I worked as a business strategist and business developer in LBS (Location Based Service) and telematics industry. I launched a high end telematics service in collaboration with Renault Samsung Motors in 2006. Car manufacturers and telecommunication companies drove the market until late 2000. Still after more than a decade, the result from these efforts is still insignificant as you see. Although many experts forecasted that the connected car would be a new dynamics of IT industry in the near future, we need to wait for more than expected to see the public success of this concept. What makes it difficult to spread out?
A car is a very sensitive machine, which directly handles a person’s safety. Even if there is a small change in the electronic device, it can affect the entire car. When I was developing the connected car service in Korea, some engineers from the car maker declined to adopt touch screen since adopting touch screen could create more trouble to the drive by reflecting light than otherwise. This anecdote shows how some people in this industry deal with the connected car. Until lately, many players did not think that the connected car is the independent area which enables a driver to connect to more information and services but consider it as a convenience option of a vehicle.
Model S [Source: Tesla Motors]
Secondly, performance in getting information in a moving car has been a huddle to publicize the connected car. In order to link to information and services, cars have used diverse communication methods such as cellular network, radio frequency, and satellite communication. Aside from WAN (Wide Area Network), the connected car provides services based on CAN (Car Area Network), which utilizes Bluetooth and Wi-Fi. However, this part is solved greatly after the wide spread-out of smartphones that support the high speed of uploading and downloading contents.
Lastly, the price of the connected car service has not been affordable for most drivers. Although GM Onstar has relatively gathered more subscribers than other service players did, many drivers even do not care about the connected car services apart from navigation and traffic information service. This is because many players have seen the market as an optional business to charge additional fee to the driver for specialized services.
Ironically, these reasons are highly correlated with the fact that car manufacturers and telecommunication providers have been leading the market until now. They tried to charge something and make their own closed ecosystem since they hoped to make revenue from the service despite of the lack of contents and services for drivers. However, the connected car market seems to be changing as giant internet service providers like Google are entering it. Also, the growth of an electric vehicle can be a propulsive power to change the paradigm of competition in that it more easily adopt environment for the connected car.
Model S [Source: Tesla Motors]
This is why this news that Apple meets Tesla is interesting regardless of the assumption underneath the meeting that Apple may be interested in the acquisition of Tesla.
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