Forget the Internet of Things: Here Comes the 'Internet of Cars'

What if large groups of people could go beyond ridesharing – replacing traditional car ownership altogether through on-demand access to the cars they want: a convertible in the summer, an SUV for winter ski trips?

What if driving skills could be computed as a score that warned us of bad drivers nearby – real time, on the road – also enabling navigation systems to offer safer alternative routes? Imagine if we could get rid of traffic jams and accidents altogether. Or how about if our cars picked up our groceries on their own -- and dropped us off at the airport like a self-contained limo service?

What if automakers could subsidize our car purchases by working with telecommunications and other companies that want to capitalize on the lifetime revenue opportunity of a connected driver? Consider also the possibilities for insurance providers to charge higher premiums (for those who drive their cars themselves), or for local governments to monitor personal CO2 usage (in exchange for not taxing or tolling public roads).

Whether you embrace or object to these scenarios, they’re not too far away. This isn’t just an evolution of technology-enabled, connected vehicles. This goes beyond self-driving cars. And it’s more than a simple sensor-network: This is the era of smart mobility -- an Internet of Cars.

Basically, cars have become the “ultimate mobile device” and we, the people, are becoming “connected drivers”. These aren’t just buzzwords: As a longtime strategic adviser and analyst of this space, I’ve been using these terms since 1998 to describe this fundamental transformation of the automobile. And it's coming within this decade. For example, by 2016, most buyers in mature automotive markets (U.S., Western Europe) will consider vehicles' ability to access web-based information a key criterion when purchasing an automobile. For premium vehicle brand buyers, this tipping point will be reached even sooner: 2014. That’s just one year away.

The connected vehicle is leading the automotive industry to its most significant innovation phase ... since the creation of the automobile itself.

The Era of Smart Mobility Is Going to Change Everything

But what is it? “Connected vehicles” are cars that access, consume, create, enrich, direct, and share digital information between businesses, people, organizations, infrastructures, and things. Those "things" include other vehicles, which is where the Internet of Things becomes the Internet of Cars.

As these vehicles become increasingly connected, they become self-aware, contextual, and eventually, autonomous. Those of you reading this will probably experience self-driving cars in your lifetime -- though maybe not all three of its evolutionary phases: from automated to autonomous to unmanned.

We still need to address a number of technology, engineering, legislative, and market issues to develop successful offerings here. But this automotive era builds on current and related industry trends such as the convergence of digital lifestyles, the emergence of new mobility solutions, demographic shifts, and the rise of smartphones and the mobile internet.

Consumers now expect to access relevant information wherever they are ... including in the automobile. At the same time, these technologies are making new mobility solutions -- such as peer-to-peer car sharing -- more widespread and attractive. This is especially important since vehicle ownership in urban areas is expensive and consumers, especially younger ones, don’t show the same desire for vehicle ownership as older generations do.

To be successful, connected vehicles will draw on the leading technologies in sensors, displays, on-board and off-board computing, in-vehicle operating systems, wireless and in-vehicle data communication, machine learning, analytics, speech recognition, and content management. (That’s just to name a few.) All of this leads to considerable benefits and opportunities: reduced accident rates, increased productivity, improved traffic flow, lowered emissions, extended utility for EVs, new entertainment options, and new marketing and commerce experiences.

Besides providing automobiles and drivers with new function, connected vehicles will also expand automotive business models to include a much broader set of industries -- IT, retail, financial services, media, consumer electronics. This is significant, because it could challenge the traditional automotive business model: Rather than focusing only on the sale and maintenance of a vehicle, companies will focus on the sum of business opportunities the automobile represents.

But What Do Consumers Want?

Do people even want all this? Or is this just a case of business thinkers, technologists, and early adopters making predictions in an echo chamber? It's not.

Consumers do show a strong interest in the features of a connected vehicle. For example, from analyses Gartner conducted over the last year, we found that of all U.S. vehicle owners:

• Almost half (46%) are interested in safely accessing mobile applications inside the vehicle. These applications include receiving on-demand wireless map or software updates, finding available parking spots, and conducting local searches; nearly 40% would also opt for remote diagnostic capabilities that alert them when parts need replacement.
• More than one-third are interested in a self-driving, autonomous vehicle.
• Thirty percent are likely to opt for a vehicle that allows them to tether their smartphone to get internet connection there.

Our increasingly digital “lifestyles” may also force consumers to re-evaluate personal transportation choices. For example: The combined cost of a monthly mobile and residential internet plan might be competing with the cost of filling up a car at the gas station.

These tradeoffs are even more important to younger vehicle owners (18- to 24-year-olds) than older ones (54+ years). The younger group is more likely (30%) to choose internet access over having a vehicle (compared to just 12% of the older group), and about the same percentages are likely to use a car-sharing service as an alternative to vehicle ownership.

Obviously, connected vehicle applications have to be safe, reliable, and non-distracting to wow consumers on an emotional level and convince them on a rational level. Simply copying interfaces from other mobile devices will not be enough – buttons in cars actually work great for certain functions. The automotive industry will need to innovate new experiences and integrate systems thoroughly so consumers don’t feel they can get the same results with just an iPad on the passenger seat.

But the fact remains that automobiles are here to stay, and they’re going to be connected. The innovations and changes described here will mature relatively quickly over the next two decades. For example, I predict that by 2016 at least three companies will have announced concrete plans for upcoming product launches offering advanced autonomous vehicle technology.

This isn’t pie-in-the-sky -- just consider a few recent advancements in the automotive connectivity space: Avis acquiring Zipcar; the first over-the-air automotive software patch by Tesla; Intel getting significantly involved in the connected vehicle value-chain; big telcos like Sprint extending their reach into automotive; a high-ranking Apple executive taking a seat on a carmaker’s board. All of these moves signal the trend.

And for those who are also passionate about automobiles and driving, the era of the connected vehicle will open a mesmerizing new world. You know that immediate connection between our senses and the stimulatory triggers of a car: sounds, speed, sights? Imagine that feeling, and so much more. I am optimistic that the automotive industry and technology companies will preserve this fascination of the automobile – it is, after all, an immersive experience.

But if you don’t like this dawning era of the connected vehicle, you should get your (unconnected) dream car now.

Editor: Sonal Chokshi @smc90