7 Comments

Summary:

ABI Research forecasts in a new report that apps for smartphone devices will give vehicle navigation systems a run for their money over the next five years — a trend that could make demand for connectivity a double-edged sword for green cars.

Ford Electric Vehicles and Microsoft HohmWill you use connected car services, such as navigation, audio, video and Internet, through a system built into the vehicle — or through an app loaded onto your cell phone? According to a new report out today from ABI Research, consumers will increasingly turn to their cell phones as the pipe to the connected car, taking a bite out of projected revenue from automakers’ in-vehicle systems over the next five years.

In particular, ABI anticipates free and low-cost navigation apps for mobile phones which will give in-vehicle navigation systems a run for their money. Worldwide, the number of vehicles equipped with GPS and navigation systems will double over the next five years, says ABI research director Larry Fisher. But revenues for those systems will shrink by two-thirds. Overall, the automotive infotainment market will drop to $24.8 billion in 2015, from more than $29.5 billion in 2010, according to the research firm’s forecasts.

What does this mean for the the nascent green car market? Well, automakers have been outfitting their upcoming hybrid and electric car models with loads of software, slick screens showing efficiency and battery information, and the capacity for remote control of battery charging and other functions via smartphones. The charging systems for electric cars will also be managed via communications networks and smart software.

“Electric cars by nature have to be connected cars,” Scott Griffith, the CEO and Chairman of car sharing provider Zipcar (which filed this week to raise up to $75 million in an IPO), told us in an interview last year. He said at the time that designing cars to function more like smartphones — with GPS, an intuitive user interface, a web connection and a set of standard applications and an open platform — could help usher in greener, more connected vehicles. All of that whiz-bang technology at a driver’s fingertips might also help automakers boost their margins, he said, because of the portion of the market that “will pay up for features.”

The shifting market for connected car services described by ABI today suggests growing pressure for green car makers to partner with companies that are controlling the mobile ecosystem. That includes Google and its Android open source operating system for mobile phones, Apple and the iPhone, and the telcos, AT&T and Verizon. Already, General Motors’ has moved to work with Google Android phones for a next-gen mobile app for the Chevy Volt, offering location-based services in addition to scheduling battery charge times (see video here).

But more mobile integration is likely needed from all the green car makers. It would be a mistake for an automaker to think it can control the connection to the car. Web and phone companies have had years of developing compelling applications and services on cell phone screens, while the car companies are just figuring out how — and if — consumers want to surf the web, watch videos on in-vehicle screens (only while parked, one would hope), and monitor things like real-time and cumulative fuel economy (see our list of 8 iPhone Apps for Car 2.0).

Consumers, “will be reluctant to pay high subscription fees” for premium in-vehicle content, when free alternatives are available through mobile devices, says ABI, noting that additional challenges may arise as “driver distraction” faces growing scrutiny from the government.

At the end of the day it’s a fight over the new content distribution platform that will be the car. Who will control it, and what will consumers be willing to pay for?

One way that in-vehicle systems can offer more attractive services is by opening up the platform to third party developers, by implementing standards, and by working with partners in the mobile ecosystem. Down the road, ABI predicts car companies and in-vehicle systems makers can make money from licensing deals with app developers, and could bring in “ongoing service revenue” for web-based services.

Images courtesy of Ford and General Motors

For more about opportunities and challenges on the road to a new networked vehicle, check out these related articles on GigaOM Pro (subscription required):

Why Microsoft’s Electric Vehicle Deal With Ford Matters

Why Google Android’s Electric Vehicle Deal With GM Matters

IT Opportunities in Electric Vehicle Management

  1. [...] Why Green Car Makers Need to Find Mobile Partners [...]

    Share
  2. [...] Why Green Car Makers Need to Find Mobile Partners [...]

    Share
  3. [...] Why Green Car Makers Need to Find Mobile Partners [...]

    Share
  4. [...] Why Green Car Makers Need to Find Mobile Partners [...]

    Share
  5. It is great to see that these automakers are “getting it” in regards to green energy. On the other hand, it is quite disturbing not to see any oil companies getting involved …

    Share
  6. car makers need to realize that they need to try and influence how people use transport to make it more eco-friendly. heres an example of software thats making a big impact on reducing carbon emissions right now – http://gpssystems.net/geobase-gis-green-fleet/

    Share

Comments have been disabled for this post