Competing Platform Businesses of Connected Vehicles
“Platform” is an overly used buzzword in the past twenty years. From business viewpoint, a platform is a business model that allows multiple participants (producers and consumers) to connect and exchange value.
Seven of top 10 world companies in 2020 market capitalization have significant portion of their business in platform business: Microsoft, Apple, Amazon, Alphabet, Facebook, Alibaba and Tencent.
A simple example of platform business model is Amazon’s marketplace where many merchants sell their products to many consumers worldwide leveraging Amazon’s platform for searching, fulfillment, payment etc.
As the automotive OEMs and suppliers waked up from their traditional design-build-sell-service linear business model, they found themselves besieged by various platform businesses, hard to compete in capital, talent, consumer base, service, or even in data.
So what are the platform businesses in the Connected Vehicle domain?
In-Vehicle Infotainment Platform: Android Auto
The most prominent platform in the Connected Vehicle domain is Android Auto.
First released in March 2015, Android Auto, a phone projection system running entirely on consumer smartphone, now dominates the world. As of June 2020, Android Auto is available in 36 countries (link), as of Jan 2020, download passed 100 million mark. Most importantly the consumers prefer to plug in the phone to use Android Auto for navigation, infotainment, voice assistance and others 3rd party applications, instead of using embedded In-Vehicle Infotainment (IVI) system developed by OEMs.
Google’s expansion beyond Android Auto with Android Open Source Project (AOSP) and Google Automotive Services (GAS), alongside Google’s developer community, poses a uniquely disruptive value proposition to the in-vehicle infotainment experience.
As the most commanding platform IVI, Google’s success contribute to its superior ecosystem services, and its Open Source licensing model and its relentlessness in pushing the boundaries. Even for China market where Google is not operating there, Android Open Source Project (AOSP) is the backbone of many Chinese OEM IVI systems.
As Android dominates the IVI systems, left Apple CarPlay, Alibaba AliOS, Automotive Grade Linux operating systems behind. All are platforms, one is just superior than other. Still to be seen, whether “Winner Takes All” occurs here.
There are many other platforms taking advantage of the Connected Vehicles in the global ecosystems.
Service Platform: Neutral Server
On the Nov 3rd election day, 74% of Massachusetts voters approved a landmark law which requires that motor vehicle owners and independent repair facilities be provided with expanded access to mechanical data related to vehicle maintenance and repair. Starting with model year 2022, the proposed law would require manufacturers of motor vehicles sold in Massachusetts to equip any such vehicles that use telematics systems –-with a standardized open access data platform. The pressure is mounting globally for OEMs to share their data in the “Neutral Servers” where multi-OEMs share their standardized telematics data to many repair shops and 3rd parties. Many data aggregators, Otonomo, MotorQ, Wejo and others, are gearing up to this mandated “Neutral Servers” platform to reap the fruit of vehicle data.
eCommerce Platform: Xevo Marketplace
Lear’s acquisition of Xevo demonstrated Lear’s ambition to the platform business and its upside potential. Xevo’s Market application provides in-vehicle commerce where many retail outlets like MacDonald hamburgers, Mobile gas stations, Applebee restaurants can reach the drivers to on-the-route orderings. The platform is in production with FCA and GM today, and Hyundai was announced. Lately Xevo announced the partnership with REEF, the largest parking operator in North America with over 4500 off-street park sites, to enable customers to search for, reserve and pay for parking thru IVI. Xevo plays the unique platform role to bring multiple OEM consumers to the many retail businesses with its in-vehicle commerce platform. OEMs can avoid the high cost of integrating many retail businesses, instead, taking advantage of the profit sharing from Xevo.
The Platform business will be even more profitable and more dominant in the automotive and its associated ecosystems. So all the ecosystem players (OEMs, suppliers, mobility companies) need to innovate in the platform business model, either build its own platform, or work with other platforms. Platform is a growth model.
