Welcome again to the global conversation on connected cars via the DIDX.net audio podcast channel! We spoke with Matt Hatton, the director of research at Machina Research.

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Dec 10, 2013 (3 years and 4 months ago)

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Welcome again to the global conversation on connected cars via the DIDX.net audio podcast
channel! We spoke with Matt Hatton, the director of research at Machina Research.

Matt Hatton, the interviewee: On the auto side of things, in terms of what’s
changed … I
think there is a crystallization of what some of the big challenges might be in terms of … the
things that have to be resolved. I think we are kind of getting past the stage of thinking:

1. Is the connected car a good idea?

2. Should everybody
be pursuing it?

3. How do you resolve those more crucial issues? Things like … who pays for the services?

For some applications, it is pretty apparent how you do it. When you start getting into
entertainment services … what kind of billing? A dedicated sub
scription or whether it is all
bundled in with the connected car system?

How does the relationship change between the owner of the car and the car that they drive
now? Is it just about owning the vehicle, or is it more about someone providing a driving
exp
erience?

Like the Zip Car approach (car sharing, an alternative to car rental and car ownership) … it
should be much more than communications and transportation services rather than just a big
bunch of metal.

The final one is around the application develop
ment environment. We’ve all seen what can
happen in a very nurturing and creative environment with application development in
Android and iOS. We would like to see similar enthusiasm and innovation in the auto space
with applications being built for those
vehicle platforms. The question is how do we achieve
that?

There is a certain amount of reticence on the part of the auto manufacturers how they push
that. So, that’s just three areas, some of the big areas, interesting ones.

Suzanne Bowen, the interviewer
: You mentioned something in the beginning about the
questions that people are asking, and when some kind of new technology is first being talked
about, a lot of people just ignore it. But when people get excited about it and they see the
opportunities it
provides, they start asking important questions because why? It is starting to
be taken very seriously.

Matt Hatton, the interviewee: You have heard the announcement that GM made a few months
ago that affect the automotive industry by 2015 will be LTE conn
ected services. There are
other OEMs that are going down that track. It’s perceived as being a necessity now. It is a
requirement.

From the end user perspective, it’s not so much there needs an awareness on the part of the
consumer. Actually if the connect
ed car its job properly, it’s almost opaque to the user that
there is connectivity there. They are driving a connected car. There are just some services that
are available through that vehicle. Whether you call it M2M, Internet of Things, Connected
Cars, t
hat’s not really the issue. It is whether they can make use of regularly updated traffic
alerts or make use of automatic re
-
routing of _________ (around 4.35.8) based on where
there is congestion or you can find the nearest restaurant. It’s more about faci
litating those
applications rather than people buying a connected car.

Suzanne Bowen, the interviewer: In other words, what is the car going to do to make life
better? They are not really concerned whether it is called “Connected Car,” “Internet of
Things”

or something to do with Machine 2 Machine.”

Matt Hatton, the interviewee: Exactly! There is certainly an appetite for buying what is
effectively just a rolling hotspot. Audi, in particular, is focused on this as part of their
strategy. What you are provid
ing is raw bandwidth. That and WiFi in itself, seems to be a
tangible and very vital service now.

There was a funny play on Maslow’s Hierarchy of Human Needs where someone had added
WiFi underneath the bottom of that pyramid above all else. I think that so
rt of plays out in the
vehicle space as well.

Suzanne Bowen, the interviewer: Connected cars is a fashionable topic just like WebRTC and
Wearable Tech. What people are going to be able to accomplish is going to be discussed at
Connected Cars America in Dal
las, TX November 21


22, 2013. You’ve talked a little bit
about Connected Car trends in your first answer, but I wonder if you can talk a little bit more.
People want to know new ways they can actually use connected cars. What are these WiFi
hotspots, inf
otainment, safety features …?

Please share some new things. What is in it for the consumers?

Matt Hatton, the interviewee: In terms of new things, there is not that much. William Gibson
[credited with predicting the rise of reality television and with esta
blishing the conceptual
foundations for the rapid growth of virtual environments such as video games and the World
Wide Web], for example, he says, “The future is already here. It is just unevenly distributed.”

What we would like to see is

that there are
a host of different applications being made on the likes of GM’s OnStar,
BMW’s ConnectedDrive and the likes. It’s kind of limited to a small number of uses at this
time. What is going to happen is a

deal spread across all models of vehicles, not just the
top masters but also th midrange
vehicles. It is a question if these applications and services page down deeper into the car park.

There are things like stolen vehicle recovery, usage
-
based insurance


a very hot topic,
particularly in Europe where there a
re mandates to not use gender to distinguish people on
basis of insurance risk. That pushes insurance companies towards how someone actually
drives.

There is host of other one’s around things like emergency call and break down. Again, in
Europe, we’ve got
the E
-
call mandated for sometime around 2015. We are seeing that come
through in other markets, companies like Angel Guardian in the U.S. with a WD2 device that
will record much the same sort of function as the E
-
Call mandate in Europe.

There is not necess
arily a new host of particularly new things you can do. That is where the
open application development environment comes in. I mentioned the need for open
application developers and how far and fast the auto OEMs want to make that vehicle
platform open to
third party application developers. It will be with that openness and
supported application atmosphere. We’ll get lots of new and wonderful and interesting
applications over and above the ones we have discussed today.

Suzanne Bowen, the interviewer: Who ca
n best leverage business development with Machina
Research’s connected cars related opportunities and how? When I say that, you know, how
do you gather research and present it?

Matt Hatton, the interviewee: We work with a bunch of companies all involved in

the
connected car ecosystem. We kind of sit between the auto OEMs, the device manufacturers,
and the providers of connectivity plus a variety of other players. We provide an independent
perspective on the evolution of the market.

For instance, with regard
s to auto OEMs, like how radio access technologies might evolve
over the coming 5


10 years. There is a lot of change coming on in those areas. We work
with various players in terms of doiing market sizing and identifying what revenue
opportunities there
are in the vertical sector and forecasts in over a hundred countries looking
at technology, traffic, revenue … We work in a range of industry sectors, not just auto.

Another aspect of what we do is more qualitative. It is more about how you can actually
se
cure as much of that market opportunity as you possibly can. In that context we are talking
to device groups, software midware, different corporations, a variety of different players who
are clients. We steer them in the direction to get the most revenue p
ossible. It is a
combination of very specific vertical and horizontal.

Suzanne Bowen, the interviewer: What do you see as the challenges in the area of connected
vehicles such as differing schools of thought and second, maybe how to meet those
challenges?

Matt Hatton, the interviewee: There is a variety of different challenges. Cost is a challenge.
OEMs are not
-
plussed about putting an extra $200


$300 of connectivity into the vehicle.

Another challenge is that of technology choices. A lot of network opera
tors are turning up
LTE, 4G and 3G networks. What happens? We’ve seen GM opt for an LTE approach, but
there is a question of how do you best balance the cost associated with the most secure
technology … how you trade that off with the cost associated with
it. That’s a bit of a
challenge.

Security and privacy always rear their ugly heads at very points. Obviously, there are some
concerns around that. Security in the auto sector is paramount. You are talking about
something very dangerous if there is a lack o
f security.

We’ve certain players who have gotten into trouble for contuing to track people’s usage or
supplying an automized data to the police and various others. I won’t names at this stage, but
there have been problems with the privacy issue. That’s an

area we are doing a fair amount of
work in … how you manage that privacy that is associated with that data.

In that case, it needs a new way of thinking about privacy … questions of implied mission. In
this scenario, we are looking at big data research.

Suzanne Bowen, the interviewer: Thank you. You covered more than I thought you would! In
the podcasts in which I have recorded interviews about connected cars, I’ve heard some about
the security and privacy issues, but you mentioned the cost, and I didn’t
think about that and
how that the OEMs may feel that they don’t … of course, they want their customers to be
safer and they also want to follow government regulations, but how are they going to recover
that extra cost?

What are the advantages for listeners

of this audio podcast to participate in Connected Cars
North America 2013, Nov. 20


21?

Matt Hatton, the interviewee: You get to see me onstage. I’ll be chairing the event, so …

Suzanne Bowen, the interviewer: Hurray!

Matt Hatton, the interviewee: The nu
mber one reason anyone would want to attend.
(Chuckles.) Seriously, this is a very interesting space at the moment. I’ve touched on a whole
host of issues without going into quite as much detail as we might have wanted to, around
things such as security, a
pplication development, how the services are bought and paid for,
how the relationship changes between the auto OEM and the customers. These are areas we
will delve into at the event in Dallas in rather more detail than what we into here. There will
be som
e people who know a bit more than I do. It should be a fascinating couple of days.

Suzanne Bowen, the interviewer: Wonderful! And I believe that website is
connectedcarsevent.com (not connectedcarevents).

Matt, Mr. Hatton, I just want to thank you for bein
g willing to share some more of your
expertise and to open us up to asking questions. So, thank you!

Matt Hatton, the interviewee: Pleasure, my pleasure. Hope to see everybody in Dallas.

Suzanne Bowen: Absolutely. What is the website address for Machina Re
search?

Matt Hatton, the interviewee: www.machinaresearch.com …