Google's driverless car, which was awarded a driving license in Nevada in May 2012, is a bellwether for the technology-driven transformation of the automobile industry. Observers are dreaming up possibilities as exemplified by "if you give a car the abilities of race car drivers (instead of the average driver) and combine them with "conservative software" used for standard driving then you can develop a safer driving experience." What if you were able to try out driverless features in your car for one month at no charge? If you liked it a lot, you could buy an annual subscription. When your subscription runs out, you could renew it through your smartphone. On a weekend, you might want to upgrade the driverless feature from "commuter style" to "race track style", and be driven at breakneck speeds on a racetrack.
Such possibilities are endless. At their core, they speak to the imminent transformation of business models in the automotive industry – from a business that is characterized by occasional vehicle sales today to the "car-as-a-service" future which creates an on-going relationship between auto manufacturers and consumers with recurring revenues from sales of apps and services. Note that Google's driverless features were retrofitted onto a Toyota Prius, and were enabled by a combination of hardware platform (e.g. laser radars), breakthrough software and Internet-enabled services, the essential ingredients of a "platform + apps + services" recipe driving the transformation of automotive manufacturers discussed below.
Until recently, comparing Apple to Ford would have been dismissed as a meaningless exercise. In this article's context, however, it serves as an indicator of the payoff that automotive manufacturers can expect should they succeed in replicating Apple's formula of "platform + apps + services" exemplified by the iPhone platform + iPhone Apps + iTunes content. The table below shows that Ford and Apple are roughly similar by revenue. But, Apple's market capitalization per dollar of revenue (3.1 in the table below) is 10 times that of Ford's.
The good news, though, is that these types of returns are very much within reach, and Ford, in particular, is already making progress in that direction. Ford Sync is an early example of a next generation vehicle information and communications system – a connected, software-driven dashboard in simple terms. Ford offers Sync in four editions based on levels of features, bundled services and optional subscription plans as summarized below:
|
Sync |
Sync with Voice-Activated Navigation |
Sync with MyFord |
Sync with MyFord Touch |
|
|
Handsfree calling |
X |
X |
X |
X |
|
Entertainment |
||||
|
Voice-activated music search, Bluetooth audio streaming |
X |
X |
X |
X |
|
Voice-activated radio tuning |
X |
X |
||
|
HD Radio (pay per song) |
X |
|||
|
Satellite radio (subscription) |
X |
X |
||
|
Navigation |
X |
X |
X |
X |
|
Subscription Services |
X |
|||
|
411 business search, Personalized news, weather, sports, traffic alerts |
X |
X |
X |
X |
|
Vehicle Health Report |
X |
X |
X |
X |
|
Wi-Fi hotspot |
X |
Ford Sync illustrates several strategies to grow revenues from a "platform + apps + services" approach, covered in Part 2.
Next time: Car-as-a-Service – Part 2: Platform + Apps + Services = Strategies for Growing Revenue
