1. Will My Child Learn to Drive?
It’s becoming increasingly likely that children born in 2016 could operate rather than drive their vehicles when they reach driving age in 16 or 17 years. Who knows? Getting that first driver’s license may no longer be an adolescent rite of passage. The convergence of automotive and digital technology is real, far-reaching, and accelerating at a pace of 0-to-60 miles per hour in less than four seconds.
Autos had a big presence at CES 2016. Two of the eight keynote speakers came from the industry; they were the only nontech representatives. Auto exhibition space was up 25%, auto companies held numerous press-day sessions, no less than three concept or new-production announcements were made, and heavy crowds queued at auto-related booths.
The following three trends from Tech East, where automotive made its CES home, have significance for technology, media, and telecommunications (TMT) companies.
Convergence. Auto companies are continuing to incorporate more and more digital technologies in their vehicles, and technology companies are investing more and more in the automotive industry, including rumored outsourced vehicle manufacturing. Technology can be a competitive differentiator for auto manufacturers, and technology-driven vehicles (in all senses of that term) have strong potential as product lines for technology companies.
This rapid convergence raises multiple questions, however, and players from both sides need to come to grips with them. For example, which communications technologies (such as cellular, Wi-Fi, and Bluetooth) will become standard for different automotive tasks, and which providers will take the lead in providing them? Will automotive connectivity evolve into a third ecosystem (after the home and mobile), or will drivers “bring their own access” by connecting their cars to their smartphones?
As chips in cars grow in number and the functions they serve, they are also becoming smaller, faster, cheaper, and more sophisticated. Software platforms and connectivity are becoming critical considerations. Which chips, protocols, standards, and software platforms will become standard and which companies will be the primary suppliers? How do companies collect and secure the Internet of Things (IoT) technologies that will gather massive amounts of data about, for example, driver behavior, crash statistics, and mechanical issues (data that can drive new opportunities in predictive maintenance and reduce the number of recalls)?
Partnerships. Two major U.S. automakers announced partnerships with technology companies during the week of CES 2016. Ford Motor Company and Amazon.com intend to link their in-car entertainment and communications systems with home-
automation hub technology. General Motors announced a strategic investment in Lyft that will see the two companies working together on autonomous-driving technology, among other initiatives. We expect to see more high-profile partnerships. Other auto and TMT companies need to be scouting the convergence dance floor for potential partners in such areas as connectivity, entertainment, and communications operating systems and sensors. For instance, if autonomous-driving technologies continue to improve, and less driver involvement in “driving” is required, what will people do with their in-car free time? What media and productivity applications will be available, how will they be consumed, and what technologies will deliver them?
The Accelerating Pace of Innovation. The startling pace of innovation is attracting more companies—and more types of companies—to the automotive-technology playing field. We expect to see heavy competition between current and future entrants around electrification, automation, and connectivity over the next few years. Platforms for entertainment, communications, assisted driving, predictive maintenance, and vehicle intelligence are proliferating and converging. (Think about a car that tells you when the oil needs to be changed on the basis of actual data from the oil tank and the engine rather than relying on generic mileage intervals.) As has been the case with most platform applications, a shakeout seems inevitable in the coming years. Which of the proprietary auto, open-source, and technology platforms and operating systems will gain share? Will there be a few central systems for managing auto technology, or will multiple systems interoperate across a wide variety of components from various sources to accommodate owner or driver technology choices?
The convergence of the automotive and technology industries also has ramifications for talent management and organization design. How will companies acquire and retain workers with the requisite skills? (Some automakers have already set up shop in Silicon Valley or Silicon Alley and have established venture capital operations.) How will companies in the auto and tech industries—with their very different histories, cultures, and organizations—acquire, develop, and integrate new automotive-technology operations?