CONNECTED CAR - PARTNERING FOR VALUE
A Cisco Perspective
Marc Girardot - IBSG
Director EMEA
Automotive Lead
Geneva, March 1rst , 2005
© 2005 Cisco Systems, Inc. All rights reserved.
1 -1
IBSG
IT’S ALL ABOUT ADOPTION !
Internet
Users
Internet
Adoption
Airbag Adoption
800
1000
1750
700
900
1500
1250
1000
750
500
600
500
400
300
200
250
100
0
0
1991
Source: ITU
1995
1999
2003
• GSM standard
• Nokia, Ericsson
• Mobility
Millions of Airbags
2000
Millions of users
Millions of users
Mobile Phone Adoption
800
700
600
500
400
300
200
100
0
1990 1997 2000 2003
Source: Internetworldstats
1990 1993 1996 1999 2002
Source: Autoliv
• IP & Ethernet
• Netscape, Microsoft
• Access Information
• NHTSA agreement (87)
• Autoliv, TRW, Takata
• Saves lives
Telematics Adoption
800
Millions of vehicles
700
?
600
500
400
300
200
100
0
© 2005 Cisco Systems, Inc. All rights reserved.
2005
2010
2015
2020
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 2
ADOPTION SUCCESS COMES FROM CLEAR BENEFITS,
STANDARD TECHNOLOGIES & ECOSYSTEM READINESS
CONNECTED CAR
SUCCESS FACTORS
WHAT SUCCESS
WOULD LOOK LIKE
VALUE
Customer
Buy-in
Clear
Benefits
Connected Car
Ideal Adoption Curve
Costs
Efficient
800
Infrastructure
Ready
Standardized
KEY
SUCCESS
FACTORS
OEM
Buy-in
Scalable
Aligned
Ecosystem
Millions of vehicles
700
600
500
400
300
200
100
Secure
0
Interoperable
ALIGNED
ECOSYSTEM
2005
2010
2015
2020
TECHNOLOGY
Source: Cisco IBSG analysis
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 3
WHERE IS THE CAPTURABLE VALUE?
© 2005 Cisco Systems, Inc. All rights reserved.
IBSG - 4
ROAD INJURIES AND FATALITIES ARE UNBEARABLE
BOTH IN HUMAN AND FINANCIAL TERMS
GLOBAL
INJURY BURDEN
OECD ROAD
MORTALITY
GLOBAL ROAD
MORTALITY
Fatality rates
per 100,000 inhabitants
Disability-adjusted
Life Years Lost in 2002
Distribution of Global Injury
Mortality by Cause
2002
12
Global
19
38+ Million
DALYs
lost globally
Millions
10
USA
8
Japan
6
GB
10,0
4
8,9
15,2
8,2
1,2M
5,9
EU
4,3
3,6
Australia
4,6
9,5
0
0
Africa
Americas
SouthEast Asia
Europe
Middle
East
Road
Traffic
22,8%
11
7,1
2
Others
77,2%
Western
Pacific
5
10
In OECD countries,
cost of these fatalities
is estimated at
15
$450 Billion
20
New
New technologies
technologies can
can
reduce
40%
reduce fatalities
fatalities by
by 40%
OECD
OECD estimates
estimates
Source: WHO 2004, Global Burden Disease Project, OECD
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 5
AND ROAD CONGESTION COSTS TO THE COMMUNITY
AND THE ENVIRONMENT ARE ENORMOUS
CONGESTION
FACTS
• Average urban motorist in the US spends 46
hours per year in traffic and in EU
countries around 66 hours per year (30% of
their commute time);
CONGESTION
FINANCIAL COSTS
in Billion of Dollars
180
160
• Congestion results in 11+ billion-hours of
delay annually in the US and Japan
140
• Fuel consumption during congestions
accounts for 1% of GDP; the average urban
motorist produces 4.9 tons of carbon dioxide
a year
100
• Time wasted in traffic in OECD countries
accounts for 2% of total GDP;
• The impact of traffic congestion on the Tokyo
economy is estimated at $50Bn;
150
$810 Billion
160
125
waste in OECD
alone
120
80
60
38
40
20
0
USA
EU
Japan
South
Korea
Source: OECD, Texas Transportation Institute, US Dept. of transportation, Cisco analysis, TokyoMK, ePrinciples 2002
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 6
HOWEVER DIRECT BENEFITS/SAVINGS TO THE AUTO
SECTOR – REBATES & WARRANTY- ARE MORE LIMITED
GROWING AUTO
DIVERSITY
GROWING
INSTALLED BASE
150
100
50
245
204
177
91
72
54
45
60
59
111
75
59
0
2000
2002
2004
800
880
700
870
600
500
400
$15 Billion
300
yearly warranty costs
-
200
Variants
New based existing platforms
1980
Satisfaction Score
200
+20%
+20%
Millions of vehicles
# of models
250
Sales Satisfaction
Study 2004
Motor Vehicle
Installed Base
New Auto
Product Offerings
+15%
+15%
GENERATION Y
HARDER TO SATISFY
860
850
840
830
820
$60 Billion
810
in rebates
800
Generation
Generation YY customers
customers
will
will probably
probably require
require
connectivity
connectivity
Under
25
Years
2004
New Platforms
35 - 39
50 - 54
65 or
older
Source: Anthony Downs, McKinsey, Deustche Bank, Detroit News, Cisco analysis, JD Power 2004 Survey
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 7
AND DESPITE INTEREST FOR ENHANCED CAR
COMMUNICATION ENABLED FEATURES, THERE’S
LIMITED WILLINGNESS TO PAY FROM END-USERS
CONSUMER INTEREST
18-24 years old interest In
digital media/games on the road
50%
Americans who want
navigation systems
66%
Surveyed individuals reporting desired
infotainment functions available on car
25%
Blue tooth availability in
North America (% of OEMs)
17%
10%
0%
Cars available with
Rear Seat Entertainment
25%
20%
40%
60%
UNWILLINGNESS TO PAY
• Value-added services are limited to the
developed world;
• Consumers bundle new technologies
to overall price of the car;
• Relatively slow take-up of in-car GPS
shows reluctance to pay;
• Mobile devices such iPods and mobile
DVD players extend home
entertainment at limited cost;
• Probably maximum monthly service
subscription-fee can’t be above $10/m;
80%
Percentage Respondents
$10 Bn
in added-value services,
$90 Bn
Source: Telematics Research Group (TRG), PwC Global entertainment industry report, Cisco analysis
© 2005 Cisco Systems, Inc. All rights reserved.
games, video entertainment &
sports
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 8
TRAFFIC & SAFETY SERVICES SHOULD BE THE
DRIVING FORCE OF CONNECTED CAR INITITIATIVES
CONNECTED CAR
VALUE* LANDSCAPE
10
Consumer
VA Services
$10Bn
Connectivity Impact
+
Connected
Real-time
Traffic
$810Bn
FOCUS
Connected
Safety
$ 450 Bn
5
Loyalty
Solutions
$60Bn
-
FOLLOWS
0
0
Entertainment
$90Bn
-
Source: Cisco IBSG analysis
© 2005 Cisco Systems, Inc. All rights reserved.
Warranty
Connected
Solutions
$15Bn
Ease of5Capture
+
10
Note: * Number equals total waste or growth opportunity
not all can be captured by Connected Car
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 9
INTERDEPENDENCIES OR
THE NEED TO PARTNER
© 2005 Cisco Systems, Inc. All rights reserved.
IBSG - 10
CONNECTED CAR HAS SOME SPECIFIC ROADBLOCKS
TIED TO INTERDEPENDENCIES
INNOVATION
RISK FRAMEWORK
Strategy
Strategy
Initial
Initial Market
Market
Target
Target
Integration
Integration
Risk
Risk
InterInterdependence
dependence
Risk
Risk
Internal
Internal
Risk
Risk
Expectations
Expectations
for
for Success
Success
Outcomes
Outcomes
SPECIFICS ABOUT
TELEMATICS
• Governments and emergency response ecosystem need to be integrated;
• Emergency device suppliers coordinated with
communications platform;
• Platform need partly to be crash-resistant and fully
mobility compliant (hand-over…);
• Frequencies used need to be standardized
internationally and made available in major
countries;
• Communications infrastructure need to be multichannel, pervasive on a territory and 100% reliable
and secure;
• Car software must be 110% secure from outside or
inside attacks, disturbance or false-manipulations;
• Car is an extension of the office or the home, thus all
this will need be interoperable over time;
• Dealers will need to be trained to maintain and
upgrade these platforms,
• Devices have different lifecycles than the car and
thus need to be car-agnostic as well as robust and
evolutive;
Source: Ron Adler, INSEAD
of success
success=
Total
Total P
Pof
=
π (P(P
ii
of
of success
successi)
i)
© 2005 Cisco Systems, Inc. All rights reserved.
The
The more
more interdependencies,
interdependencies, the
the higher
higher
the
chances
of
failure
!
the chances of failure !
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 11
AREAS REQUIRE STANDARDIZATION AND FOCUSED
COORDINATION FROM A LIMITED SET OF PARTNERS
INTERACTION &
INTERDEPENDENCY RISK AREAS
SOLVING TELEMATICS
BOTTLENECKS
Car-to-car
Mesh Network
• Car interaction with the Internet will require
scalable and evolutive interface/security with
car BUS CAN;
Real-time
Traffic
Connected
Safety
• Car-2-Car and Car-2-Infra-2-Car
communications require standards in protocols
as well as in technologies for road
infrastructure;
Authorities
(Gov, road…)
& Service providers
Communications
& Security
Technology
Leaders
OEMs &
Tier1 Suppliers
Internet
Source: IBSG analysis
Car Network
• So-called seamless communications to and from
the car will require to build and mutualize
wireless infrastructures (notably in the
countryside) for the car as well as a clearinghouse process/ organization to enable accessroaming across different service providers and
technologies.
Entertainment or
Vertical Solutions
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 12
PARTNERING WITH CISCO
© 2005 Cisco Systems, Inc. All rights reserved.
IBSG - 13
THE CONNECTED CAR BUILDS WELL INTO CISCO’S
VISION ON A NETWORK OF NETWORKS
A NETWORK OF NETWORKS
CISCO RELEVANCE
Homeland Security
Leader
Car-to-car
Mesh Network
Mobile
Metro
Networks
Carrier
Class
Home
Networking
#1
WiFi
Mobile
IPV6
WiFi
Security
Routing
Entreprise
Mobile
IPV6
Mobile
Access
Router
VPN
Internet
#1
Car Network
Laguna
IPV6
The car network
becomes the
natural extension
of Home NW and
Entreprise NW
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 14
CISCO’S MOBILE IP AND TECHNOLOGY MAKE THE CAR
ARCHITECTURE APPLICATION AND ACCESS AGNOSTIC
CISCO’S IP V6 TECHNOLOGY
ENABLING CONNECTED CAR
ADVANTAGES
• Avoid “reinventing the wheel” in networking
technology, wireless communications and
security;
• Scale Cisco innovation resources ($3,7Bn) in
networking technologies, wireless and security;
Cisco 3200 Series
Wireless & Mobile Routers
• Leverage Cisco’s unique experience in traffic
prioritization and quality of service;
• Leverage existing and future wireless
infrastructure (Homeland security infrastructure
in the US) and roam over different channels of
communication;
Cisco 3200
Mobile Router
for Vehicles
• Extend usage of existing and future IP
applications and devices from home (Linksys by
Cisco) or the office (Cisco) to the car;
Cisco 3200
Wireless Router for
Infrastructure
• Evolution of applications or devices doesn’t
depend on upgrade of platform;
Source: IBSG analysis
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 15
CISCO HAS RECENTLY ANNOUNCED AN
ORGANIZATION DEDICATED TO PUBLIC SAFETY
WHICH INCLUDES MOBILE ACCESS ROUTING
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 16
CONCLUSION
© 2005 Cisco Systems, Inc. All rights reserved.
IBSG - 17
CONCLUSION
• The industry has failed so far;
• Greater standardization is the right direction…
• …but there needs to be much much more focus on
value;
• Government, traffic authorities and environmental
agencies are also critical stakeholders;
• We all need to partner intelligently coming with our
respective forces…
• …and Cisco invites you to a balanced partnership
to a clear vision.
© 2005 Cisco Systems, Inc. All rights reserved.
Marc Girardot – Automotive Lead – mgirardo@cisco.com
IBSG - 18