A STB on Wheels – Notes from Detroit

Don Dulchinos, president, Smart Home & Away LLC

Don Dulchinos, president, Smart Home & Away LLC

New Trends in Transportation, or, as it’s Labeled Lately, “Mobility”

By Don Dulchinos

A premise of my consulting practice is that home automation is not enough; service offerings need to cover the customer both when at home and when away from home.

My experience with my connected car, which as an electric vehicle is extra-connected (e.g. to utility networks) increasingly underscores the Home and Away nature of IoT. The question is how to provide a customer with a holistic view and integrated set of services no matter where they go.

In search of answers, I found myself in Detroit (actually out in the suburbs, alas) for TU-Automotive Detroit, “the connected car conference.”  The audience was primarily the car manufacturers (still call themselves OEMs), and there is surprisingly still a lot of opportunity here, or perhaps not surprising given an industry that still refers to in-car screens and services as “infotainment.”

The agenda reflected a broad definition of “connected car,” covering three primary trends. Sad to say, a fourth topic, electric vehicles, was dropped from initial plans. Given the continuing drop in battery prices and increases in range, EV’s seem likely to see major penetration before some of these other trends.

Of course, conferences follow the money. Stay tuned for an installment of Intelligent Spaces which will highlight some opportunities, especially in conjunction with trends in electric utility economics.

Connected cars was one track, and has the most resonance for the broader IoT/home automation industries. My main takeaway is the lack of a shakeout in terms of the platforms/operating systems in cars. OEMs seem undecided about whether to cede control to the likes of Apple and Google, and this is an area rife with vendor competition as discussed below. (By the way, along with OEM, a preferred industry acronym is CV for connected vehicles, and there’s also “Tier 1”, for the major suppliers to the OEMs, such as Delphi or Harman.)

A second track covered “smart cities and urban mobility.” Car sharing and ride sharing services were the two horsemen of the apocalypse for OEMs not too long ago.  As one speaker had it, “the largest change in the transportation industry since Ford’s model T.”  But now, there appears to be a nervous consensus that perhaps, while car ownership behaviors may be shifting, there will still be lots of cars sold. (For example, more fleet sales than to individuals.) And so, new business models characterized by a multi-industry ecosystem were the order of the day.  This seems another opportunity for home service providers to be part of the mix.

The third track, autonomous vehicles, was the largest and busiest by far. (Acronym alert – autonomous vehicles = AVs.)  At the end of the day, seems to me that AV’s reflect a gold rush mentality among vendors and suppliers, rather than any groundswell of demand from customers.

General OEM Responses

OEM responses to these trends were often what you might expect. A few have partnered with big names in innovation – Fiat Chrysler forming a partnership with Google’s Waymo around self-driving cars. Others have formed separate subsidiaries – Ford Smart Mobility LLC – “to inject new DNA into the company.” And others have taken the classic route of buying the innovators – Ford bought Chariot (ride sharing for women), Porsche invested in “parking solutions” company Evopark. And a few were and are ahead of the curve – Daimler spawned Car2Go years ago.

Glaringly absent from the discussion was Tesla, whose innovative approach to all things automotive has driven their market cap to levels on par with Ford and GM. Tesla is working on all the trends highlighted in this conference, but their style is more that of an Apple, having their own developer events rather than participate in industry conferences, and indeed, not characterizing themselves as something so antique as an OEM.

The most interesting of the “OEM” speakers was Kurt Hoppe of GM, who made me sit up when he said cars today are like “set-top boxes on wheels.”  Sporting the title of Global Head of Innovation – Connected Car, Kurt is an alumnus of smart TV and set-top work at LG Electronics.  He summed up his mission as bringing the speed of software development to the automotive space.  That includes published SDKs, fostering developer communities, leveraging cloud services and mobile apps, decoupling hardware and software, and taking advantage of the speed and scale of open source approaches.

His biggest challenge? Teaching the company that all this is possible. That said, GM has not been oblivious – the OnStar service has been doing connectivity for many years now. GM has built on top of that core emergency service a range of other value-add services and features (Has my car finished charging?)

General Industry Implications

Weaving in and out of all of the recent discussions are business models and ecosystem contributors that are being disrupted, or are part of the disruption.  For example, insurance implications arise from almost all the new trends – think of Progressive Insurance’s Snapshot program, providing discounts based on monitoring device that plugs into any car’s OBD (On-Board Diagnostic) port.

The existence of a range of monitoring possibilities opens up the CV to innovators in the world of big data analytics and machine intelligence. Note as a recent example Comcast’ debut of the MachineQ service, which is focused on data gathered outside the home.

Connectivity runs through all these trends, and service providers are in a strong position there.

Incumbent LTE providers may not necessarily own this market,  if other entrants implement lower-cost solutions for connected devices – see for example Low Power WAN solutions..

And finally, closer to home for OEMs, all these mobility innovations and sensor-instrumented, solid state engines are putting pressure on the whole dealership model which depends heavily on service. This seems why Tesla is seeking to disrupt that dealership part of the automotive value chain in addition to its electric drive focus.

Implications for Service Providers

With all that as overview, let’s look at the three main subject areas of the conference, in reverse order of where home automation and service providers may have an opportunity to play.

Autonomous – The benefits of the move to autonomous driving were estimated by one speaker to amount in a few years to $1.3 trillion in savings to the U.S. economy – accident cost reduction, fuel savings and productivity gains (more on that later) – rising to $7 trillion by 2050. This is Internet of Things-level hype for sure. And there’s enough momentum behind it for the FCC to have released a Notice of Proposed Rulemaking requiring new vehicles to come with Vehicle-to-Vehicle (V2V) capabilities via dedicated short-range radio communications (DSRC) in a dedicated spectrum band.

But some researchers at the conference feel that accident-reduction benefits come only when a majority of cars are autonomous. Even with all the hype, optimistic forecasts see penetration of 25% taking 13 years, and getting to 50% taking until the year 2040. (Note: there are degrees of autonomy, and even official definitions of the degrees:  Level 1 is current stuff like cruise control; Level 2 is some level of autonomy such as slowing down or maintaining lanes to avoid other cars; Level 3 includes some decision-making like changing lanes to pass rather than slowing down, and on up to Level 5, which is totally autonomous with no attention from the human. Most of the supplier and startup offerings at the conference were focused around Level 3.)

One other consideration, of course, is cybersecurity. Fortunately, the automotive industry has already created the Automotive Information Sharing and Analysis Center. Unfortunately, it is strictly an industry body – no government agencies, universities or security vendors are eligible for membership. Hmm.

The autonomous vehicle media craze is churning up investment frenzies, but this would not be the first time I’ve said, don’t hold your breath. I don’t even think it’s that the technology challenges can’t be overcome in a timely manner, but no one has addressed the elephant in the room (or car.) As William Faulkner put it, “The American really loves nothing but his automobile: not his wife his child nor his country nor even his bank-account first but his motor-car. Because the automobile has become our national sex symbol.”

At the TU-Automotive lunch, I sat next to a Car and Driver writer, and you can imagine he shared these sentiments. But to be fair, I may be violating Amara’s Law – “we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” This dictum might well apply in light of the widely reported fall-off in car sales to Millennials.

Smart Cities and Urban Mobility – A great, billion-dollar question came out of this conference. Will municipalities fund CV/AV infrastructure? There have been a number of high profile announcements of cities like Barcelona or Denver announcing general smart city launches with systems integrators like IBM and Panasonic. But those deals don’t necessarily include significant transportation investments.

A TU-Automotive conference panel included reps from Detroit and Beverly Hills (awesome range of perspectives there.) They noted that “smart” is good, but specifics of explaining the range of future mobility trends and needed investments are hard – “Don’t tell me you’re investing in DSRC. Just fix the potholes.” Panasonic’s presence in Denver includes a large prototyping and demonstration facility, so they are still figuring it out, but a part of the Denver announcement is supporting Denver as “aerotropolis” – multi-modal transportation is definitely in their near-term sights.

Network service providers have a play here. The targeted markets for Comcast’s connectivity and analytics platform MachineQ include both transportation and smart cities, although they don’t quite tie the two markets together. Transportation examples are targeted at private sector fleet management and “cold chain temperature management” (making sure food freight trucks maintain safe temperatures), while smart city targets waste management or intelligent street lights. The industry trade group SCTE gets it right with an IoT working group titled Smart City, Smart Roads.

Panelists acknowledged the importance of a partnership with cities – trends toward car share and autonomy were thought to be part of an answer to a range of municipal problems from safety to congestion to air quality. The possible downsides included cannibalization of mass transit, lost revenue from parking or an actual increase in congestion from autonomy as fewer drivers worry about finding other options if they can just sit inside the car and watch movies..

At the end of the day, public/private partnerships are going to be necessary, and difficult to design. Autonomy likely will require legislation and regulation, as public rights of way are implicated.

Information sharing will be key. Mobility companies in this digital world derive great benefit from user data, and this includes both drivers/owners and municipal infrastructure providers.  But smart cities also get smarter if they harvest vehicle data. This, of course, is the opposite of most platform providers from Google to Facebook, where the user provides data and the platform company profits from it.

This is a good segue to the last topic here, the state of the art in connected car platforms.

Connected Cars – The news since my last column on the topic is that software platforms and user interfaces for CVs are still bad. A handout at the conference from industry analysts announced Ward’s 10 Best UX. A quick glance gives you nothing but classic computer blue and white screens – where’s 8K? Where’s personalized skins? Where’s voice control? Where have you gone, Dale Herigstad (cable UX guru, who actually has gone here)? Companies like Cisco think there is lots of opportunity here – their conference speaker said in-vehicle networking is like enterprise networking in the 1980s – good news for networking companies, bad news for drivers.

Ericsson is touting its expertise in connected services (see what Ericsson cable veteran Ken Durand is up to these days with IoT), selling the OEMs on service integration and enabling non-automotive service providers to play nice in cars. As a guiding mantra, their speaker invoked, “Every product is a service waiting to happen.”  The company is pursuing partnerships and acquisitions to keep up with the market. For example, they have a new partnership with location platform service Here Technologies (itself a spinoff of European OEMs.)

Airbiquity is an example of a more automotive-focused player, leveraging core expertise in wireless connectivity to develop and operate connected car programs using a software-as-a-service model. The bridge for them to drivers while at home is probably a bigger reach.

There are still standards alliances within the mobility industry, such as GENIVI. The name is a combo of Geneva, the “city of peace” (?), and In Vehicle Infotainment (that antique word again). Harman is chair of this group in its incarnation as a “Tier 1” Vendor to OEMs.  Samsung acquired Harman earlier this year, and there’s a clear platform synergy between Harman’s connected car technology and Samsung’s earlier SmartThings acquisition.  Samsung is inside the tent (in GENIVI, but more generally in automotive), while Google, Apple and other platform players are still on the outside.

For my money, the most interesting speaker at TU-Automotive Detroit was Steve Surhigh, VP and GM of Apps services for Harman.  He talked about the Harman “Ignite Platform, an end-to-end platform which enables connectivity, device management, application enablement, analytics and managed services capabilities.” That should just about cover it. (Ignite is also integrated through Samsung with the IoT industry standard Open Connectivity Forum, and so a critical link to in-home IoT services and platforms is inherent. This all came with Samsung’s 2014 acquisition of SmartThings.)

Harman’s value proposition, according to Surhigh, is about monetizing the new connectivity of cars. Surhigh said 2% of the total vehicle spend today is on connectivity, but that will grow to 7% by 2020. It is not just about the technology but also about delivering a premium experience.   And with connectivity, OEMs “are sitting on a golden egg, in the shape of data.”

Given the level of interest, I was fascinated to see the following summary of the size of the connected car market (in millions of vehicles.)

2016 2025 projection
Europe 4 16
U.S. 7 15
China 2 14

These numbers seem low, but again it seems the OEMs are still coming at this in a very conservative way. One speaker noted, “There’s all this money being spent to connect cars without having necessarily gone all the way to a business model.” Reminds me of how cable companies used to be resistant to new lines of business, but would always spend money to improve “stickiness.”

Home and Away – So perhaps where business models might become more apparent is in the synergy between in-home and in-car services. As one speaker proposed, “You should go after advertising.”  This makes me think of peripatetic cable exec Arthur Orduna, who went from cable to ADT and now Avis, where he recently pitched autonomous vehicles as a new green field for entertainment programming.  I think any such market is years away, but consider this news item:

Tesla is in discussions with major record labels as it seeks to license a streaming music service that would be made available in its vehicles, industry sources say. The company wants to create a proprietary service that provides customers with the freedom to choose what they listen to and what source they use to listen to it, a representative said.

Panasonic Automotive’s Andrew Poliak (ex-QNX, an RTOS Company now part of Blackberry) thinks the connected vehicle becomes not STB but a smartphone. Panasonic is not only in the smart city business as systems integrator, but their heritage in television and consumer electronics means they look at in-car entertainment as on opportunity not unlike in-flight entertainment.  And Poliak notes their approach comprises innovation “inside the car or outside the car.” For example, there are new business models based on the identity of people inside the car, leveraging cameras that monitor the inside and outside of the car.

Any mention of video brings me back to innovators like Kurt Hoppe who see parallels in the car business and the video service business, and to my cable background. Another interesting speaker was Mark Huber of Cox Automotive, which incorporates old Cox business auctions with the new generation of Autotrader.com.  He spoke about the general case of innovation through software development, but noted, “The customer experience is the deliverable, but sometimes we miss the link between that and our corporate culture.”  I’m wondering if he talks to the guys at Cox Cable.

My takeaway here, not unlike my prior Intelligent Spaces column, is that it’s still early.  I’m thinking that the biggest actual transportation innovation of recent years is in the tires – when’s the last time you had a flat tire? And, like me, does your latest car not even come with a spare?

OK, that’s probably not satisfying.  TU-Automotive Detroit also featured a number of start-up demos. There were white-label platforms for ride sharing, car sharing, voice assistant and, of course, IVInfotainment. But other of my favorites were:

  • ParkWhiz – Expedia for parking
  • Gestigon – Gesture-based UX; also, interior passenger monitoring.
  • OBD Solutions – leveraging standard On Board Diagnostics ports in cars.
  • FireFly Essential Services Vehicle – all electric, smaller than a car, bigger than a golf cart
  • Cognata – validation platform for autonomous driving – the simulation is “reality-grade”!

And to close, my two favorite futurist presentations:

  • From NEXT Electric, a modular bus that splits into smaller vehicles.
  • A Ford F-150 aftermarket product to turn it into a drone Launchpad.

Americans love their cars.  Maybe they will learn to love mobility just as much.

About the Author

As president of Smart Home and Away LLC, Don Dulchinos provides consulting services for developers and providers of Internet of Things applications and services. Dulchinos, a former CableLabs executive, recently served as executive director of the EIDR (Entertainment Identifier Registry), a service created by Hollywood studios, cable companies and digital video providers, including Netflix and Google, to manage assignment and storage of IDs used to track movies and TV programming across all distribution outlets.