Automotive Business Leader Perspectives

Service monetization in the software-defined vehicle and OTA

Mark Greban

The Device Chronicle interviews Mark Gerban, a senior digital and payments expert in automotive OEM with a background in big tech. Mark shares his insights on service monetization in the software-defined vehicle and the importance of OTA in this process.

Recently, Northern Tech CTO and Mender co-founder Eystein Måløy Stenberg laid out the essential requirements for the new cybersecurity standards for automotive, including ISO/SAE 21434 and UNECE R155/R156, how they affect the automotive industry, and how to establish a solid security foundation through building efficient, robust, and secure OTA updates.

In this interview, Mark discusses how the connected car will become a center of e-commerce opportunities through the software and the connectivity available. 

Mark undertakes this Device Chronicle interview personally with a disclaimer that his views do not necessarily represent those of his employer.

Mark is a noted business executive in developing strategies for connected vehicle services. He advises senior management in automotive OEMs on strategic partnership and digital product strategies in various areas, including charging, parking, fueling, insurance, e-commerce, infotainment, payment, and even NFT blockchain systems. He's also a champion of clearance of legal topics, allowing for innovations in vehicle features.

Chapter 1 - Effective service monetization strategies for the software-defined vehicle

Monetization strategies

Mark describes the connected car's most compelling digital service and monetization strategies. The ecosystem is relatively young, and many companies are trying to find their place. The industry is moving to a scenario where OTA enables something relatively quickly, and people will pay for that. More diverse digital content in different forms and flavors is becoming available. It can be entertainment, navigational, or other types of services, and payments will be central to this.

Chapter 2 - Referral model for connected services coming to all automotive OEMs

Google ad referral model comes to automotive OEMs

Mark foresees the Google ad referral model of the Internet coming to all automotive OEMs. Companies that have been paying for referral business from the Internet are gradually starting to pay for the referral business from the connected car. The Google model uses ad networks and large volumes of traffic. We are going from internet traffic to real-world traffic and a convergence. Sophisticated computing devices are now part of the automotive ecosystem. Larger screens and more computing power mean that OEMs can start placing referral types of business into the car. It manifests itself in the new forms of advertising, where the driver or passenger can have simple push notifications to say, "Hey, look, what about this?" As an offer, if they are driving by somewhere, they can get a message, "This place is having a sale." The marketing and transactional perspectives are both present, creating different types of businesses in parking, fueling, and other types of things out there today. Where the driver becomes aware of those services, and they're placed right in front of them. The primary place in this case will be the navigation system so the driver can see where these things are without even needing to pick up their phone. And that comes to this point where things need to be highly intuitive so that you will want to enable payment. And you have a convenience because you're like, "Whoa, I didn't even need to pick up my phone. I have everything presented to me right there. And I can find what I need on the fly." You can make intriguing comparisons to the phone because you pick it up and look away from the road when you're driving. And this is a distraction, and it's a danger. But when you get to a point where things present in a much more natural form, things get safer and more attractive.

Chapter 3 - Navigation system as the center of commerce in the connected car

Navigation system as transaction hub

The in-vehicle navigation will be the hub of e-commerce. Mark says the navigation system is the mandatory default of having either a home screen or drivers having a mandatory default towards the navigation screen. And when we think about digital services, consumers need to be given a spot where these things will be intuitive. Often, with app services, they are buried within the actual vehicle itself. You have to look through menus and find everything - taking as many as 20 steps not just to see everything but also to register and all this other stuff with your phone. The experience could be more practical. Having everything where you make a more intuitive approach where things are presented to you by navigation makes things so that you can be presented with material and items directly in front of you with much less work. Instead of 20 steps, you have services in two or three steps, so it is straightforward and intuitive. The navigation screen becomes your prime real estate for where you want to play services and a more intuitive experience that will lead to more use, sales, and commerce. 

Chapter 4 - Big brands, open APIs, and richer experiences in the software-defined vehicle

Open APIs & richer brand experiences

OEMs will use open APIs to create richer experiences for their brands. The inspiration for this is actually from the smartphone era, where you have connectivity from your ecosystem to the Google Play Store and Apple Store. And OEMs have the advantage that they control everything within their ecosystem. So you have different types of hardware and various types of experiences. And this approach could work out quite well. The challenge is that the ecosystems are tiny in comparison to phones. So, with phones, you have billions of users, whereas with cars and vehicles, you have exposure to audiences of 100m to 200m at best. Developers will ask if it is worth putting in that time to develop their apps for the vehicle environment. You need to set up APIs in a more scalable way so when companies such as Apple and Google are producing things that, they create APIs to help the developer when they are working and create something for the mobile ecosystem that automatically can change resolutions and change things to screen sizes that are appropriate for the vehicle side. And that could be a huge game changer for that part of the industry.

Chapter 5 - OTA for services for the software-defined vehicle

Role of OTA updates

Mark says that OTA updates present the ability to upgrade the software just as a user would with their phone. It's relatively new for vehicles. Automakers have applied OTA updates to system modules and such, but not to the capacity we're starting to see today, which is more consumer-facing. It starts with introducing new types of content, like playing your Netflix, Spotify, or Apple Music in your car. 

OTA & monetization strategy

OTA can also play a role in the monetization strategy of a company. New payment capabilities will also require OTA. OTA will also help with physical rollouts. OEMs are just producing features and often ties, throwing them out into the market. Half the time, from what Mark has seen in the past, these features have been broken or flawed in some way, so there is low to zero usage. 

OTA enables higher quality product experiences

With OTA, product engineering teams can set up the software and have it lying dormant, and when the feature is mature and ready, they can update it and switch it on in the vehicle. And when it's updated and working, you release it to the customer, and it's customer-facing, and the customer feels that the product has improved. On the other hand, you have a scenario where the OEM is no longer selling broken products, which is essential for consumers to understand that they're not buying something that's half-built. The liability perspective is also crucial so that consumers know that they're getting stuff that's fully working. 

OTA & security

Security is another big piece. Security and data consumption are changing quite a bit within the ecosystem. IoT is now highly familiar with utilities such as SIM data connectivity in the automotive sector. This type of connectivity requires a lot of data consumption, requires a secure connection, and also requires it so that no one else could tamper with your car. OTA is game-changing in this regard. It was game-changing for phones 15 years ago, and now it is doing the same in the vehicle ecosystem, and people are starting to take notice of the general benefits. And I think that maybe over the longer term, with the strategies of the other OEMs, they'll focus more on the execution to make it like a cleaner OTA, as we mentioned before, not having like half-finished products, but having dormant products, giving their development teams time to perfect them and then release.

Get in touch with Mark on LinkedIn.


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