With all of the “New Frontier” talk of the Internet of Things (IoT) and how it will change everyone’s connected lives, someone had to figure out how much all of this would cost and how revenue could be generated.
Writing in the Wall Street Journal, Joe White has unearthed a new conversation among automakers that would evolve their century-old manufacturing-centric business model into a technology-based proposition that uses connected devices and services to drive additional revenue, effectively monetizing the connected car and gaining the attention of the tech investment community. But the connected road to revenue is long and uncertain.
Mass consumer adaptation of connected technologies is key to success, and burdening the cost of a new vehicle by $300 or so for additional hardware and data transmission expenses will not encourage customers to enter the connected car world. Consider also the increasing capabilities of smartphones that already provide many of the proposed connected features of V2V technology at a much lower price.
But if the industry and its partners can mitigate these hardware and service costs, the rewards are potentially stunning. Today’s connected service revenue streams will pale by comparison to profits gained through localized advertising, augmented reality, behavioral data and other third-party apps and big data analysis coming soon.
It has been estimated that in-car data commerce will generate over $14.5 billion in revenue by 2020. With 152 million connected cars on the road by then, that figure could be conservative. The risk of adding connected features to cars could easily be offset by the financial rewards – but only if the best minds take leadership roles in developing the business case.
Source: Paving the Internet of Asphalt Will Take Time – Wall Street Journal