Connected Cars and The Future
Connected Cars: The Next Big Platform
A glimpse into the next big phase of computational revolution
by Harshal Agarwal, Kim Dodds, and Xuchen Yao
Highlights
- Connected Cars will become the next big platform following Mainframes, PCs, Web, and Smartphones, changing people’s lives in the next 10+ years.
- Connected Cars are a seamless extension from your phone to your online experience. At a minimum, they render the traditional $2000+ “premium navigation package” obsolete and worthless.
- Four catalysts make this happen: hardware (Qualcomm, NVIDIA, electrification), software (Android Auto, Apple CarPlay), carriers (5G data plans), and consumer demand.
We humans have an insatiable desire to be prepared for the future, and take necessary measures to be ready for whatever comes next. Probability as a mathematical science came into existence because of the effort of gamblers to determine the outcome, based on their past successes or failures. Probability, along with other mathematical, technical and scientific advances came together to give rise to the modern computational revolution, that pushes the limits of our capabilities and enables us to enter the future.
According to Benedict Evans, the computational revolution can be divided into 4 major phases: “Mainframes”, “PCs”, “Web” and “Smartphones”, each characterized by an S-curve pattern of development as they move from early development, through a period of rapid growth, and finally slow again with technical maturity and market saturation. We are currently living in the era of smartphones. Looking back from this standpoint, the computational advances are vast: The Apollo 11 mission achieved perhaps one of the greatest human enterprises to date (moon landing, of course!) with a processor running at 0.043 MHz, nearly 55,000 times slower than the latest iPhone. These kinds of retrospection make me speculate on what lies in the future.
Emerging technologies like augmented reality, quantum computation, and block chain get a lot of attention, but we believe the next generational change will arise from something far simpler, something of day-to-day importance for millions of people around the world. We believe it will be the “Connected Cars”; cars that are fully integrated with your smartphones and the overall online experience.
Connected Cars that are fully integrated with your smartphones and the overall online experience will become the next big platform.
Case for connected cars: the intuitive analysis
Let’s look in detail at the history of smartphones and a problem that has arisen as they become more ubiquitous. Smartphones have been present in some form or the other since the early 2000s, but what unleashed the era of the smartphones was the legendary iPhone launch in June 2007. Mike Lazaridis, the founder and vice chairman of Blackberry at the time, was watching the televised report of the iPhone launch from his treadmill and wondered “How did they do that?” (source). At the time, Blackberry was the seemingly unstoppable king of smartphones. He, like Blackberry’s executives, was in awe of Apple’s ability to pack so many features into one phone. However, the fact remains that the first iPhone was so bad by today’s standards that it did not even have a global clipboard! Nevertheless, that one singular event brought a change that had a cascading effect on the human condition. From smartphones being an ego expressive commodity to getting categorized as a utilitarian need for an individual, smartphones have been the platform for many technological breakthroughs in the past decade. They brought in the capability of the SLR and DSLR cameras to a common person. With Siri, Google Assistant and Alexa, the smart phones have evolved from just being a phone with touch capability to becoming a platform for voice enabled conversations with the hardware itself.
We have become so dependent on our smartphones that we tend to use it anywhere and everywhere. Based on a study in 2019, an average American spends 8 hours and 22 minutes in a car per week (The Car Connection, 2019). This means 8 hours and 22 minutes per week away from the smartphone! Connected cars enable a user to remove their dependence on the phone while driving and shift all the basic functionality of the smartphone to the car itself. Users can interact with the car using a finger touch or voice commands to interact with the head unit, while the car takes care of stuff like keeping an eye on the road or other cars, communicating with the network and informing the users. Although hardware integration is critical for enabling such capability, there are already two successful software platforms available, Google’s Android Auto and Apple’s CarPlay.
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What are Android Auto and CarPlay
Apple originally started with a little known Apple iOS 4 feature called iPod Out. Over the course of time, this feature started taking share into what we now know as CarPlay. CarPlay was first announced as iOS in the car at Apple’s Worldwide Developers Conference, and was launched as CarPlay at the Geneva Motor Show in March 2014. Android Auto, on the other hand, was announced on June 25, 2014 at Google I/O 2014, and was released on March 18, 2015. Android Auto is also a part of the Open Automotive Alliance, a joint effort between 28 automobile manufacturers, with NVIDIA as its supplier.
Connected cars come with built-in processors and user-interactions enabled by Android Auto or CarPlay software. Android Auto and CarPlay display the android phone and iPhone content (respectively) to the head unit of the car. In other words, they are screen mirroring apps for the mobile devices and their respective operating systems (OS). Generally supported apps include GPS navigation, music playback, SMS, calls, podcasts, radio, and web search. Currently, Android Auto supports around 300 apps. CarPlay is relatively flexible as it allows apps to be added to the CarPlay platform, if they belong to a set of categories. The app capability supported by these 2 platforms represents in its entirety everything that a commuter has needed traditionally. Imagine you are going on a self-discovery ride to a nearby state and are looking forward to a calm drive with music on, navigation on your head-unit in place and the scenic beauty on the way. What else could a leisure driver ask for!
But why Connected Cars?
The primary intent for Android Auto and CarPlay is to reduce the dependency on handheld devices. However, an individual might feel the need to interact with other kinds of apps that are not currently supported by these platforms. Thus, the app base of these platforms is bound to increase.
Let us take a specific scenario. For instance, a person on a road trip to a nearby state is feeling hungry while driving and realizes that they left their bag of snacks back at home!
What do they instinctively think of? Their phone of course! Because it can show them the nearest place to eat and navigate them there. Can Android Auto and CarPlay supported apps currently provide a seamless experience to solve this use case? NO.
Now, let us think of the possibilities. What if there was a way the person could use the head unit of the car, or better, use voice commands to order food from that place on the go! This would ensure that they are not waiting for the food to be prepared and might just come and collect it. Or, at the beginning of your trip, your car tells you that you would need refueling/recharging and the selected places might reduce your commute time! In a nutshell, Android Auto and CarPlay not only enable your car to become an extension of your phone, but have the potential to do a lot more than that!
Catalysts: Hardware, Software, and Consumers
For any tech revolution to take place, 4 catalysts are must: hardware, software, carrier, and consumers.
Hardware: Any technology runs on basic hardware. If the hardware is not developed enough, the technical revolution cannot occur. From a hardware perspective, the processing giants like Qualcomm and NVIDIA are already upping the game as we speak. Qualcomm recently and successfully concluded its 3-year long connected car comms test with Audi and Ericsson (source). NVIDIA recently raised the bar by starting a collaboration with Mercedes to develop an in-vehicle computing system and AI-computing infrastructure. The way Qualcomm is investing in connected cars, it seems like it wants to put a Snapdragon chip in every connected car as they have done on every Android powered smartphone.
Qualcomm wants to put a Snapdragon chip on every Connected Car as they have done on every Android-powered smartphone.
Software: Software represents the applications that run on top of the hardware. They are the medium using which the consumers interact with the hardware. Android Auto and CarPlay are the basic software examples that enable such interaction. Google’s Android Auto and Apple’s CarPlay are already ahead in the game in providing the right application base to fully utilize the hardware capabilities that are getting perfected. The platforms are already disrupting the traditional revenue models in the automobile industry. For instance, the $2000+ premium navigation package, previously considered critical for cars, has been deemed unnecessary by connected cars.
The traditional business of $2000+ “premium navigation package” has already been killed by Connected Cars.
Carriers: Any modern technical revolution is incomplete without the participation of mobile carriers. Hardware and Software together provide solutions for consumers, but carriers provide the ability to enable data exchange between the solution and the cloud to improve that experience multifold. The faster the data exchange, the better the experience. For the kind of revolution we are talking about, we need speeds in the order of 10s of Gbps on the go, which are enabled by 5G networks. In December of 2019, T-Mobile upped the game in the 5G world by launching a nationwide 5G network (source). AT&T joined the game recently when on July 23rd, 2020 they announced a nationwide low band 5G network of their own. The idea that 5G services will enable connected cars, thereby expanding revenue streams is well understood by major carriers like AT&T and T Mobile. Both carriers have come up with plans to enable in-car WiFi sharing and will be the biggest beneficiaries of the 5G revolution connecting to cars.
AT&T and T-Mobile already provide data plans for in-car WiFi sharing. The time is not far when they will provide data plans for your connected cars itself!
Consumer: Any technical revolution is not a revolution unless the consumers adopt it. Interestingly, in the case of connected cars, consumers are adopting it even without knowing it. As of today, a total of 100 million Android Auto and Apple CarPlay enabled cars might be running all over the world. Our internal estimations show that these numbers might be around 14–20 million in the US alone. What came as a surprise to me was that this revolution might not be limited to cars. Harley Davidson recently announced its first Android Auto enabled motorcycle (source).
I believe that by 2025, more than 50% of the cars on road will be Android Auto and Apple CarPlay enabled
Where do we stand?
As of July 2020, there are around 300 apps that are available for use in Android Auto platform. CarPlay is much more flexible as it allows apps to be added to the CarPlay platform, as long as they belong to certain categories such as navigation, music, calendar, messages, phone, etc. Let’s compare the Android Auto situation with the app store for the iPhone. Back in 2008, the App Store was launched with just 500 apps. Fast forward 10 years, and there were 3M apps on the app store, representing a 240% YoY growth. We haven’t seen any such progress on these platforms. This might have been partially due to the lack of hardware, carrier, and consumer catalysts. But now, with the hardware and software already available to consumers, carriers moving in to capitalize on emerging 5G technology and the strategic priorities of the hardware, automotive and software companies aligned together, connected cars have the potential to fundamentally change the way we drive by safely integrating the capabilities of our smartphones into the vehicle itself. What we are trying to assert is that we are already in the middle of a connected car revolution, and the organizations might be failing to even realize the endless possibilities here.
Conclusion
In the modern world, a true technical revolution is one that has robust technical as well as business roots. Smartphones ushered a new age of technical breakthroughs where features provided by several commodities like television, portable music devices and cameras were blended on one platform. I believe that the next big platform might not be a fancy tech like quantum computing, augmented reality or blockchain, but will be based out of connected cars. For any revolution to occur, we need the right conditions in a perfect balance. For the revolution of the connected car we needed 4 catalysts in the perfect conditions: hardware, software, carrier and consumers. Fortunately, we live in an era where we are seeing all these catalysts achieving breakthroughs that have the potential to propel the revolution of the connected car. And most importantly, the leaders in these areas are already beginning to realize the opportunities that lie ahead. In some instances like the case of premium navigation packages, we are already beginning to see disruptions happening. However, there are some other areas where I believe this platform has the potential to disrupt the status quo and bring about a welcomed transformation. We will talk more about that in our next blog post.
