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 Auto companies hope that the vehicle data will one day generate
billions of dollars in e-commerce, though they are just beginning to
form strategies for monetizing the information. Apple and Google
already make money from smartphone owners by providing a variety of
products and services, from digital music to targeted advertising,
and connecting phones to car systems will almost certainly extend
their reach.
But as infotainment systems such as Apple's CarPlay and Google's
Android Auto become more widespread, auto companies hope to keep
tech providers from gaining access to a wealth of potentially
profitable information collected by computer systems in cars.
Some auto companies have specifically said they will not provide
Apple and Google with data from the vehicle's functional systems -
steering, brakes and throttle, for instance - as well as information
about range, a measure of how far the car can travel before it runs
out of gas.
"We need to control access to that data," said Don Butler, Ford
Motor Co's executive director of connected vehicle and services. "We
need to protect our ability to create value" from new digital
services built on vehicle data.
HIGH STAKES
The stakes are potentially huge: General Motors Co told investors
earlier this year that it expects to realize an additional $350
million in revenue over three years from the high-speed data
connections it is building into its cars. [ID: nL2N0XC0V3]
Consultant AlixPartners estimates global revenues from digitally
connected cars will grow in value to $40 billion a year worldwide by
2018, from $16 billion in 2013, and auto companies would like to
hold on to as much of that money as possible.
"The risk is, if you give up control and somebody else figures out
that business model, then you lose the future revenue stream," said
Friedmar Rumpel, vice president in AlixPartners' automotive
practice.
Auto companies hope to profit from in-vehicle data in a variety of
ways, including the provision of travel planning services and auto
repair and service information they hope will bring drivers to
dealerships. They also expect to work with insurance companies,
providing information that would allow insurers to base their rates
on a driver's behavior behind the wheel.
While many automakers have signed up to use CarPlay and Android
Auto, systems designed to make it easier and safer for drivers to
use the apps and features on their smartphones while driving, some
car companies also have designed their own systems.
Ford is installing a proprietary system, Sync 3, in its cars that is
designed to work with and supplement CarPlay and Android Auto.
Volkswagen AG's Audi subsidiary is hoping to develop and license its
own brand-specific apps, while attracting third-party programmers to
create and customize car-specific apps, according to Mathias
Halliger, Audi's senior systems architect for connected vehicle
technologies.
"This enables a business model that completely belongs to the
carmaker," Halliger said.
Still to be answered, however, are questions concerning how
comfortable consumers will be with sharing their personal
information from the vehicle. In addition, state and federal
regulators could impose limits on data-gathering and sharing.
In the meantime, policies on data access and sharing differ from
company to company.
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Several automakers said they are sharing minimal vehicle information
that directly affects the performance of third-party infotainment
systems - for example, GPS coordinates to enable navigation;
information about whether the dashboard screen is in day or night
mode; and notification of when vehicles are in reverse gear, so
rear-view video displays can be activated.
GM is integrating Apple's and Google's infotainment systems into its
vehicles without "any outgoing data or shared revenue," a
spokesperson said.
VW says it is treating the tech companies more as strategic partners
and is being more open in terms of data access - a different stance
from its sister brand Audi, which makes such decisions on its own
and has restricted access to vehicle data.
A VW spokesperson said Apple and Google had "asked for more data
than we were willing to share," but that the automaker is providing
access to "data points that are important to providing the best apps
performance and user experience."
The car companies recognize that Apple and Google can glean a wealth
of information from the mobile devices that users bring into the
car, said Thilo Koslowski, vice president and automotive practice
leader at consultant Gartner.
As for Apple's and Google's interest in connecting with drivers, he
added, "it's all about tying you into their ecosystems."
Apple says it is collecting only limited data to enhance the in-car
services offered through CarPlay, such as GPS information from the
vehicle to make Apple Maps as accurate as possible.
"As with all of our products, CarPlay is built from the ground up to
protect your privacy using the same industry-leading safeguards
already at work on iPhone," Apple said in a statement. "All of the
data is anonymized, not connected with other Apple services, and is
not stored by Apple, so no one can build a profile about the driver
or their travels."
Google says its aim is to integrate data from the car with features
on Android Auto "for an improved driving experience."
With Google's Android Auto, the driver is asked whether he or she
agrees to share user-generated data with Google and third-party app
providers, a Google spokesperson said.
Vehicle owners who bring their mobile devices with them can elect
whether or not to connect those devices inside the car.
(Reporting by Julia Love in San Francisco and Paul Lienert in
Detroit; Editing by Joe White and Sue Horton)
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