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I am passionate about cars and always have been. As a child, I imagined owning a car that would do whatever I wanted it to. Of course, it could fly as well as drive. But more important, it would do much more than simply getting me from point A to point B. My future car would look out for me, entertain me, and make sure that I would never be late for a playdate with my friends.

These are no longer childish notions. The automotive and transportation industries are entering a phase of the most significant innovation since the popularization of personal automobiles a hundred years ago. Similar to the way telephones have evolved into smart phones, over the next 10 years automobiles will rapidly become “connected vehicles” that access, consume, and create information and share it with drivers, passengers, public infrastructure, and machines including other cars. We can already predict benefits such as reduced accident rates, improved productivity, lowered emissions, and on-demand entertainment for passengers. The rise of connected cars will lead to widespread changes affecting many kinds of businesses, not to mention governments and communities. As just one example, we are seeing collaborations between automakers and life-science companies to develop in-vehicle health-monitoring sensors that can transmit data about the driver’s health in case of an emergency.

It’s only recently that the importance of the connected car has become widely accepted. When I founded Gartner’s global automotive advisory practice in 1999 in San Jose, California, automotive company executives scratched their heads and asked me why I didn’t open the office in Detroit. Back then, it took a good 15 minutes to explain the critical role Silicon Valley would play in the automotive industry’s future. Today, little convincing is required. Automotive executives, as well as managers in such industries as consumer electronics, media, the Internet, computer hardware, and financial services, are beginning to realize that new concepts of mobility will affect their business and that they need new strategies to address consumer and market opportunities.  

Convergence of digital lifestyles and cars

The emergence of the connected vehicle is closely linked to that of smart phones and the mobile Internet, which, though still relatively new, are strongly shaping consumer expectations for on-the-go access to data. Consumers increasingly view the automobile in this connectivity context, and carmakers realize they must offer in-vehicle access to data from the Web in order to stay relevant. For example, vehicle navigation systems are already the location-based service that’s most popular with consumers; next-generation navigation systems able to incorporate up-to-date maps and real-time traffic information are bound to be even more appealing. Expectations for accessing other digital content in the vehicle will continue to grow, and by 2016, the majority of consumers in mature automotive markets will view in-vehicle access to Web content as a key buying criterion.

The fact is, automakers now compete for customer dollars not only against each other but also against iPhones and iPads, especially among younger consumers. Data collected by us illustrates the trend. In one survey, participants were asked to choose between Internet access and owning an automobile. Among U.S. 18-to-24-year-old drivers, 46 percent said they would probably select the Internet and give up their car. Among 45-to-64-year-old drivers, only 15 percent said they would be likely give up their car for Internet access.

This means that mechanical excellence won’t be enough for automakers to impress future customers. The automotive industry must capture consumers’ interest in digital lifestyle offerings and adapt the relevant technologies to the car. Although most car companies have innovative efforts under way, quite a few of these will misfire as the companies attempt to simply imitate what consumers already do on smart phones—for instance, having the car read you Facebook updates while you drive. Instead, successful adaptions of mobile technology will enhance the experience of owning a vehicle. For example, future cars could monitor the driver’s cognitive and emotional state and assess what information, and how much of it, the driver can consume at a given time. Noncritical phone calls could be routed straight to voice mail when the car is on the highway in heavy traffic, and text messages could be read out loud when it is idling at a stop light.

Changing demographics and the need for sustainability

The world’s population is growing, and in developed countries it is aging. That means we have to find ways of giving more people (including the increasing number who can’t drive anymore) the ability to move around. This needs to occur in the context of a global transportation scenario in which growing traffic congestion, rising energy prices, and concerns over the burning of fossil fuels are likely to be critical limiting factors.

One technology stands out in addressing these challenges: the self-driving vehicle. Over the next 10 years, continued evolution in sensors, computing power, machine learning, and big-data analytics will bring us closer to the goals of zero accidents and real-time traffic management. Cars that are aware of their own location and the location of other vehicles will “self organize”: they will talk to one another and to the infrastructure in order to optimize traffic flow, minimize congestion, reduce pollution, and increase general mobility. Imagine a future in which even a 90-year-old person can remain mobile over long distances in a car that drives itself. That may mean more visits from the grandparents—and it might also mean that the car could drive them straight to a hospital in a medical emergency. The autonomous vehicle would also eliminate the dangers of distracted driving and make possible more fuel-efficient driving—for example, if the cars traveled in a platoon that minimizes wind resistance. Self-driving cars are certain to bring up profound legal questions: Will a 10-year-old child be permitted to “drive”? What about someone who has had a few drinks? Who would be legally at fault in case of an accident involving two autonomous vehicles?

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Tagged: Business, Business Impact, business

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