of IPTV services to back-seat viewers are other examples of the opportunities at hand.
"The [car manufacturers] we've been involved with so far are really jazzed about this, in part because they recognize their competitors are going to be introducing connected cars," Carfagnini says. "With auto development cycles running to three years, the time to produce connected vehicles aligns well with when the LTE footprint will be well laid out. We're expecting to see this technology on a diverse array of car lots in that timeframe."