Ericsson predicts industry casualties as cars get connected

AMSTERDAM--Connected cars will be such a disruptive force in the automotive industry they could make or break car manufacturers, the vice president of Ericsson's Connected Vehicle Cloud division said at the Connected Cars trade conference here on Tuesday.

Magnus Lundgren told FierceWireless:Europe that the automotive industry is one of the earliest industries facing disruption from growing use of mobile broadband networks and cloud services, and predicted the disturbance will spread to other industries as machine-to-machine (M2M) services begin to take off.

"I'm quite certain that some car manufacturers are not going to make it, I think that's how disruptive it's going to be," Lundgren said, noting that the shift is already underway in the form of Tesla, an electric car manufacturer that recently entered the automotive industry. "[B]efore that it was impossible to come in as a car manufacturer."

Lundgren defines a 'connected' car as the vehicle itself being the main item that connects. "You might have your phone as the bearer but you won't have the applications on the phone. The car itself is the main asset. And that will take information down to the car--applications and services--and also send data from the car."

Ericsson has developed an anonymity protection component for its vehicle cloud, based on current banking security systems, to ensure cars are not hacked in an effort to address concerns over data security and privacy.

The company's Connected Vehicle Cloud is a variation of its telecoms Service Enablement Platform, which already handles services including firmware over the air (FOTA) updates for mobile devices, and has thus been adapted to enable in-car systems to be amended remotely.

Ericsson's pitch to auto makers is its long experience of managing telecoms companies' businesses. Lundgren noted Ericsson currently manages around 1 billion mobile subscriptions for operators, and some 2.5 billion OSS and BSS services. "[T]hese are the systems--the exact same systems--a car manufacturer needs to have now in order to manage their cars, in order to manage their users, to able to charge for stuff," he said.

Connecting cars has the potential to revolutionise car ownership. Lundgren pointed out consumers may choose not to own a car, but instead use any nearby vehicle --a concept not dissimilar to bicycle rental schemes in cities including Barcelona and London, whereby a person hops on and off the machine.

For people who prefer more traditional car ownership, connectivity can be used to automatically book the vehicle in for repairs and servicing, and to guarantee the history when selling to a second or third owner.

"Today, car manufacturers are really business-to-business companies--they send the cars to car dealers who sell the cars.

"Now, if you connect the car and connect the driver and owner, you can start selling cars directly. You can also…sell services to the second owner of the car; the third owner of the car-- this whole cycle of the ownership of the car you can get involved in. And that's a huge potential for the car manufacturers," Lundgren explained.

Ericsson is also pushing its cloud service into other sectors, including smart meters for energy companies, and a service for shipping company Maersk covering 400 of its largest vessels.

While that deal is primarily focused on enabling the company to improve the efficiency of its ships by remotely controlling the engines to account for factors including the ship's load and weather conditions, Lundgren noted there is also potential for third parties to remotely access individual shipping containers. That would allow a supermarket to adjust the temperature in refrigerated units to ensure produce is ready to sell when it arrives in port, or to allow remote monitoring of livestock via video feeds, for example.

Logistics companies are another potential target. Lundgren explained that Ericsson and Volvo have already developed smart trucks that use historical journey information to eliminate the need for manual gear changes. Lundgren said most roads in Europe are covered by the technology, and that it can be used to optimise the efficiency of the vehicle to reduce fuel consumption.

Related Articles:
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Connectivity a key asset for telecoms operators, says analyst
Analysys Mason: Connected cars have huge potential for operators in next 10 years
Vodafone drives connected car strategy with €145M telematics buy
Nokia stakes $100M for slice of connected car market

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