Analyst Report: Car Data As the Next Platform for Innovation


For the first time in history, our cars are becoming connected to network communications, embedded with software, hooked up to digital devices and synced with cell phones. This means a vehicle information platform is finally emerging, and consumers, automakers and entrepreneurs can finally tap into the wealth of digital information that’s been unearthed.

Unlike, say, the web or the smart grid, the connected car platform will be ruled by a different set of players: automakers, drivers, vehicle-focused startups and cell phones companies. Though it’s still too early for a crystal-clear picture, the connected car will undoubtedly give birth to innovative third-party applications, particularly ones that can make driving a lot more efficient.

The Car Data Landscape

What types of data have emerged across the connected car landscape? Data can be embedded in the vehicle, cell phones can provide location-based data and third-party data that can be used to enhance connected car services. Of course, without the networks attached to the car or the phone — from satellite to cell phone to Wi-Fi — the various data wouldn’t be shareable.

The emergence and proliferation of all this low-cost (often free) data is, of course, due to the rise of the Internet, more advanced mobile devices and low-cost network connections. Virtual Vehicle Company CEO Laura Schewel told me recently that it was only when Google and Apple launched their mobile operating systems that VEVCo was able to make an app that could inexpensively and unobtrusively pull driver information.

Embedded Data

For decades, cars have utilized an Engine Control Unit (ECU), which houses information like engine performance, braking frequency, acceleration and speed. For a long time, this was a black box which only auto mechanics and the auto makers themselves ever touched. But some drivers want more visual access to this data; car companies have developed interfaces like the Prius’ famous Energy Monitor in response.

More recently, companies have made novel devices like the Kiwi Wi-Fi dongle, which plugs into the OBD-II port and uses Wi-Fi to connect with iPhone applications. Gearheads, auto mechanics, race car drivers and DIY-types have been using devices like this to monitor things like the performance of their cars in real-time.

Location Data

Connected cars also contain location data, which largely comes from a GPS device in the vehicle itself, or from a cell phone. Over the past decade, in-vehicle navigation systems, like those from Navteq,  have enabled drivers to hear and see turn-by-turn driving directions on a display screen map. The growth of in-vehicle navigation systems has been driven by the decreasing cost of satellite services and mapping data.

Cell phones — mandated to be equipped with GPS so 911 dispatchers can find them — can also be used to create vehicle data. Using the GPS chip and software, mobile application companies like The Virtual Vehicle Company can capture data about how fast or slow a car is driving, along with other details about a person’s driving habits. Cell phone carriers and mobile application companies already commonly offer applications that use the cell phone as a navigation device.

Third Party Data

Finally, there’s data that doesn’t come from the car or a cell phone itself, but is used to enhance the connected car experience. This could be traffic data, taken from road sensors and car and taxi fleets. Mapping data is the underlying third-party backbone of navigation services. Even your personal data, like your calendar or to-do lists, could be used to enhance driving services: For example, a screen in your car could send an alert you when you drive by the grocery store because “buy coffee beans” was on your to-do list that morning.

Connected Car Services

Many of the latest connected car services are mashing up all these different data streams and offering them to customers via a slick interface.

Some car companies have their own connected car services, like GM’s Onstar and Nissan’s new EV-IT service. Nissan’s upcoming LEAF EV uses an AT&T cellular line connected to satellite service to deliver an in-vehicle service that uses Google Maps and its own software. GM, meanwhile, has seen success with its branding of Onstar; the company plans to use the service for the heart of its electric vehicle network services. Ford uses Sync, built by Microsoft, for its network service. Through these networked services, automakers can get a steady revenue stream and control the network and brand, potentially using it to sell customers upgrades and new products.

These services represent the vision of the connected car controlled by the automakers themselves, and they often require an in-vehicle dashboard. The car owner will subscribe to the automaker’s branded service (like Onstar), and the connection pipe (like Nissan’s AT&T deal) will be the quiet dumb pipe on the backend.

An alternative vision of the connected car is one controlled by the screen of a cell phone: The automaker provides a dock in the car that will charge the phone and connect it to the information from the onboard embedded computer. Cell phone companies have been developing mobile apps around vehicles for years — like Verizon’s navigation service VZ Navigator — as the optimal play.

Sitting in the middle of these two technologies are Internet companies like Google and Microsoft, both of which can partner up with either team to sell mobile and software services. For example, Microsoft is working with Ford on its Sync connected platform; Google and its mobile Android platform have teamed up with GM.

Third Party Startups

In the end, it’ll be the third party startups like GreenRoad, VEVCo and Celudon that will have to maneuver around the behemoths to strike deals and make decisions about what kind of data to incorporate. VEVCo’s application uses only cell phone driving data (for now) because it’s inexpensive. Schewel told me she’s seen other companies spend millions of dollars trying to collect driving data, while VEVCo’s app cost in the hundreds-of-thousands-of-dollars range to build. As such, VEVCo’s mobile app will be offered for free to consumers to download. The first of these mobile apps, the Virtual Test Drive, uses driving information to educate and recommend what type of green car a consumer should buy or lease, and can make money from automotive marketing firms.

Other startups want to connect to the ECU unit in the vehicle, which provides much more detailed information beyond cell phone data. Startup Celadon, whose mobile app calculates an EV’s real-world range in real-time, says its biggest market opportunity is doing a deal with the car company to embed hardware and software into the vehicle, as well as connect to the ECU unit. Celadon can use all that detailed info, combined with the data analysis on its servers which sit in the Amazon cloud, to offer a high-powered app to alleviate EV driver’s range anxiety.

Meanwhile, GreenRoad, which sells driving services to public and private fleets, offers its own hardware package that consists of a processor, a GPS unit and a cellular connection. GreenRoad places this package in vehicles, but without connecting it to the ECU unit. Because the startup is targeting companies and organizations, and provides recommendations for how drivers can reduce crashes and drive more efficiently, GreenRoad says it needs more detailed data than just cell phone data.

Connected Car Hurdles

However, GreenRoad CEO Dan Steere tells me his hardware doesn’t tap into the car computing system because the information from vehicles’ ECUs comes in different formats for different vehicles; GreenRoad didn’t want to go to the trouble of creating different hardware for different models because of cost and complexity. While the OBD-II port itself was standardized in the mid-’90s in the U.S., the format of the data itself isn’t standardized, a definite hurdle to getting it off of the vehicle computer.

Another major challenge will be calming consumer fears about security around connected cars. Media reports of hackers cracking into wireless sensor networks for cars are a recent phenomenon this year. As with any case where information becomes networked, analyzed and used for different applications, the customers that own the data worry about where it could land.

Finally, startups will find that car companies and vehicle development moves very slowly. If Internet development is the hare, car development is the tortoise. The turnover for fleets can be 15 years, so if you’re basing your business model of embedding hardware in fleet vehicles, expect to wait.

Electric Vehicles and Green Cars

With all the automakers — along with many startups — launching electric vehicles in the next two years, the push for the connected car as the platform will only increase. As Zipcar CEO and Chairman Scott Griffith has told us, “Electric cars by nature have to be connected cars.”

But before EVs even come onto the market, the emerging connected data platform could help current internal combustion cars reduce their fuel consumption and make cars a lot more efficient on roads. The simple GPS navigation device, which is a standard add for most new vehicles, has been able to, reduce fuel use by 12 percent, according to GPS device-maker NAVTEQ. Think about the potentials for more sophisticated data vehicle systems. Another example is GreenRoad, who says it can save companies $1,000 to $4,000 per vehicle per year, largely in fuel reductions.

According to the Climate Group, information technology can help the world reduce carbon emissions by 15 percent below business-as-usual levels by 2020. Embedding IT in vehicles and transportation will be a key aspect of hitting that goal.

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