End Of The Road For Auto Giants?

The automobile manufacture is currently mulling over the biggest transformation inward its history since Henry Ford set upwards shop inward Dearborn, Michigan.

Before Ford, the automobile was an expensive plaything for the rich that had picayune resultant on the prevalent shape of transportation - horse-drawn vehicles. Ford’s introduction of the volume production assembly line inward improver to production standardisation (“any colouring thus long every flake it’s black”) brought his Model T motor automobile within the gain of the masses, fundamentally disrupting the marketplace for transportation vehicles inward improver to sending millions of horses to the knacker’s yard.

Today’s disruptive forcefulness is already innovate inward most people’s offices inward improver to homes inward improver to is carried inward most people’s pocket or bag: digital technology. It seat a human beingness on the moon inward the sixties inward improver to sacked the CD inward the noughties. But entirely every flake digital applied scientific dependent has disrupted concern models inward the newspaper inward improver to music sectors, thus the automobile manufacture is contemplating entirely where digital applied scientific dependent testament transportation service it spinning.

While R&D departments experiment amongst the latest digital technology, producing driverless inward improver to opened upward source cars, the executives inward improver to strategists dorsum at the caput offices of automobile giants such every flake Volkswagen inward improver to GM are trying to figure out how they testament navigate their way through the digital wormhole. Will GM, Ford inward improver to Toyota measure inward to a globe total of novel possibilities or on to a planet where they no longer exist?

Warwick Business School Professor of Information Systems inward improver to Management Ola Henfridsson has spent the lastly 8 years consulting inward improver to researching digital excogitation at GM, Volvo inward improver to Saab and, slice he admits that he doesn’t know what they testament regain either, he is certain the opened upward platform automobile is coming.

Just every flake the smartphone has acquire a platform where users tin download whatever apps they wishing inward improver to connect to the cloud, thus the automobile could acquire a giant mobile version.

“If yous tin prepare an android community amongst thus many useful apps, intend what could hap amongst cars,” says Henfridsson.

“Cars already comprise thus much more than digital content, much of the value of the automobile inward improver to the damage of developing a automobile is related to the digital applied scientific dependent inward close way or another. When it comes to lowering fuel consumption or novel safety features it is rattling much closed the digital infrastructure, which requires a totally novel scientific discipline set for the people developing the car.

“It used to alive on that challenger within the automobile manufacture was rattling locked into the boundaries of the automobile manufacturers, but all of a sudden inward that location are non-automotive companies taking parts of the markets. Microsoft, are heading into it along amongst Google inward improver to others. Why is it that Google has 10 driverless cars on the streets of California? Because they are imagining a time to come where a automobile communicates amongst its environment, where at close quest what testament alive on significant inward a car’s functionality is non something that GM or Ford or Volkswagen tin deliver.

“Suddenly, yous tin encounter that the automobile manufacture needs to engage amongst the ‘crowd’, where anybody amongst £300 inward improver to a practiced idea tin acquire an entrepreneur.”

In the globe of opened upward platform cars a tike inward a sleeping room could acquire the side past times times side giant automobile company. Just every flake Mark Zuckerberg has taken over the cyberspace amongst Facebook, thus the side past times times side major automobile evolution could come upwards upward from a dormitory at a the the U.S. of A. of America university rather than the R&D section of BMW. And that is what is worrying the automobile manufacturers; opening upward their cars to third-party developers could encounter them lose command of their ain products.

Car executives are nervous, but they are at exhibit dipping their toes inward the digital waters. Apps are inward cars now, inward improver to Ford inward improver to GM take away hold away hold started their developer programmes. In January Ford launched its opened upward mobile app developer programmer for iOS inward improver to Android. But it is limiting developers to its car’s entertainment systems to enable two-way communication between the apps inward improver to the car. Also developers testament take away hold away hold to submit an app to Ford for review past times times its engineers to “ensure it industrial institute properly inward improver to is suitable for utilization inward the vehicle.” Once it’s been approved, developers acquire a distribution license thus the app tin alive on submitted to the relevant app stores inward improver to speak to the car.

More interesting is Google’s tie-up amongst Audi, GM, Honda inward improver to Hyundai inward the Open Automotive Alliance (OAA)to prepare a usual platform for Android apps on their cars. It was something that Helen Falkås was working on at Saab until the companionship filed for bankruptcy inward 2011.

“We were planning a similar system, using Android every flake a platform,” says Falkås, who is at exhibit Senior Project Manager at Nordiska Interaktionsbyrån, a leading interaction designing means inward the Scandinavian automobile industry. “We were talking closed a two-sided marketplace where yous take away hold away hold to give the developers the possibility to take away hold away hold close concern benefits amongst a large client base of operations of operations inward improver to the customers are looking for practiced content, rather than the proprietary marketplace that the automobile manufacture has used. We were looking to lower the threshold of entry for developers to opened upward upwards a mensurate API (Application Programming Interface) thus information could alive on accessed to create the opened upward space.

“There were several research projects we were discussing amongst Google, every flake yous demand somebody amongst the size of Google to strength the manufacture into this opened upward space, but they said they testament motion into the automobile manufacture inward i case they take away hold away hold done tablets inward improver to TV.

“Now they take away hold away hold formed OAA inward improver to brought inward several automobile manufacturers every flake they e'er said they were looking for more than volume. It testament alive on rattling interesting to encounter how OAA develops inward improver to whether they tin standardise an opened upward platform across several automobile manufacturers, because inward that location is a lot of traditional thinking inward the automotive industry. We are seeing semi-open platforms for infotainment inward cars, but we were looking at the engine administration arrangement inward improver to other digital systems inward the car. After all, inward that location are 500 vehicle signals which are pretty similar inward all cars. They take away hold away hold dissimilar protocols inward improver to dissimilar systems of language, but if it was standardised yous would take away hold away hold much a larger volume to create novel apps. But this testament take away hold away hold quaternary dimension for the automobile industry. It took xv years to innovate ABS brakes inward large scale, thus that gives yous an idea of how similar shooting fish inward a barrel the automobile manufacture moves.”

Falkås reveals a projection she worked on amongst Saab inward improver to the Swedish route ascendancy which gives close idea of the potential value of connecting all makes of cars across a digital platform.

“Icy roads are a large number inward Sweden, thus we wanted to prepare an app where yous would know exactly where inward improver to when a route was slippery inward improver to fifty-fifty inward what administration cars were sliding,” says Falkås. “That information is available inward cars today. These cars would relay instantly to the ascendancy which route was slippery inward improver to how slippery thus that they could pinpoint their efforts, because it is rattling expensive to motion on roads safety inward the wintertime inward improver to tabular array tabular array salt is bad for the environment.”

That was amongst entirely 50 Saabs, but imagine if all cars were relaying this information to the Highways Agency inward improver to to drivers every flake adept inward real time, it would certain plenty assistance build roads safer. Falkås’ lonely piece of employment was the concern model every flake it produced damage savings for the route ascendancy but picayune value for the automobile manufacturer.

But Henfridsson argues that is i of the points of opening upward access to cars’ information - third-party developers testament slice of piece of employment out concern models inward improver to apps we can’t fifty-fifty dream of, every flake happened amongst smartphones. As Falkås says: “You tin essay to gauge what apps would alive on invented, but yous testament inward all probability alive on wrong.”

And these developers testament alive on focused on the drivers inward improver to the user feel more than thus than automobile manufacturers, who take away hold away hold been tinkering amongst suspensions for decades.

“In the past times times if yous wanted to alive on successful inward the automobile manufacture yous needed a huge amount of investment,” says Henfridsson. “The automobile manufacture has been thus focused on scale, that it is lonely a few companies who ain those resources who take away hold away hold been controlling what has been going into the car. Now, we testament encounter the nascency of customer-driven DIY developments inward the car. An app shop for cars, that is what is coming, everybody tin designing an app for a car.

“Instead of i navigation arrangement yous mightiness take away hold away hold 10, or close navigation help nobody has idea closed before inward improver to yous mightiness alive on able to sell advertising through this app. Plus opening upward to the crowd addresses close of the customisation issues automobile manufacturers build for local markets. Traditionally they wishing to minimise them because it drives upward cost, but this turns it around, every flake a pocket-size fry app developer inward each say tin do those adaptations inward improver to it won’t damage the automobile manufacturer a penny.

“Also, commonly inward the automobile manufacture yous demand a 4 or six-year wheel inward automobile evolution to acquire your investment back, but this testament change. Software tin alive on reproduced at a minimal cost, at the quest when yous constituent amongst the Android community.

“GM asked a companionship to prepare their navigation system. It took them 18 months to prepare something novel - it’s an expensive physical care for inward improver to would inward improver to so alive on expensive for the customers. The Android community contains upward to xx navigation systems at the moment, it tin rattling easily alive on adapted for a bigger covert for the car. Suddenly yous already take away hold away hold these developments, that damage is thus much lower inward improver to quicker.”

Other industries would dearest to acquire their hands on automobile data, i obvious i beingness insurance companies.

“Very soon we testament take away hold away hold insurance setting upward deals amongst customers to gain information on how they drive,” says Henfridsson. “You would alive on able to take away hold away hold lower fees for those that drive carefully, but at the quest yous speed yous would lose that deal, it would alive on personalised to each individual.

“This testament cutting across industries, because digitalising the automobile way it becomes close other sensor within a huge network. Google mightiness non wishing to sell cars, but it definitely sees them every flake close other source of information that they tin utilization to acquire fifty-fifty better inward digitising the world. Eh how is the traffic say of affairs inward Los Angeles? - Search Google cars inward improver to regain out?

“Also, inward the Android globe developments are beingness pushed out inward improver to customers are testing it for you. The automobile manufacture is totally dissimilar where it has to alive on perfect for the client before it is on the market, but releasing a novel champaign for the software doesn’t damage anything.”

It could alive on the cease of all those costly recalls to adjust the steering arrangement or throttle, entirely transportation service out a arrangement update inward improver to it would alive on done - though repairs done digitally could take away hold away hold a serious touching on on automobile dealerships, a human human relationship that automobile manufacturers would alive on abhor to hurt. And speak of app developers beingness allowed into the engine, suspension, inward improver to brakes of a automobile must transportation service many automobile executives into convulsions. Who is liable if something goes wrong if inward that location is a crash? Is the insurance companionship going to plough to the app developer or the automobile manufacturer?

Falkas reveals how at Saab they planned to opened upward the engine administration arrangement to developers inward stages.

“You could select certain sensors inward improver to information to number every flake ‘read only’,” says Falkas. “The side past times times side measure for selected 3rd companies amongst whom the automobile manufacturer is inward partnership is to give them the powerfulness to write into the system, every flake yous would even so take away hold away hold liability. There would inward improver to so alive on possibilities to take away hold away hold a packet for something similar additional horsepower, it would alive on a gradual process.”

Liability is i number that has to alive on resolved, but Henfridsson is certain it testament alive on inward improver to believes whoever moves rootage to totally opened upward upwards their automobile testament take away hold away hold a large advantage. The large worry for the automobile manufacturers is that if they don’t do it somebody else will, somebody of the scale of Google or Apple. They could build a mensurate automobile inward improver to as well as so transportation service it out every flake an opened upward platform vehicle, transforming the manufacture inward improver to potentially killing off close large manufacturers.

“An app that tin tune your engine could take away hold away hold been done 10 years ago,” says Henfridsson. “At the quest GM or Audi allows third-party developers to designing apps to tune their engine inward that location would alive on hundreds of them. They may non allow access to the braking system, engine, or powerfulness prepare immediately, but it testament soon come.

There is a middle ground, where yous tin take away hold away hold lx or 70 trusted vendors. Then it is a dissimilar business, the automobile testament acquire a platform. Why non take away hold away hold other people innovate on your platform? That is what yous wishing to be, a platform owner similar Facebook. It is rattling quondam fashioned to sell a whole production these days.

“This is coming, the automobile manufacturers know it inward improver to they can’t stop it. We testament encounter a totally novel automobile manufacture when digital takes over. It testament alter everything, inward that location testament alive on novel brands that mightiness alive on connected to Google rather than a automobile manufacturer. It is a do-or-die number for the automobile industry.”
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