I attended the recent Automotive Megatrends conference in Detroit (Dearborn, actually, across the street from Ford world headquarters). It was an exciting event, with 500 participants, an exhibit hall, and 45 speakers who showcased three prevailing trends in the automotive industry: powertrain innovation, vehicle light weighting, and connected vehicles. It was a powerful statement about US manufacturing, and I was proud that my firm (Infosys) was a major sponsor.
While powertrain and light weighting are vital to improved mileage and performance, I was keenly interested in the connected vehicles track. This marriage of Detroit and Silicon Valley has energized the entire industry, and on the surface, it seems to reinforce the renaissance of American manufacturing overall.
The Connected Vehicles track had something for everyone. The large OEMs discussed their approaches to telematics, and their successes and failures along the way. Greg Ross of GM talked about a global connected customer experience. Their flagship OnStar product already has seven million customers and growing rapidly, and the monthly call volumes and interactions are already mind-boggling. The infrastructure and support implications are scary, but then again, the revenue and diagnostic opportunities from all those interactions and sensor readings are attractive as well.
Paul Asel of Nokia Growth Partners discussed two forces for change: in the short-term, innovation will be driven from the outside in, propelled by software and services, and usher in the dawn of Intelligent Driving. Long-term, it will be from the inside out, from hardware and infrastructure, and becoming a more pervasive Intelligent Mobility.
Connected vehicles aren't just about the physical connection - they are also improving the human-machine interface. Today there is isolated information management and adaptive driving and steering. However, the industry is heading toward holistic integration of information and assistance systems. The user experience designer and the engineer are becoming partners to deliver a compelling experience to a set of drivers with continually increasing expectations.
Connected vehicles are on the road to becoming autonomous vehicles, or as Sam LaMagna from Intel put it, it becomes as much about the compute as the commute. To make it happen, we will require an auto grade-computing platform.
It's now about the software, not just the hardware. This is also giving rise to an interesting set of allies: open source and secure connected vehicles. While conventional wisdom may view open source as not secure, there has been a 45% drop in car thefts, partially due to the increased use of open source technology in vehicles. Even if you are not worried about your physical security, chances are you are fretting about data security and privacy issues. This is also becoming a significant component of the connected vehicle technology stack, especially when tampering with the data can have safety or privacy impact.
Why all the fuss about connected vehicles? There is profit in connectivity, with revenue estimates over $30 billion if the assumptions hold true. After all, there is a reason that Apple and Google are now in this market. Connected vehicles require a rethinking of strategy. Let the app developers develop the apps, and OEMs control the data, from personal devices, vehicles, and the environment.
How can this industry adopt more agile and faster ways of working? Rohit Kedia, Infosys Manufacturing regional head believes that the answer may lie in non-traditional ways and non-traditional competitors. His lunch keynote covered how mature industries like automotive need to look outside the usual competitors for innovation - and threats. Apple and Google are not just cool tech companies with best practices to emulate. They are now both in the auto business. And of course there is Tesla, born and raised in Silicon Valley and proudly proclaiming itself to be a software company that makes cars (not a car company that makes software).
What does that mean for manufacturers? Are OEMs doomed to suffer the fate of telecom providers, who invested billions into data networks and then saw Google and other internet-based firms achieve billion dollar valuations before they barely crossed 100 workers? Not necessarily. As several speakers reinforced, automakers should allow the tech companies to handle the entertainment aspects of connected vehicles, but maintain tight control over the platform and own the data. The frenzied, rapid-prototyped, quickly launched software mindset has reached the world of physical products, and the old operating models (not to mention the products) will never be the same.
One of the coolest talks was about the Willow Run Automated and Connected Vehicle Facility, a 400-acre facility in the heart of the 'smart vehicle' corridor in Detroit. By building out this dedicated test track to simulate the real world and collect relevant data, it is reinforcing Detroit's prominence in the brave new world of connected vehicles. Ironically, this scary disruptive technology may be just the thing that provides the automotive industry a new lease on life - the connected vehicle trend is one of the most exciting things to happen to the auto world in decades, and it is capturing the imagination of a whole new generation of buyers.
What will next year's Megatrends be? After all, 2015 was supposed to be the year of the Hoverboard from Back to the Future. When it does finally arrive, perhaps it will be connected too.