by Greg Ross, Connected Vehicles Practice Lead, motormindz
This is a reprint from an article featured on Automotive News.
OEMs have never had a monopoly on innovative ideas.
The history of the automotive industry is chock full of innovative thinkers from its very first days, yet – for most of that history – innovation of anything beyond the conceptual drawing board remained generally only within the reach of the titans of industry, and their large-scale design and industrial manufacturing capabilities.
While this economy-of-scale-based paradigm has nearly always been true – innovation has flourished in spite of it, mainly within the aftermarket sector, that has created myriad opportunities for modifiers, hot-rodders, tuners, accessorizers, and physical “hackers” of every kind – which, in turn, indirectly increased the values of the vehicles themselves. Just look at the annual SEMA show to see how much real-world innovation is done outside the walls of the OEMs, and how much desire there is to contribute to overall industry innovation and improve the enjoyment of the consumer experience. The best “platforms” are actually more valuable because of the vast range of accessories and modifications available. What would an F150 be worth without the vast availability of caps, covers, storage bins, trailers, campers, tents, and other various accessories?
In addition, within the last 20 years, we’ve seen an acceleration of even broader industry innovation. As industrial design and manufacturing has become more democratized, electrification has become mainstream, software innovation has exploded, and piles of new investment money has entered the space – we’ve seen some exciting new manufacturers emerge and become viable niche companies. The latest of which, of course, is Tesla – which is well on its way to becoming the first new-era established mass-market automotive brand.
At the same time, we’ve seen an explosion in the democratization of software development – with Apple leading the way in the creation and blossoming of its open developer ecosystem. The likes of Google, Amazon, Samsung, Salesforce and others have taken different approaches to building their own open developer ecosystems in Apple’s shadow, but with no less benefit to their top and bottom lines, and to the richness of contribution to their products.
These smartphones, tablets, and other smart devices and open developer platforms they’ve each created offer a useful analogy here – take a look at how many of the applications on your smartphone were developed by someone other than Apple, Google, or Amazon – and realize that this open, external contribution concept has not only driven massive unit sales for nearly all of them over that timeframe, but also fueled their transformations, in large part, from hardware unit-sales-based giants into subscription-and-services-based software behemoths. The creativity that has made these ecosystems so productive and highly successful can also be applied to OEMs, vehicles, and fleets.
OEMs are realizing that digital ecosystems drive massive growth.
With all of these dynamic changes taking place, some OEMs are beginning to appreciate that they need to support and enable software innovators to develop the most attractive products, provide optimal customer experiences, and accelerate their top and bottom-line growth.
There are several good reasons for this emerging shift in perspective:
- Product Complexity: Vehicles are reaching an inflection point in their destiny to become part of the “smart computing edge,” and are increasingly software-controlled and extensively software-defined – which raises the OEM dilemma of core versus complementary competencies and drives an increase in partnerships and ecosystems.
- Reach Amplification: Digital ecosystems can amplify the reach of OEMs by enabling scalable connectivity between existing partners and customers – but they can also provide a mechanism of collaboration and exchange for as yet unknown parties to contribute.
- Growth Acceleration: OEMs need to evolve from value-chain-structured businesses trading with well-known partners and adding value in steps, to being part of a faster and more dynamic networked digital ecosystem with revenues attached to digital products and services, not hardware.
This shift in perspective creates many opportunities for innovation and creativity as it gives birth to new ecosystems through openness, transparency, and a two way-dialog with OEMs in regards to access to remote data and controls, access to in-vehicle displays, and access to additional in-vehicle systems and controllers possibly in the future.
OEMs are experimenting with Developer Programs.
Some OEMs have started down the path to experimenting with Developer Programs. Most of these have enabled API access to some of the vehicle’s key data elements – such as vehicle diagnostics, vehicle performance, location & positioning, etc.
Some have also enabled limited development of in-vehicle applications, both through proprietary programs or through add-on platforms like Apple CarPlay, Android Automotive, and more recently, Amazon Alexa.
Others are exploring other ways to open their ecosystems by enabling limited data partnerships:
- Wejo and Otonomo are creating connected car data sets for use by road planners, municipal authorities, and others
- Motorq is enabling flows of connected car data to fleet users
- Verisk, LexisNexis, CCC, and Arity are managing driving data on behalf of car insurance companies
- And OEM’s have done several individual agreements with large commercial partners like Amazon, AvisBudget, Enterprise, or with individual insurance carriers.
But, OEMs have more work to do to foster innovative ecosystems.
Even with all of this progress happening, today’s existing OEM programs are still highly centralized and extremely constrained – and are anything but “self-serve.”
- OEM’s only deal directly with very large commercial partners
- OEM-authorized data platforms are limited to OEM-authorized use cases
Part of the underlying reason for these restrictions is that OEMs are naturally concerned about security and safety, as they should be. And they have good company in those concerns:
- Nobody wants to allow unsafe, distracting content onto vehicle displays
- Nobody wants to allow unauthorized access to private data
- Nobody wants to facilitate software modifications that would cause a violation of regulatory requirements for emissions or safety.
But, while they may be critical, these concerns can be addressed with a thoughtful design of the Developer ecosystem – and this kind of security bifurcation has been accomplished in every large-scale developer ecosystem to date. Apple, Google, Samsung, Salesforce and Amazon all have implemented sandboxes, layered security checks, and failsafes.
The following key items could be limited and sandboxed under any APIs or SDKs created by OEMs to keep tight control while creating transparency and openness valued by the types of external innovators they will want to attract:
- What can be displayed under what conditions
- What displays can be modified
- Limits on access to infotainment and mission-critical data
- What vehicle settings can and can’t be modified by developers
- How many vehicles can be connected to a particular application
OEMs are experiencing massive pressure to innovate.
Additionally, OEMs are being pushed to enable 3rd party innovation from external sources, more than just parties interested in participating in their ecosystems:
- A Right to Repair law was passed recently in Massachusetts, requiring OEMs to enable access to connected car data by independent repair shops
- The law is being challenged by OEMs and dealers, but may be an indicator of more external access requirements to come
And in the same way that innovators have tinkered with cars’ appearance and mechanical performance for 100 years, there is creativity to be released through software innovation
- Individual tinkerers to collect and analyze data on their own vehicles — performance, efficiency, family use
- EV owners to manage and evaluate their charging, and connect to smart grid applications
- Fleet owners and dealers to customize displays for vehicles in their fleets or inventories
OEMs can take Key Lessons from Apple, Google, and Amazon.
While current OEM Developer programs are still highly constrained, being limited to only the largest commercial partners, OEMs can take some key lessons from the biggest digital ecosystems.
Some of the essential foundational and functional features of these key programs that OEMs must replicate to attract innovation, money, and talent:
- Robust “self-serve” developer sites, with clear and well-defined Software Development Kits
- Peer-to-peer developer forums
- Standardized pricing for access to the platform and associated data
- Standardized terms and conditions
- Streamlined application approval processes
OEMs have a short window of opportunity to define their digital ecosystems before they are defined from the outside.
Gartner has laid out that in any successful digital ecosystem, there are 8 key dimensions, with Openness, Participants, Relationships, and the Value Exchange between participants being the most important to get right.
The developer ecosystems established and run by Apple, Google, Samsung, Salesforce, and Amazon have largely been successful due to their high levels of Openness and transparency about what is possible and what isn’t along with how to get started quickly; their ability attract the right Participants through high quality, self-serve tools, licenses, and easy-to-understand business models; their self-serve contracting and well-documented syndication and growth processes; as well their clear and inspiring stories of world-changing platforms, alignment of participant values, and commitment to continuing openness and stability of the ecosystem and business models to encourage continued investment by external parties into the ecosystem’s Value exchange.
These are very exciting times within the Connected Car ecosystem, with both incumbents and new players alike finding ways to use new technologies to explore disruptive strategies, most notably the Developer Ecosystem. motormindz has extensive experience identifying and leading industry innovation, including enabling greater innovation through more flexible and robust developer platforms. Get connected with us, to “get” Connected today.
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