Automakers Are Transforming Cars Into Third Living Spaces

Automakers Are Transforming Cars Into Third Living Spaces

This week’s featured analyst is Jennifer Kent, Director of Research Quality & Product Development at Parks Associates. Since joining Parks Associates in 2009, Jennifer has worked on the health and mobile research team, specializing in the connected health, mobile payment, and connected car markets, as well as the consumer research team, analyzing consumer data related to the connected home and consumer electronics markets.

Jennifer covers a wide variety of intriguing topics in today’s blog post, from the latest developments in connected car technology to the biggest challenges facing the IoT industry in 2017. Here’s what she had to say:


Partly due to consumer demand and partly due to competitive necessity, connected features and apps are being integrated across automakers’ fleets. Automakers initially tried to keep tight control over their infotainment systems but most have since opened up to Apple and Android in the car. In doing so, they cede some revenue opportunities to the tech giants and must take a much broader approach to monetizing connectivity in the vehicle.  

At the same time, automakers and their suppliers are rethinking traditional approaches to the automobile. They are expanding their definition of transportation and mobility, vehicle ownership, and the driver and passenger experience. Many industry players have set a goal of transforming vehicles into productive and rich entertainment environments, and third living spaces—behind only the home and office. With the rapid increase in voice-controlled personal assistant adoption across device ecosystems, ecosystem gaps may close more quickly and seamlessly than expected.   

Connectivity also provides automakers the means to send major software upgrades to the vehicle at little cost and almost no inconvenience to the customer. This is much more dramatic than it sounds. It means that vehicles coming off the sales lot are not a finished product. Over-the-air (OTA) updates can be leveraged not only to fix bugs and avoid recalls, but also to enhance the driving experience and add new capabilities. Tesla, for instance, enabled limited self-driving functionality, called "Autopilot," in its models that were already on the road via an OTA update, fundamentally changing the car that the driver purchased. This foundational but incredibly compelling benefit of connectivity is not marketed or truly leveraged by traditional OEMs. Connected car players with a long-term vision can plan for value-added benefits that are introduced to drivers years after the initial purchase. Limiting strategies to maximize today’s one-off vehicle sales may not be a competitive play for the long term.  


In consumer IoT markets, consumers routinely report being wary of hidden fees and concerned about the privacy of their data. They feel they are giving up too much data for the value received. For instance, in Q4 2016, a Parks Associates survey found that more than 40% of U.S. broadband households do not trust companies to keep their data safe; over half do not feel they get much in return for sharing data. This balance must be flipped. Consumers will be more at ease with connected products if they trust the companies that have access to their data and they believe they receive value in return. Offering consumers the ability to erase their historical data and opt-in to data sharing can alleviate concerns.

Affordability also remains a problem. Costs of smart devices are much higher than prices of their un-connected “dumb” counterparts. Smartphones were able to go mass market because they are multi-functional, replace a variety of other devices (cameras, calculators, calendars, etc.), and costs were built in to mobile data plans. Prices of emerging single-function devices are harder for consumers to justify. Industry players are now starting to experiment with new pricing models to help address the problem. Vivint Flex Pay is one such example.


I find the enterprise applications of technologies we cover in the consumer space to be particularly interesting as they demonstrate entirely different value propositions, business models, and deployments of often the very same technology. Commercial use of robotics is widespread, for instance, compared to the very limited deployments of robotic vacuum cleaners in the consumer space. Hot technologies in the connected car space actually have a much clearer path to monetization within fleet management than within consumer vehicles. We touch on these overlaps in our current research and will evaluate if and when it may be appropriate to cover enterprise IoT in a more dedicated way.

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About Parks Associates:

Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups with expertise in the Internet of Things (IoT), digital media and platforms, entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, support services, consumer apps, advanced advertising, consumer electronics, energy management, and home control systems and security.


Published by Research and Markets


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