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Connected Cars: It's All About the Software

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Anand Sanwal, of CB Insights regularly sends out some of the most interesting aspects of the IoT marketplace.  You may have seen their periodic table of IoT Investment, but this week’s “picture worth a thousand words” was about the unbundled car.

Like so many things on the Internet, the vehicle has become an open market for disintermediation between the car manufacturers and the rest of the industry.  Like utilities coping with Nest, car manufacturers have to deal with a growing after market that is focused on specific opportunities and therefore able to accelerate past the in-house development.

The implication is that cars will continue to be a hot market for innovation to be revealed this year, since 2013 was when VCs started to put money into the business. Investments have been made by the ventures arms of BMW, Castrol, Intel, Qualcomm and Verizon.

In Clayton Christianson terms, we can say that the innovator’s disruption is coming and in this case, it is coming from all directions. The quickest way to market is still being part of the supply chain for the manufacturers themselves, but the innovation is going to be driven by aftermarket opportunities in many cases.

One place where we see this is with Buy Here, Pay Here insurance offerings.  Ken Shilson of the National Buy Here Pay Here Dealers Association hits a market ripe with used car inventories where dealerships are looking to eliminate the risks. While this sounds like a bottom feeder market, it is actually a disruption field that will continue to impact how cars are sold.  The same technology will be available when we are in Las Vegas to people who want to rent the car of their dreams with Enterprise’s exotic car services.

There is a case to be made that as pay-as-you-go automotive solutions continue to evolve, we will find the ownership of cars will be less attractive and pay-as-you-travel will increase.  This could be the ultimate Uber service or the end of “drivers” as cars become autonomous. It’s early to tell, but we can bet that it will have at its core a lot of software.




Edited by Ken Briodagh
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