Cars are rapidly being transformed into connectivity centers constantly linked to the outside world as automakers, suppliers and service providers try to benefit from a multi-billion-dollar sector forecast to grow at a double-digit rate for the rest of the decade.
SNS Telecom Research, a consultancy that specializes in wireless infrastructure and mobile devices, estimates that connected car services will account for $14 billion in annual global revenue by the end of 2016. This will be driven by applications such as infotainment, fleet management, remote diagnostics and usage-based insurance. SNS also predicts that this sector will grow 31 percent a year between 2016 and 2020.
This change is so significant that Robert Bosch CEO Volkmar Denner said recently: "The car as we know it will soon be history." He predicted: "Alongside the home and the office, the car will become the third living environment." Denner was speaking in November at an event run by Automotive News Europe sister publication Automobilwoche.
The vast majority of today's new cars have some level of connectivity. Most also offer some or all of the services associated with connected cars, including the transfer of smartphone apps and real-time traffic updates.
The huge revenue-generating potential of these services has caused consolidation as players of all sizes look to add technical knowledge and fast track growth. In November, electronics giant Samsung agreed to buy connected car and premium audio systems producer Harman International to accelerate its push into the automotive sector. Chipmaker Intel has also made a number of acquisitions including Yogitech, a semiconductor functional safety specialist with expertise that can be applied to advanced driver assistance systems.
The roll out of connected cars is gathering momentum with roughly 90 percent of BMW's new vehicles now fully connected. Jaguar Land Rover's target was 100 percent connectivity on models sold by the end of 2016. While this level of commitment might be expected from premium automakers, volume brands are also determined to capitalize on the trend. Seat CEO Luca de Meo has prioritized "affordable connectivity" and he wants all of the Volkswagen Group subsidiary's cars to be connected by next year.