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The Russian and world market of consumer devices for Connected Cars

June 2017

Analytical Report (full version)

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Analytical Report (full version)

The Russian and world market of consumer devices for Connected Cars
The Russian and world market of consumer devices for Connected Cars
June 2017

The Russian and world market of consumer devices for Connected Cars

June 2017

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J'son & Partners Consulting presents brief results of the research “The Russian and world market of consumer devices for Connected Cars”. The development prospects in this segment are related to the further development of "smart" car insurance, remote vehicle diagnostics, driver assistance systems (ADAS) and other services.

 

The Connected Car ecosystem

 

The ecosystem of the key players and elements of the Connected Car market is quite diverse. It includes companies that offer solutions for the consumer segment (infotainment services, car- and ridesharing/carpooling, renting on-demand, car diagnostics, driving style analysis, parking, etc.), for large companies (monitoring and fleet management, telematics service providers, insurance telematics, etc.), developers of specialized platforms and solutions in the field of Big Data and analytics, navigation, etc. "Things" include a variety of sensors and equipment, among which a prominent place is occupied by different dongles and built-in car solutions for providing infotainment services and autonomous driving.

 

In Russia, we can also see an ecosystem of telematics vehicles forming. This ecosystem will be based, as expected, on a service informational-analytical platform. This platform is likely to be built on the basis of the infrastructure of "ERA-GLONASS" (a system of automated alerts about accidents and calling emergency services to the emergency site). According to forecasts from NP "GLOGASS", this system is expected to have about 1 million users in Russia by the end of 2017. This leaves considerable scope for the other market participants.

 

Products and operator services

 

Operators can act not only as providers of communication services, but also as providers of packaged solutions, as it happens, in particular, in the United States. For example, AT&T Mobility offers two main Connected Car devices. They are connected to the ODB-II car connector. These devices are:

  • ZTE Mobley, a mobile hotspot. It allows you to connect up to 5 Wi-Fi devices (Table. 1).
  • Audiovox Car Connection. It is solutions to increase the level of safety and convenience of driving.

 

Meanwhile the operators actively cooperate with car manufacturers, e.g., Verizon Wireless – with Mercedes-Benz and Volkswagen (users of Verizon 4G LTE data tariff can "connect" their cars via their smartphones using mbrace or Car-Net); AT&T Mobility cooperates with car manufacturers.

 

Among the European operators the most active players in the Connected Car segment are: Vodafone, Telefonica, Orange Business Services and Deutsche Telekom.

 

Russian operators are hardly ever presented in the consumer segment, including cars. According to the independent expert Mikhail Omelchuk, consumer automotive telematics is a new market, and Russian Telecom industry traditionally gives the leadership while taking the first steps to colleagues in the US and Europe. Today, everyone can see the success of projects in the consumer automotive telematics field made by T-Mobile, Verizon, AT&T, and now it is left to see who is the first in Russia to launch a similar product. Such decision needs a proper tariff policy in terms of the cost of services and communication, good pricing "on the shelf", the quality of implementation and good marketing.

 

As seen from the analysis of the offers of major mobile operators in the consumer segment there is a demand for aftermarket solutions in the field of insurance telematics and value additional services (remote diagnostics, Wi-Fi hotspots, etc.). Most clearly the business model is worked out in the US market, where mobile operators directly sell OBD solutions to the private owners according to their subscription.

 

Consumer devices

 

The range of external consumer devices for Connected Cars available on the market is quite diverse – from usual smartphones with installed applications ("smartphone-only" solutions) to "full" OBD-dongles with satellite receivers, cellular modems and Wi-Fi. They all have both advantages and disadvantages. For example, OBD-dongles are easy and quick to install, but compared to, for example, "black boxes" they have limited control of the vehicle and obtaining of monitoring information.

 

Source: hum.com

 

A detailed comparison of different types of consumer devices as well as the cost of different types of OBD-dongles are given in the full version of the report.

 

Forecasts and prospects

 

In many countries, the main driver of consumer telematics is UBI ("smart" insurance). For example, in Southeast Asia, where insurance telematics received governmental support, it is developing very actively.

 

According to Ptolemus Consulting Group forecasts by 2020, in developed European markets of insurance telematics the share of OBD-dongles (the "full" ones, with a satellite modem and SIM card – Rich OBD dongles) will increase, as well as other onboard devices that can be installed by the owner themselves (Self-install OBUs) (Fig. 2). The share of smartphones will also grow rapidly, it includes self-sufficient devices for "smart" insurance and other services, various windscreen devices, dash cameras and line-fitted systems. On the contrary, the share of professionally installed onboard "black boxes" out of car manufacturer (Professionally-installed OBUs) will be reduced. Also hybrid solutions ("truncated" OBD dongles that have no SIM card or GPS module, Cut-down OBD dongles) will “extinct” and be replaced by smartphones and standalone OBD-dongles with SIM cards, where mobile app is just an access to services and data.

 

Source: Ptolemus Consulting Group, 2016

 

In search of an optimal balance between the cost of the device, its functionality and accuracy of the obtained data, market participants continue to experiment with different types of devices – OBD-dongles, black boxes, smartphones, adapters for cigarette lighters and other devices. Each device has its advantages and disadvantages, so the search goes on. In the longer term, as expected, the aftermarket solutions will be replaced by built-in car solutions at the stage of their manufacturing (OEM telematics). Currently, however, this process is very slow.

 

The volume of the Connected Car market in Russia, according to J'son & Partners Consulting, will reach 18.8 million passenger cars by 2022. The main market drivers will be the project "ERA-GLONASS", which will cover more than half (55%) of all connected vehicles, insurance telematics (17.3%) and infotainment (12.5%)

 

 

Comments from the market participants

 

1. What are the prospects for the use of various consumer devices for aftermarket of connected cars (OBD-dongles, "black boxes", smartphone-only, etc.)? Is there a trend of increasing the share of the smartphone-only solutions (especially in the segment of UBI) compared to OBD-dongles and black boxes?

 

In the B2C segment car manufacturers started to habituate us to connected devices, and then aftermarket-manufacturers also joined this trend.

 

The growth of aftermarket devices from independent vendors (Mojio, Zubie, etc.) directly depends on their own marketing, but even more on the market "rocking" made by car manufacturers and Telecom operators. The latter are the key interest for the business of connected devices – the segment in which in the short term mobile operator networks will be used. The operator is always interested to arrange a Wi-Fi network inside the car.

 

As we see in the examples of the experience of some market players, using the right approach to the marketing of the product, as well as to the tariff policy, subsidies of equipment while buying, in hands of Telecom operators the aftermarket product for the connected car can be a great success:

T-Mobile sells today about 10 thousand units a week, it includes OBD Wi-Fi devices with telematics services for the driver in the mobile app.

The operator Telia Soneira since its launch has sold about 30 thousand similar devices in a few months.

In many countries, the main driver of consumer telematics is UBI ("smart" insurance). A good example is the countries of Southeast Asia, where UBI-insurance received the support of the governments of this region and is developing very actively.

 

For UBI products the use of consumer devices (most often OBD-dongles) is less than the fourth part of the market, the majority of customers of the UBI uses smartphone apps for that. This minimizes the cost of the product for the customer and for the insurance, but it imposes some inconvenience – UBI app is permanently active and drains the smartphone battery faster. Most often devices are sold with UBI insurance products in partnership with Telecom operators. The operators complement the product features that make the purchase of this product attractive, and often even subsidize its cost.

 

2. Are there any differences in functionality between OBD-dongles which are dominant on the market and black boxes? For example, it is believed that OBD dongles have limited opportunities for driving and receiving monitoring information...

 

Back boxes as an automotive telematics product in the form of aftermarket solutions are poorly developed in the world. One of the main markets for such equipment is Russia, where people are used to give their cars "under the knife" of mounting centers for installation of alarm systems. Indeed, in contrast to the OBD dongles, which simply plug into a standard vehicle connector, the installation of the black box takes hours of work of a professional electrician and is connected with interference in the normal wiring of the car. If it needs implementation of the control function, then the mechanic uses so-called crawlers of the immobilizer which worsens the safety of the vehicle in terms of theft.

 

In Russia today, the key demand for telematics in the format of black box due can be explained by the need for remote start in cold climate as well as the need for the security functionality. The key market for telematics of the black box format is presets by the manufacturers, where a black box is created and implemented at the production level as a component of the vehicle, without disrupting the internal architecture of the car and its safety. In this segment, for example, there is a company Bright Box that supplies its products to manufacturers under its brand, with deep integration of standards of the manufacturer, creating a personalized product for each specific vehicle which is impossible for the aftermarket segment.

 

Thus, today, the aftermarket segment is OBD devices, that most often do not allow to drive the car, but they are plug'n'play devices for implementation of telematics services within the vehicle.

 

3. What is the probability that, in the next 2-3 years, the manufacturers, present on the Russian market, will start offering embedded telematics solutions (for example OnStar on GM) and aftermarket solutions will be significantly narrowed?

 

All the car manufacturers are actively developing telematics products and services for their products. The car is connected to the user’s smartphone is one of the most important functions consumers pay attention to when choosing a car.

 

Often telematics products manufactured by the automaker, for example, for the US market, do not correspond to the realities of another market, or the expectations of consumers in this market. Today we see the brands for local markets choose different suppliers of telematic products for their vehicles. Even when the head office has its own product (OnStar, etc.)

 

 

Detailed results of the research are presented in the full version of the report:

“The world and Russian markets of consumer devices and services for connected cars”

 

Contents

 

SUMMARY

  1. MAJOR PARTICIPANTS IN THE CONNECTED CAR MARKET IN THE CONSUMER SECTOR AND THEIR KEY FUNCTIONS

1.1.Car manufacturers

1.2.Device manufacturers and their partners

1.3.Large IT companies

1.4.Operators

1.5.Startups

1.6.Authorized dealers and service centers

1.7.Insurance companies

1.8.Highway operators

1.9.Other participants

  1. OVERVIEW OF PRODUCTS AND SERVICES OF MAJOR TELECOM OPERATORS IN THE FIELD OF THE CONNECTED CAR FOR B2C

2.1.USA

2.1.1.   AT&T

2.1.2.   Verizon (Hum, Zubie)

2.1.2.1.      Hum

2.1.2.2.      Zubie

2.1.3.   Sprint

2.1.4.   T-Mobile (Sync Up Drive)

2.2.Western Europe

2.2.1.   Vodafone

2.2.2.   Telefonica

2.2.3.   Orange

2.3.Asia

2.3.1.   SK Telecom

2.3.2.   NTT Group

2.4.Russia

  1. COMPARATIVE ANALYSIS OF THE FUNCTIONALITY OF OBD-DONGLES AND BLACK BOXES FOR THE CONNECTED CAR, THEIR ADVANTAGES AND DISADVANTAGES
  2. PROSPECTS FOR THE USE OF VARIOUS CONSUMER DEVICES FOR THE CONNECTED CAR BY TYPE OF CONNECTIVITY

4.1.OBD Dongles

4.2.Black Boxes

4.3.Applications on mobile devices

4.4.Other devices

  1. STRATEGY OF MAJOR AUTOMOBILE MANUFACTURERS IN RESPECT OF DEVICES FOR CONNECTED CARS: RISKS AND OPPORTUNITIES

5.1.AvtoVAZ

5.2.Hyundai/Kia

5.3.Renault

5.4.Toyota

5.5.VW

5.6.Chevrolet (General Motors)

  1. MAIN TRENDS AND FORECASTS IN VARIOUS MARKET SEGMENTS

6.1.Information and entertainment system

6.2.Search security systems

6.3.Satellite navigation (PND)

6.4.The device of insurance telematics

6.5.Other connected devices

  1. CONCLUSIONS
  2. ANNEX 1. WHOLESALE PRICES FOR OBD-DONGLES FROM THE COMPANY NYITECH (CHINA)

 

 

List of figures

 

Fig. 1. The Connected Car ecosystem in the world

Fig. 2. Ecosystem of telematics vehicles in Russia

Fig. 3. Russian service informational-analytical platform

Fig. 4. Telematics solution HumX from Verizon (on the left – part of the solution, on the right – mounting of the loudspeaker)

Fig. 5. Wi-Fi hotspot (Huawei Hilink E8377 CarFi) from Orange.

Fig. 6. Сomparison of different devices for connected cars: the cost of the solution, target segment, the degree of integration with car, functionality and cases

Fig. 7. The number of different devices in the segment of insurance telematics, major UBI markets of the EU, mln. units, 2012-2020

Fig. 8. The share of different devices in the segment of insurance telematics and other European countries*, 2015-2026.

Fig. 9. Car manufacturing market on the Russian market and their possible role in the concept of the Connected Car from the point of view of the operator

Fig. 10. The main stages of the LADA CONNECT project

Fig. 11. The number of installed infotainment systems in Russia in natural expression, thousand devices, 2015-2021.

Fig. 12. Forecast of the number of connected onboard security systems, 2016-2021, thousand

Fig. 13. The number of connected navigation systems for passenger cars of all types in the world, billion units, 2015-2020

Fig. 14. The market of "smart" motor insurance in Russia in natural expression, thousand policies, 2015-2022.

Fig. 15. The number of connected cars in Russia, thousand, 2016 to 2022.

Fig. 16. The annual supply of the Connected Car by regions of the world, 2014-2020

 

 

List of tables

 

Table. 1. Brief summary of the Mobley ZTE AT&T Mobility solution

Table. 2. Brief summary of the Audiovox Car Connection decision AT&T Mobility solution

Table. 3. Brief summary of the Hum Verizon solution

Table. 4. Brief summary of the Zubie Verizon solution

Table. 5. Brief summary of the SyncUp Drive T-Mobile solution

Table. 6. Wholesale prices for OBD-dongles with support of satellite navigation and mobile communication standards

Table. 7. GPS/GLONASS trackers from MTS

Table. 8. Advanced "black boxes" that use additional equipment (at the example of MT-9)

Table. 9. Advantages and disadvantages of OBD-dongles, "black boxes", "smartphone-only" solutions and adapters for cigarette lighters

 

 

The newsletter was prepared by J'son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of the release of the material. J'son & Partners Consulting reserves the right to revise the data after the publication of new official information by individual players.

 

 

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J'son & Partners Consulting presents brief results of the research “The Russian and world market of consumer devices for Connected Cars”. The development prospects in this segment are related to the further development of "smart" car insurance, remote vehicle diagnostics, driver assistance systems (ADAS) and other services.