What is the Killer App for Connected Car?

What is the killer app for connected car services? That’s another way of asking where the obvious value lies, for end users, car owners or fleet managers. So far, the answer is not clear.

Nor does it help much to assert that there is “no killer app.” That is a fuzzy answer essentially tantamount to saying “we don’t know,” or that we haven’t thought it through.

ABI Research forecasts the penetration of “embedded telematics” in new vehicles will increase from 13.4 percent in 2014 to 52 percent in 2020.

Nonetheless, a GSMA-commissioned report suggests that by 2018 such connected car markets will triple from 2012 levels, and generate €24.5 billion from in-vehicle services such as traffic information, call center support and web-based entertainment.

Some €6.9 billion will be generated by the sale of hardware such as telematics control units. An additional €4.5 billion will be earned by suppliers of telematics services such as customer relationship management.

The access connections portion of the business might represent €4.1 billion. But it always is possible such forecasts will prove too optimistic.

“While penetration levels of embedded connectivity in vehicles continue to grow steadily, it remains challenging for car OEMs to convince users to pay for built-in connected car services,” says Dominique Bonte, ABI Research director VP.

That is just another way of saying we haven’t discovered a connected car killer app, yet, and that consumers deem the value-price relationship yet to be strong enough to encourage high take rates.

So “full penetration is unlikely to be achieved solely through consumer-led drivers,” says Bonte. That likewise is another way of saying supplier push is going to be the key factor for wider adoption.

The “perceived value of safety services or in-car Wi-Fi hotspots simply are not big enough,” says Bonte. So something else will have to happen to spur adoption.

ABI Research suggests car sharing could be one such driver, enabling the remote finding and unlocking of “shared” vehicles.

Also, as the percentage of electric-only vehicles grows, remote monitoring of vehicle battery status could emerge as another value driver.

Or, ABI Research suggests, autonomous vehicles could provide the value.

In the meantime, growth will be fueled by other “non-consumer” apps such as eCall and stolen vehicle mandates in Europe, Russia, and Brazil, or manufacturer diagnostics, prognostics and preventive maintenance.