The document discusses the current state and future trends of the automobile industry. It analyzes major players like Toyota, GM, Ford, and newcomers in the space like Tesla. Emerging technologies around connectivity, autonomous driving, and electric vehicles are shifting the industry. The document recommends that incumbents develop their own operating systems and acquire software talent to control the software stack, while insurgents should leverage existing internet-based models and connectivity to transfer platforms to cars. It remains unclear whether incumbents or insurgents like Google and Apple will become the ultimate winners in this changing industry.

1. Technology x
Automobile industry
EDGE (FTMBA’14)
Alan, Sun A, Taecko, Yoshi
5/6/2014
Who is going to be a next generation
winner in automotive industry?
1

2. Automobile Industry is
a History of
Technology
2

3. 3

4. 4
4

5. 5

6. 6

7. 7

8. 8

9. Market Overview of
Current Automobile
Industry
9

10. Industry at a Glance in the US
IBIS World(January 2014) 10

11. Industry at a Glance
Automotive profits now exceed precrisis levels,
but the sources have changed.
(The road to 2020 and beyond: McKinsey&Co 2013) 11

12. Industry at a Glance in the US
-Market Share
IBISWorld Industry Report 33611a (January 2014)
Major Players
Toyota
GM
Ford
Hyundai-
Kia
Honda
Other 18.9%
18.6%
14.0%
8.1%
7.3%
33.1%
Market share (Revenue)
12

13. Industry at a Glance in the US
-Products Segmentation
IBISWorld Industry Report 33611a (January 2014)
• Fuel efficiency has become a top design concern for
manufacturers, with more car models featuring hybrid-electric
drivetrains, smaller forced-induction engines and more advanced
transmissions delivering fuel economy gains.
13

14. Industry at a Glance in the US
- Five Forces Analysis
Fierce Competition
with low margin
Usually buy one car at
one time
Entirely new players are coming!!!
Powerful auto union
Weak small suppliers
High upfront capital
requirement
14

15. Current Industry EcoSystem
A shift to new TECHNOLOGY vehicle will drive growth
15

16. What’s Coming
NOW?
16

17. What was the future car? (in 1900’s)
“Everyone will own an
Auto something or
other”
- The Boston Globe imagines the year 2000 -
17

18. NOW: >80% US people own cars!
Vehicle Ownership rate in the US (per 1,000)
- Davis et. Al. (2011) -
0
87
246
410
711
800
844
828
0
200
400
600
800
1000
1900 1920 1940 1960 1980 2000
18

19. What was the future car? (in 1950’s)
“Electric vehicles are right around corner”
- Chicago Tribune’s Sunday “Closer Than We Think”
19

20. NOW: EV is here!
20

21. What was the future car? (in 1970’s)
“They shouldn’t allow humans to drive”
21

22. NOW: Google is on!
22

23. What’s happening now in
Automobile Industry
Catalysts for
Change
23

24. Car Evolution (Current to Future)
Telematics
Infotainment
Driverless
Connected
Automatic
Safety
Navigation
Smart control
Eco
Cloud
Communication
CarUser
Single service Convergence
• Automotive is getting smarter
(More user-oriented and More converged)
24

25. Catalysts for Smart Cars
Regulation Technology Needs
• Safety
• Protect people
• Standard
• Energy efficiency
• Environment
• Carbon emission
• Electronics
• Eco technology
• Telematics
• Contents
• Smart phone
• Mobile
• Connectivity
• Technology safety
• Convenience
• Second room
• Emotional privacy
• Efficient mobility
Government Market
Companies
Smart Car
25

26. Smart Car Market Trend(Hyundai security report 2014)
0
500
1000
1500
2000
2500
3000
2012 2013 2014 2015 2016 2017
Global Smart car market ($B)
0
500
1000
1500
2000
2500
2008 2009 2010 2011 2012 2013 2014 2015
Automotive with IT market ($B)
0
10
20
30
40
50
60
1960 1970 1980 1990 2000 2010 2020 2030
Electric Component of a Car (%)
0
50
100
150
200
250
2011 2012 2013 2014 2015 2016
# of connected Cars (million)
26

27. Internet Connected Cars are on the
rise (The road to 2020 and beyond: McKinsey&Co 2013)
27

28. For example…. Tesla!
• Tesla is a smart EV
• 17” touch screen controls
• Model S can be connected and controlled with
iPhone, iPad, iTouch through Tesla App
• No emission, Advanced electric technology
• More seating, More technology, More storage
28

29. Insurgents
Emerging New Players
29

30. #1 Google
• Google formed Android based Open Automotive Alliance
(OAA) with Audi, GM, Honda, and Hyundai (Kia)
• Announced to bringing the Android platform to cars
starting in 2014
30

31. Google SWOT
² Experiences in dealing with multiple hardware
manufacturers (Android Alliance with majors)
² Driverless car technology lends an advantage
² WAZE (crowd-based)
² Google Now as the brain
u No manufacturing capabilities
(pure software company)
u No control over any car brand
ü A huge potential market
ü No standard service yet
ü Emerging driverless cars era q Competition from Apple/MS
q Car manufacturers rise like Samsung, into
developing their own systems
Strength
Weakness
Opportunity
Threat
31

32. #2 Microsoft
•Current partnership
–Kia UVO system, Lexus enform (Bing), Ford Sync system, Fiat
Blue&Me in-car system
•Windows in the car Concept
–Mirrorlink, to project the phone onto the central display, very much
like CarPlay
32

33. Microsoft SWOT
² Cortana, the Microsoft version of Siri
² Experiences in developing central systems
for cars
u Windows mobile is less recognized
as a mobile platform
ü A huge potential market
ü No standard service yet
q Competition from Google/Apple, and
incumbents
q Ford is leaving from MS
Strength
Weakness
Opportunity
Threat
33

34. #3 Apple
• CarPlay (iOS in the car):
Smarter and safe way to use iPhone in your Car
34

35. Apple’s Partners
35

36. Apple SWOT
² Siri technology for voice control
² Strong brand recognition.
Apple provides ubiquitous Apple
experiences on its mobile devices
u No iPhone, No CarPlay
u A second music player, second
navigation system, second phone
app, and second voice control
ü A huge potential market
ü No standard service yet
q Intensive competition in smartphone market
q Decreasing iPhone’s market share
Strength
Weakness
Opportunity
Threat
36

37. #4 Electronic companies
(Samsung, LG)
• Provide electronic components to car makers
• Develop smart car technologies
• They are waiting for right time to launch their technology
• They may dominate Smart Car market….
37

38. Electronics companies SWOT
² Hardware technology in automotive
electronics components
² Manufacturing
u No brand image in automotive and
software (OS)
u No popular software/application
ü A huge potential market
ü No standard service yet
q Intensive competition in electronic market
q Too big organization
Strength
Weakness
Opportunity
Threat
38

39. Industry Shift
What is going to
happen in the
Future?
39

40. 40

41. 41

42. 42

43. ?
43

44. What Incumbents/Insurgents
should do?
Conclusion &
Recommendations
44

45. Conclusion: While Incumbents competing at
hardware layer, Insurgents may appear with
innovative approach (Cloud/Crowd services)
Cloud
OS
Hardware
Incumbents
Insurgents
45

46. Suggestions for Incumbents
● OS layer: Should create own OS
o Merge edgy software companies
o Create Autodrive software and standardize it
o Acquire talented software engineers and technology
o Create software/application platform (ecosystem)
faster than competitors
● because…. WINNER TAKES ALL!!
● Cloud/application layer
o Create edgy software community (platform) online
o Gather cloud/crowd based edgy applications
o Differentiate from other competitors by apps
…to be continued to part #2 46

47. Suggestions for Insurgents
● Leverage Internet-based business models
o Transfer OS/Apps into the automobile industry
● Connect the same platform with Cars
● Leverage existing customer base
o Utilize network effects
● Customers are the best sales reps
● Wider Connectivity
o Network connectivity is important issue
● AT&T announced car 4G service $80/m = insane!!
o Create own network resource like Drone, Satellite
…to be continued to part #2 47

48. Who’s going to be a winner?
Incumbent?
● Toyota, GM, Ford, BMW, Audi
or Insurgent?
● Google, Apple, Amazon
● Tesla?
48

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