Who will win in the Connected Car Ecosystem?

Within IoT, the market for connected cars provides a major opportunity for OEMs (original equipment manufacturers or the auto manufacturers), communications service providers (CSPs), systems integrators (SIs), hardware/software developers, and a host of other technology players. As the industry moves towards autonomous vehicles, the opportunities will grow and the landscape will become even more complex, involving standards bodies, city and transportation planners, and regulators.

The market is poised for strong growth as vehicles become more connected. But as the ecosystem widens, the connected car value chain is shifting, although OEMs remain at the center of it. OEMs have been making new investments and developing partnerships around the technologies needed to enable and secure autonomous driving. They are also taking strategic steps to gain greater ownership of the evolving connected and autonomous vehicle value chain.

The connected car ecosystem is expanding both in terms of new services and new players. As vehicles become more autonomous, new enabling technologies such as autonomous driving software, artificial intelligence, cloud management, and data analytics will create new opportunities for players with greater expertise in these areas than automotive manufacturers. Internet companies and cloud players such as Amazon and Microsoft can expect strong future growth in the automotive vertical, while the expanding ecosystem will also open the door to start-ups around autonomous enablers such as Argo.AI and Cruise Automation. 

While the ecosystem and market are expanding, not all players will benefit equally. Traditional telematics service providers (TSPs) will struggle as OEMs look to bring their telematics platforms in-house. Connectivity will become an ever more critical enabler for connected vehicles, CSPs will face more intense competition from each other as well as from newer global connectivity providers such as Cubic Telecom and Globetouch. SIs should, in the short-term, see opportunity to provide strategic guidance around best practices. Some large tech leaders such as Google and Amazon are well positioned to expand their role in autonomous vehicles. In addition, some are aggressively investing in autonomous driving technologies. Enterprise software vendors are also going to find new opportunities, particularly related to applications for data management, analytics, and integration. The expanding market has also attracted many start-ups, even though, up until now, most connected automotive start-ups have had little success (Tesla being the notable exception).