Success in the automotive sector requires us to start with the business model not the edge technology.

In an excellent halloween webinar, AECC described potential “Automotive Big Data” edge use cases. AECC were predicting 100M connected vehicles in 2025 producing between 1-10 EBytes of data per month, outstripping social networks. Backhauling all of this data, to say Japan, would be a huge problem and a globally available edge infrastructure would be the answer to this.

Whilst the content and insight was good, there appeared to be two underlying problems with this:

  • There was no evidence of a business case or business model for the use cases proposed. It was unclear who would pay or be willing to pay for the infrastructure required to support these use cases.
  • Apart from Toyota, there was no automotive manufacturer participation in the consortium or participation by automotive regulation. The consortium is predominantly network and IT providers.

Addressing these will matter to AECC’s success! Identifying the way people with cars or companies making cars or servicing cars will pay for and make money from these applications, is critical to making these real. Otherwise we end up with yet one more network centric vision of what another industrial sector wants and needs.

“Auto manufacturers currently have three priorities: SUVs, SUVs and SUVs”

In a recent Appledore briefing a leading provider of automotive software solutions described the lack of real engagement by automotive manufacturers in these type of future vision scenarios. In an increasingly competitive and stagnating market, automotive manufacturers are not going to add a feature to a car unless it allows them to make money or unless they are compelled to by regulation. SUVs make the auto motive sector a lot of money. By contrast clever technology make their vehicles more expensive, with limited evidence that a consumer would pay more for this.

Would we as car owners pay the manufacturer extra to enable fuel efficiency and optimum servicing? If not who would pay and why?

Streamed data from jet engines and aircraft back to their manufacturers is a key and high value part of the maintenance and value chain for aircraft manufacturers. So it is easy to extrapolate a similar need for cars. However, this ignores the very different value of the vehicle and the very different consequences of failure and running costs. A plane breakdown is something to be avoided at all costs with a constant service schedule. The optimisation of running costs, particularly fuel is critical to airline profitability. A car by contrast does not have these pressures. Most of us are happy to stick to regular/mandated servicing of our cars and if we breakdown there is always a tow truck. Similarly we are rarely troubled by constant optimisation of our cars efficiency. In fact our buying behaviour is to do the opposite by buying fuel hungry SUVs.

Appledore believe that use cases, like those presented by AECC, do have the potential to drive innovation in the automotive sector, but they have to start with business model to succeed. Appledore has a growing portfolio of edge cloud research, focused at the business case and business models for success.