From a traditional transportation industry OEM perspective, today’s discussions of Smart Systems focus almost exclusively on communications — the “pipe” — and very little on the data and information value. Focusing on the communication element alone as ‘first-order’ business value amounts to grabbing the wrong end of the technology stick. Communications steals the limelight and potentially eclipses the real revolution: utilizing new networking technologies and embedded intelligence to liberate information from sensors and leverage collective awareness.

Since the advent of transportation connectivity, there have been three generations of technology and architecture: the first cycle focused on safety, fleet management and relatively simple applications; the second cycle largely comprised of infotainment and entertainment innovations; the third is where we appear to be today – with a rapidly growing community of innovators enabling “hyper aware” vehicles, trains and planes that can sense their surroundings.

What is important about the next generation of smart automotive and transportation systems is the combined impact of these legacy cycles of innovation. While there is standalone value in each cycle of innovation – embedded software, communications and information services – it is the combination of these innovations that will inform significant disruption moving forward.

Data is Enabling a New Generation of Application Services

In consumer and commercial transportation applications, “always on” wireless connectivity to both people and vehicles is essential. Transportation market players are investing in networking and data applications to extend new services to customers in a wide range of applications such as providing real-time feedback to users on driving performance, user-based insurance services, preemptively predicting vehicle and route problems and systems to support maintenance and vehicle health.

With the demand for greater connectivity set to soar, the emergence of 5G-enabled connected cars and satellite-enabled planes and trains, will enable powerful new capabilities but consumers will still be looking for better integration among mobile and transport devices, and improved user experiences and interfaces.

From a data perspective, we have seen a significant shift in the last three years as technology innovators enter and disrupt the automotive and transportation markets.  Data has become the currency and value driver of investments in smart transportation technology and services. Massive amounts of data will require significant levels of processing in all types of vehicles–not just in $100k+ luxury cars. It is estimated that a connected vehicle will send 25 gigabytes of data to the cloud every hour ̶ this will require high-speed, yet cost effective network capabilities.

Transportation Data Ecosystems

Data-driven applications will become the core value creation mechanism within the transportation arena in part because it is a market that shares many similar characteristics to the consumer and mobile Internet. The convergence of collaborative systems, vehicle communications and data-driven applications is enabling new and novel relationships between and among technology suppliers, service providers, OEMs and users who are all becoming participants in shared data ecosystems and new value delivery networks.

This will bring an end to the era of “command-and-control” alliance and partnering strategies with a hub-and-spoke partner set-up. Collaborative communities and new value networks will now be self-organized by diverse players; what we like to characterize as “strange bedfellows.”

The depth of this shift has begun to suggest itself, but it is by no means accomplished. It’s a shift from knowing “what happened” to knowing “what is happening”—all the time—and then automatically alerting and controlling systems with that knowledge.

TRANSPORTATION INTEGRATION “NODES”

Users will require that connected product device ecosystems are not siloed. For example, vehicles leveraging geo-fencing technologies can communicate with the driver’s smart home to turn on the lights when the vehicle approaches or open the garage once a vehicle arrives at home. In the future, consumer purchasing decisions will be driven by seamless integrations of hyper-aware vehicles and their surrounding environments. Manufacturers need to anticipate the types of integrations across adjacent markets like retail and the smart home.

Consumers now demand transportation infotainment technology and connectivity as standard, and they are also beginning to recognize the value of integration into larger systems; therefore, technology suppliers and OEMs need to develop technologies with an eye towards use cases that integrate vehicles with smart parking systems, virtual applications like Open Table, and other adjacent offerings that can enhance the user’s experience.

Data-Driven Ecosystems Enable
Connected & Autonomous Vehicles

Across the transportation landscape, autonomous vehicles in the passenger and commercial car and truck context provide the largest opportunity to catalyze the development of connected transportation and are the inevitable next phase of the connected car.

To bring autonomous cars to market beyond just the simple point solutions of making cars that drive themselves, market participants will need to engineer their products to embrace a new and much more valuable data-driven portion of the automotive value chain. The data that cars can generate opens up huge potential revenue streams for both the carmakers and autonomous tech suppliers, as well as third-party developers that may sell data back to the cars to increase the level of productivity and cooperation across the entire transportation ecosystem.

For truly new ways of deriving revenue, it comes down to data. No longer are simple hardware and leasing sales the way to prosper in the connected and autonomous vehicle era. With autonomous vehicles, the hardware will be in place for automakers, tech companies, and a host of new entrants to drive new complex applications within and between ecosystems  ̶  collaborating with homes, other cars, business services like distribution and logistics systems, and numerous others.

Connected Cars

People in cars continuously interact with both the vehicle and the surrounding environment including virtual points, such as future restaurant reservations. This is really the collision of two entirely different computing and data interaction legacies and technology architectures.

For mobile device manufacturers it’s about the interoperability of vehicle systems with smart phones, while network carriers are focused on providing a value-added services layer on top of always-on connectivity.  For technology innovators, it’s about disrupting existing business models by providing new data application services that are enabled by embedded computing and connectivity.

The automotive manufacturers are faced with an opportunity for creation of value or massive destruction of value as the car becomes commoditized and competition for on-going service revenues intensifies. All of the stakeholders have an opportunity to act as the integration point, but it’s those who partner with “strange bedfellows” to create a shared data ecosystem who will succeed in the next chapter of the connected vehicle market.

Smart Fleets

For commercial fleets, always on connectivity enables visibility into driver performance, theft prevention, fuel management, electronic data logging and other services that can decrease costs for enterprises who own and operate fleets.

A broad range of connectivity and network services providers are announcing diverse partnerships to provide more seamless always-on connectivity for fleets, even if the vehicle is in a remote location. Combinations of network services (e.g. cellular, satellite, etc.) will help fleet managers monitor vehicle location and performance.

The Growth of the EV Market

After years of denial and resistance, the realities of climate change have broken through into the consciousness of citizens worldwide. Across the globe, consumers are expressing increased desire for sustainability, and governments are offering incentives to satisfy that desire. One clear result has been the nearly overnight acceptance of the need to transition from the internal combustion engine (ICE) to non-polluting alternatives like electric vehicles (EVs). EV demand promises a better, more interactive car that eliminates the need for conventional gas stations.

While EVs cost more than vehicles with ICEs, they are projected to cost less than ICEs by 2025. EVs currently have a smaller range than ICEs, on average requiring twice as many fuel stops as ICE vehicles, but this too is expected to improve noticeably even in the short term. Tesla, for example, has projected a range increase of nearly one-third, achieved by altering cell form factor and cell vehicle integration (i.e., making the battery a structural element of the car), without switching to a new battery chemistry.

However, improvements to EVs themselves are obviously only half the story. The vehicles themselves need to be charged at a cost roughly on par with present-day gasoline/diesel, and without requiring the EV to be tethered to a wire all day.

Aviation Goes Digital

While some parts of the air travel industry—bookings and surveillance and security, for example—have been closer to the forefront of innovation, most of the industry remains woefully behind the digital curve. Today, most discussions of next-generation inflight experience still focus almost exclusively on entertainment or in-seat systems. Similar discussions about airports might highlight shopping malls more than true experience. But the digital transformation of the air travel experience will go much deeper than media and entertainment tied to seatback systems or airport shopping.

Steep demand for travel—driven by a growing middle class in emerging markets, as well as the increasing importance of designing and consuming travel experiences—means that more digital innovation will be vital if the expectations of tomorrow’s consumers, customers and stakeholders are to be met.

If these millennial-driven demands are one side of the coin, the other side consists of diverse, data-driven services as well as new in-cabin enhancements such as more sophisticated cabin pressurization, air purification, wellness sensors, anti-bacterial  seats,  personalized lighting, and windows with variable translucence. Consumers will be the catalysts, but not the only beneficiaries of all these new services, regardless of how many “hidden” providers are necessary to bring about that result.

Supply Chain and Connected Maritime

A smooth, operational supply chain is something many in the modern world take for granted in the era of next-day delivery. Ninety percent of world trade flows through maritime transport, making it a lynchpin in the global supply chain. In fact, commercial cargo and ports will represent nearly 91% of the $45.5 billion maritime industry by 2026.

In its perfect state, consistent satellite coverage keeps the supply chain operating efficiently. Constant connectivity allows downstream retailers to correctly predict consumer preferences and order their goods, while upstream manufactures produce enough goods to meet demand and midstream suppliers consistently deliver those goods to their destinations.

The importance of connectivity goes beyond optimizing the supply chain. Vessels built with significant onboard technology are considered “Digital Vessels” and are quickly displacing current seafaring vessels due to their greater efficiency, productivity, and safety. These digital vessels require reliable connectivity to offer maritime passengers, captains and crew peace of mind knowing that they can connect with friends and families onshore, as well as allowing vessels to maintain critical operations, such as navigation systems and weather monitoring, while having the ability to receive support from onshore personnel and remain visible for tracking.

For commercial maritime, connected vessels are able to track their onshore deliveries in real time, conduct remote diagnostics, assess the latest weather data to calculate the best route, optimize fuel consumption, and improve product traceability. Connected vessels also improve crew member health, safety, and happiness by enabling them to remain connected with friends, family, and social applications, while ensuring the application of safety regulatory measures and a reliable connection for emergency communications. In an industry known for above average turnover rates –with 24% of fishers leaving a job after one year and 59% in four years or less, broadband connectivity could be used to support crew welfare and increase employee retention.

For leisure maritime, yachts are increasingly being equipped with sensors and Internet of Things (IoT) systems to monitor engines, depths, shoreline, reefs and other ocean features. Satellite connectivity also allows for entertainment and use of business applications while at sea. These systems require consistent connectivity to stream data for real-time analysis.

Connected and Autonomous Trains

Rail also plays a critical role in the global supply chain, transporting large volumes of goods over long distances. In 2020, the U.S. Department of Transportation found that 28 percent of goods were transported via rail in the United States, with 52 percent of that being critical bulk commodities like chemicals, agriculture and energy products.

Given the critical role rail plays in our supply chain, optimizing rail operations and improving safety through connected technologies has become increasingly important. Rail operators are working to enable real-time monitoring to ensure train health, enable predictive maintenance and reduce downtime. Other efforts are being made to improve rail communications and enable an autonomous rail network.

Freight rail represents a $62 billion market, expected to grow to $140 billion by 2032. With nearly 140,000 miles of rail in the U.S., much of which is in remote areas, satellite communications are required to ensure real-time connected services and always-on connectivity. Traditional communication networks such as fiber, cellular and microwave can be unreliable or unavailable, especially in remote or rural areas. By using satellite connectivity, rail operators can overcome these limitations and maintain connectivity even when constantly moving in and out of areas with limited network coverage.

The New Transportation Market Requires OEMs to be Data and Innovation Orchestrators

Digital and Smart Systems innovations are creating the potential for visionary players in transportation ecosystems to step into the critical role of “innovation orchestrator.”  In this role they will be conductors of the entire ecosystem, enabling innovative passenger journeys that are accompanied by a whole new realm of lucrative services. Top players in the emerging transportation data ecosystem are in an ideal position to enable new innovations, but they and others in the transportation arena must learn to be responsive to new trends, technologies and evolving consumer preferences.

The ongoing transformation of the transportation venue is being led by seemingly unlikely partnerships between automotive, OEM and tech industry players—creating several discontinuities across the smart vehicle and transportation systems with perhaps new data orchestration, management and brokering innovations being the biggest disrupter.

Smart Transportation Requires Smart Ecosystems

We have entered a new era of “strange bedfellows” in the smart transportation arena. We are rapidly evolving beyond “hub and spoke” connectivity and simple narrow function applications to a new cycle of continuous innovation from very diverse players.

Though their business models have begun to intermingle today, all of the major categories of players in the transportation arena have historically operated within well-established business models that reflected the distinctive competencies that each group believed to be at its core. The advent of Smart Systems, particularly the emergence of device and usage data, is causing a blurring between these legacy business models, forcing all the major players in the transportation world to re-think their strategies and re-consider their relationships across the ecosystem.

Our analysis points to many significant challenges in realizing the value of such a community of innovators, including:

• Adopting non-traditional business models that are intended to provide new innovative services and solutions
• De-coupling of innovations between these increasingly interconnected player types due to misalignment between the OEM’s development lifecycle and the technology lifecycle
• Anticipating new smarter systems and service innovation modes that are not widely adopted today because of the fragmented landscape

Although the automotive and transportation sectors were relatively stable over the past 20 years, there is no-doubt that established players in this market are facing a potentially massive disruption in the next 3-5 years. In order to create value, companies must create open, collaborative partner ecosystems to drive new smart services for their customers and users. It’s certainly an exciting time for the transportation venue, as Smart System integration and automation will rapidly transform this space in the coming years.◆