Today, digitisation is dramatically affecting all industries, businesses and areas of our lives. One sector reacting quickly to this progress is the automotive industry. According to BI Intelligence, by 2020 there will be around 220 million connected cars on roads across the globe, increasing from the 30 million connected cars in use today. One company leading the way is HARMAN.
Acquired by Samsung in 2017 for $8 billion in its quest to increase its presence in the critical automotive sector, HARMAN’s President of the Lifestyle Audio Division, Michael Mauser, discusses how digitisation is changing the automotive industry and how diversification and collaboration is crucial to stay ahead of the competition.
We live in a digitised world in which devices, homes, infrastructure and cars are becoming increasingly connected. Alongside this, the global automotive industry is about to enter a period of transformative change that will take us from owning and driving cars to shared mobility for passengers.
Digitisation is at the heart of this transformation. As with mobile phone and smart devices, digital apps and digital features with Over the Air (OTA) updates and personalisation will become key differentiators in a car. These factors will overtake the traditional horse power, acceleration and design that we currently base our preferences on. This is allowing new brands – the likes of Google and Apple – to enter the automotive space and become strong competitors to traditional car brands such as BMW, Audi and Mercedes.
Digitisation megatrends This digital transformation is creating megatrends that are shaping the future of mobility and are unleashing significant business and growth opportunities. Daimler describes these megatrends as CASE. ‘C’ stands for connected Car, ‘A’ for autonomous driving, ‘S’ for shared mobility and ‘E’ for electrification.
It’s the scale of the opportunity that is driving interest: it’s anticipated that there will be 220 million connected cars by 2020. According to the World Economic Forum, there is $0.7 trillion at stake for automotive players and an additional $3.1 trillion of societal benefits to come from this, which includes reduction of air pollution, turning time spent driving into productive time and a significant reduction in road accidents and deaths. Society is set to benefit more than the industry alone.
Automotive companies that want long-term success within the industry need to quickly make key strategic decisions on how to address the CASE megatrends. Diversification will be crucial to this.
As our cars turn into computers on wheels, Ford Engineering has predicted that roughly 50% of the vehicle value will be in hardware, such as powertrain, suspension and body, and 50% will be in software. This is a transformation from the 90% hardware and 10% software of the past. Automotive companies must adapt, embrace this move to software-based systems, and become savvy in this technology and its customer offerings.
The Internet of Things is upgrading the car to a connected smart vehicle and ensuring it remains ‘future proof’ with Over the Air updates. It’s introducing innovative new functions such as cloud-based office tools for productivity, high resolution streaming of entertainment services, remote vehicle diagnostics and personalisation.
But connected cars come with challenges. As cars transform into computers, they inherit the problems of the IT industry. One of these issues is cyber security. Connected cars are a target for hackers who may want to manipulate networked systems and access data. Automotive companies must therefore become security experts, implementing systems that detect and prevent malicious attacks.
But as we move closer to autonomous vehicles, increasing Advanced Driver Assistance Systems (ADAS) will be needed. These safety-crucial systems are additional ribbons to add to the automotive bow.
This diversification is what attracted Samsung to acquire HARMAN. Together, both companies have a wealth of expertise allowing us to drive forward change in the automotive space.
And it’s led to another way of working – collaboration.
Combined, our diverse experience, collaborative approach and openness to work with the best technology minds is helping us to satisfy demand for automakers. For example, taking Samsung’s strength in 5G and HARMAN’s automotive credentials, we will be the first to market offering 5G-based car telematics solutions.
This is the start of a new chapter in the automotive industry. To thrive in the future, our aim is to become the leading connected technologies company in the world. We want to continue to diversify, to expand our offering to data analytics and to drive major recurring revenue streams through software services and IP licensing.
As with all automotive companies, we need to continue to adapt, to diversify and work with collaborative partners, which I believe will be the key to success in this redefined automotive space
Michael Mauser is President of the Lifestyle Audio Division, HARMAN
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