Will car companies compete with Big Tech in a 5G world?

Week 5 of 8

December 2, 2019

Will car companies compete with Big Tech in a 5G world or will they decide to fall back on their capabilities as manufacturers? Big tech has integrated with Transportation through mobile phones during the last decade. The last time something like this occurred was between 1930 and 1946 when 9 million radios were installed by manufacturers in cars. The in-car radio created a reliable captive network for advertising and content during commute time to and from work. Car companies did not participate or monetize through this network. 5G brings the realization of Internet of Things (IoT). Transportation modes in IoT are basically another device. This blog explores the impact of big tech in transportation through Networks, Operating Systems and Platforms over the next decade.

Networks

It’s estimated that over 2 Billion people could utilize 5G networks by 2025. Ericsson is a strong proponent of 5G Network slicing which should allow targeted offerings especially to those using different transportation modes. The question remains what device will be the main interface? Is it a phone, car, watch, or something completely different? This could be a huge enabler for companies that provide content, advertising and other on-line services. While radio is a mostly passive technology, 5G is an active one that allows real time data sharing with countless applications such as optimization of traffic patterns, commute times, schedules and many more. How will people’s data interface through operating systems and cloud-based platforms between your home, office and transportation networks? Will companies make this seamless or add barriers between networks?

Operating Systems

Is your phone operating Android or iOS? Is your home using Google or Apple devices? How will this affect your future commute? Imagine a world where compatibility of those operating systems could affect customers decisions of what mode of transportation they use. Security, portability between devices, and ease of use are focal points of all OS development moving into the next decade.  Apple through its iOS 13 has privacy as a top tenant of all future products. This is no accident. Most people never understand what happens when you download an app, upload pictures to social media or create a “free” shared drive. Volkswagen recently announced development of their own in vehicle Operating System. Their goal is to have an OS that works across their brands for the 10M+ vehicles they build every year globally. This bold move by VW, if successful, could open new revenue streams that compete with big tech.

Platforms

According to an MIT post, “Platforms are environments, computing or otherwise, that connect different groups and derive benefits from others participating in the platform. The underlying concept covers companies from Google to Facebook to video game platform Steam to Taser.” In an IoT world, your mode of transportation is just another device. The question is what platforms have access to the device you travel in? The big tech players usually take two approaches, open source or closed loop. Cloud services allow you to port your digital life from device to device, even if the device is a car or autonomous vehicle. It makes you wonder if car companies have brands strong enough to create platforms to their existing customer base. If so, could these car platforms compete? 

Networks, Operating Systems and Platforms presence in Transportation are poised to accelerate through 5G. Will car companies compete with big tech in the next decade? Car companies that lack a strong brand following may find it easiest to leverage their manufacturing expertise. I would argue that car companies with strong brands can compete by learning from Apple and Tesla. Think of a car as a device instead of a vehicle. The vehicle as a device connected through a 5G network offers a specific advantage to the device manufacturer. Their loyal brand customers want to buy from the brands they love! Strong transportation brands can control their part of the IoT world as a platform if they seamlessly adapt in-vehicle with mobile technologies that their customers desire. This may necessitate a new model which acts more like a technology company than a manufacturing company. The Tesla model appears to be a blueprint available for car companies that want to compete with big tech. Tesla continues to create closed loop environments that serve their customers beyond just a physical electric car. Will car companies learn from Apple and Tesla to compete with big tech in a 5G world? The next decade may bring some incredible outcomes for companies who choose to adapt and compete. Look forward to hearing your thoughts!

Thank you for taking time to read this blog. Next week focuses on Luxury Solutions – Poised for growth if you tap into the Tribe, Experience and Exclusivity

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