Analysys Mason's latest report Connected cars: worldwide trends, forecasts and strategies 2014–2024 provides a 10-year forecast of the connected car market opportunity. We have found that 48% of passenger-carrying road vehicles (cars) in use in the world will have embedded connectivity and 48% of car owners will be able to pair their smartphone with their vehicle's in-vehicle infotainment (IVI) system by 2024 (see Figure 1). This emerging market segment could be a chance for mobile network operators (MNOs) to offer and monetise new services. This article outlines the factors that are enabling growth in the connected car market and summarises some of the strategies that mobile operators should adopt if they are to seize this opportunity.
Figure 1: Percentage of cars in use that include a connectivity solution, by solution type, worldwide, 2014–2024 [Source: Analysys Mason, 2014]
Various elements are aligning to significantly boost the connected car market in the next few years
Cars used to be mechanical, but now they are almost entirely electronic and come factory-fitted with a range of computer components. Analogue radios and cassette players that were fitted in the dashboard of vehicles have been largely replaced by digital stereos and screens, enabling the display of highly visual multimedia, navigation and diagnostic information. All these components of modern vehicles benefit from a networked connection. Indeed, instead of turning on FM or AM radio, it is conceivable that the next generation of car passengers and drivers will prefer to use their vehicle's embedded connectivity to access audio entertainment apps, such as TuneIn radio or Spotify, or to mirror these smartphone apps in the in-vehicle infotainment (IVI) unit using technologies such as the Car Connectivity Consortium's MirrorLink or Apple CarPlay.
Several factors are aligning to make this dream of in-car connectivity a reality.
- Enabler: mobile technology capability has advanced to support machine-to-machine (M2M) communications and vibrant multimedia experiences.
- Driver: consumers want digital services that are not interrupted when they are on the move.
- Driver: regulation in many countries will mandate connectivity for safety and security reasons.
- Driver: vehicle manufacturers (VMs) that agreed deals with MNOs some years ago will bring significant numbers of connected car models to market during 2014 and 2015 – giving consumers an early glimpse of what is possible when the automotive and telecoms worlds collaborate.
MNOs should prepare to provide connectivity, value-added services and reliable coverage of roads
MNOs should broaden their ‘connected lifestyle’ credentials by providing connectivity support for cars. They could also offer value-added services – such as cloud-based media streaming, digital profiles, personalised advertising, workspace tools and even smart-home integration.
The connected services that users expect in their cars will ensure robust mobile data growth for MNOs, but users will also expect these services to provide a seamless and delightful experience. This may not be the case unless operators can offer multi-device shared data plans for cars, innovative cloud-based services and easy-to-use vehicle-optimised apps.
More fundamentally, the user experience will be determined, to a large degree, by the quality of the mobile networks that support these services. Consumers will increasingly expect uninterrupted network access and undisturbed enjoyment of mobile services while they are travelling. Consequently, operators must evolve their network strategies, from building coverage where people live to supporting access when people are on the move. Operators have typically prioritised urban population centres when designing and upgrading networks – particularly in the case of LTE deployment – but MNOs that seek to capitalise on increased data usage will need to prevent radio link failures, interference, bad coverage and unsuccessful handovers along roads.
Analysys Mason's report Connected cars: worldwide trends, forecasts and strategies 2014–2024 and accompanying data annex provide: a 10-year forecast of new cars sold with a connectivity solution, as well as the proportion of cars in use that have a connectivity solution; key implications and recommendations for MNOs; an in-depth analysis of trends in the automotive sector that will affect the propagation of connected car solutions; and an overview of key trends in the connected car sector.