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The Internet of Cars: Spawning New Business Models
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The Internet of Cars: Spawning New Business Models Presentation Transcript

  • 1. The Internet of Cars Spawning New Business Models Andreas Mai Director Product Management Smart Connected Vehicles October 2012Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 1
  • 2. Internet of Cars: Unlocking $1,400 in Benefits per Vehicle, per Year Internet of Cars Vehicle User Service Providers  Lower insurance  Traffic guidance, navigation,  Lower operation cost emergency services  Less time stuck in  “Google on wheels,” $ 550 traffic, more productivity PAYD insurance, $160 location-based services $300 Auto OEM/OES $420 Society  Lower service/warranty costs  Fewer crashes  New profit pools  Lower traffic/road/toll  Architectural savings operation costs Benefits per vehicle, per year  CO2 reductionSource: Cisco IBSG Automotive and Economics Practices, 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 2
  • 3. The Internet Takes to the Road… Running Transportation on Networked Information Transportation Services Delivered by Technology Safety and Operational Travel Revenue Security Efficiency Experience GenerationSource: Cisco IBSG Automotive, 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 3
  • 4. THE “Savior-App”: Strategic Asset for the Entire Car Insurance Value Chain Usage &  PAYD, PHYD, MHYD 10% - 30% Behavior Premiums  Vehicle and driver health monitoring  Safest-route Crash  ADAS + V2V + V2I 20% - 35% Prevention of Crashes  eCall/ ACN  Virtual Black Box Fast & Correct  Driver vitals to first responders 5% -15% Response  Investigation costs Savings  Fraud prevention and reduction (~80%) Claims & Cost  Stolen vehicle tracking / location 30% - 80% Containment Savings  Pay as you speed  Virtual violation detection and notification Connected Law  Automated payment 20% - 30% Enforcement Savings per connected vehicle and year: Savings $280 for insurance/ owner + $100 for societySource: OctoTelematics, Cisco IBSG Automotive 2010Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 4
  • 5. U.S. Roads and Highways Are Congested, Deficient, Lack Desirable Safety Features $270 B Needed 4.2 T 2030 +38% +41% 2010 25% 2.2 T 1990 Cost Budget: + 55% $100 B Vehicle-Miles Travelled (Trillions)Source: America’s Top Five Transportation Headaches, AASHTO, Victoria Transportation Policy Institute, 2009Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 5
  • 6. THE Future “Finance-Application”: Connecting for Smart Road Pricing Smart Road Pricing / Vehicle-Miles-Traveled Tax Time of Day Occupancy Congestion Speed Weight Road Type Fuel Economy Emissions CO2Source: Cisco IBSG Automotive 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 6
  • 7. New Battleground: From Building Cars to Selling Travel Time Well Spent Extended Design Connecting Marketing, and Supply Chain the Value Chain Advertising, CRM CONNECTED CONNECTED CONNECTED CONNECTED within the car to personal devices around the car to the cloud Travel Experience & Distribution and Location-Based Services Service NetworkSource: Cisco IBSG Automotive, 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 7
  • 8. Emergence of New Business Models Smart Parking Mobility On-Demand Source: Web Research, 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 8
  • 9. Off-Loading Data and Switching Is Key to Improve Experience and Contain Cost HOME ROAD OFFICE Home Security & Automation 3G/LTE WLAN Media DSRC City Mesh Hotspot Cable / DSL “Switching” Ethernet / LANSource: Cisco IBSG Automotive 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 10
  • 10. Service Providers Are Well Positioned to Enable Key Business Operations Service Providers / Network as the Platform Internet of Cars Service Provider TSP PAYD EV Clearing ITS And more… Internet of Data Service CRM/ CC PaymentCars Business Acquisition Aggregation Service Processing Operations Vehicle User Vehicle Road Source: Cisco IBSG Automotive 2011 Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 11
  • 11. Internet of Cars is a Scale Business Scale Industries & Applications … Regions EV Clearing ITS Insurance TSP Captive Entire Industry CustomersSource: Cisco Smart Connected Vehicles Team, 2012Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 12
  • 12. End-to-End Architecture is Essential – Especially for Scaling Globally Public Cloud Private (OEM) Cloud Enterprise Cloud Services Subscription-based Data Center/Virtual Enterprise Video, Voice, Services Servers Data VNO Operation Policy Enforcement, Flow-based Energy Service Providers Management, DPI (Smart Grid) Mobile SP 1 SP 1 Mobile Communications SP 1 Mobile SP 1 Service Mobile Providers, “Fog” Infrastructure Mobile WiFi Offload DSRC Roadside Consumer Network Electrical Charging Network Wi-Fi Hotspots, Infrastructure Home/Dealership Wi-Fi Hotspots, Charging Stations, Other 802.11u, 3G/4G 802.11p (V2I) Femtocells Services V2I/Upstream Communication (Wi-Fi, 3G/4G, 802.11p, etc.) Vehicle Software Client V2V Communication (802.11p)Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 13
  • 13. New OBU and RSU Business Models: Enabling Internet of Cars Services TSP PAYD EV Clearing ITS And more… IoC Services Network OBU RSU NewCo NewCo Subsidize OBU Upgrade Build & Operate For Right to Monetize WiFi + DSRC Network Data & CV Services to Monetize Off-Load and ITS & LBS ServicesSource: Cisco Smart Connected Vehicles Team, 2012Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 14
  • 14. The Connectivity Infrastructure Could be a Profitable Business at 1/10th ¢ / VMT U.S. Roadside Equipment (RSE) PPP Revenue Model [US$ Million] 1/10th CapEx P&L ~3,000,000,000,000 Initial Total 5 Year RSE 6,261 626 Investment (10 Depr.) = Repair/ Replacement 616 62 Operating Expenses 440 Subtotal RSE Cost 1,128 Hypothetical Margin 100% 1,128 Per Month Revenue Required to 2,256 Fund “RSE Business”Source: Vehicle-Infrastructure Integration (VII) Initiative, Benefit-Cost Analysis, Version 2.3, US-DOT, 2008Cisco IBSG Automotive, 2011Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 18
  • 15. Connecting 1/3 of All Vehicles = $116 Billion in U.S. and $345 Billion Globally Benefits of Connecting All Road Vehicles Per Year By Penetration [$ Billion] $282 $837 Internet of 32 96 Cars SPs United States Worldwide 64 191 Auto OEM 85 251 Society $117 $345 13 39 27 79 $35 35 $105 104 Vehicle User 101 299 42 123 10% 10% 33% 33% 80% 80% 10% 10% 33% 33% 80% 80%Source: Cisco IBSG Automotive and Economics Practices, 2011 Note: Core Regions NA, EU, AP, Excl. 22% RoWCisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 19
  • 16. Resolving the “Chicken & Egg” Dilemma 15-20% Savings = $6-8 B ~$110 B+ ~$60 B RSE ITS CV SPs Infra REITS Auto OEM PAYD 40 1.3T 20% 1/10th Society Policy OBU Vehicle Fuel Tax Share VMT User 20Bottom 33% of Cars 20% of RoadsLine $20-30B 550,000 Jobs $1.3T Source: Cisco IBSG Automotive 2012 BudgetCisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 20
  • 17. Making the Internet of Cars a Business No One CanWe Can… Together Do It Alone Automotive Government Service Provider Infrastructure Insurance ITS Source: Cisco Smart Connected Vehicle Team 2012Cisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 21
  • 18. More Food for Thought on the “Internet of Cars”  Executive Summary: A Business Case For Connecting Vehicles  Government: A Catalyst to Unlock Societal Benefits of Transportation  Carriers: Service Providers at a Crossroads  Automotive: From Building Cars to Selling Travel Time Well-Spent  Insurance: The Business of Preventing Crashes Andreas Mai: andmai@cisco.comCisco IBSG © 2011 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 23