Technavio Reports Increased Demand for Infotainment Services Will Drive the Connected Car M2M Connections and Services Market in the US Until 2020

July 13, 2016  by  

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Technavio analysts forecast the connected car M2M connections and services market in the US to grow at a CAGR of 32.23% and 28.62% respectively, during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the connected car M2M connections and services market in the US for 2016-2020. To calculate the market size, the report considers the following:

  • Service revenue generated from OEMs and aftermarket equipment; for instance, the revenue includes the per year service revenue of Audi connect, not the device or module cost installed in the vehicle
  • Revenue from infotainment, navigation, and telematics services; other services include vehicle management, on-drive management, safety and security, and driver assistance
  • Data analytic services and automotive apps

Technavio ICT analysts highlight the following four factors that are contributing to the growth of the connected car M2M connections and services market in the US:

  • Increased demand for infotainment services
  • Awareness of safety and security features
  • Growth in embedded telematics solutions
  • Demand for analytics in automotive industry

Increased demand for infotainment services

According to Rakesh Kumar Panda, a lead analyst at Technavio for research on M2M and connected devices, “Infotainment technology is one of the fastest growing technologies in the automobile industry. The technology growth will sustain as the smartphone technology is flourishing. Consumers value in-car technology over the car’s driving performance.”

Infotainment units in vehicles offer audio and visual entertainment, connectivity, and navigation. Mostly these serve the driver’s and passengers’ entertainment needs. Infotainment includes dedicated streaming of multimedia content and provides access to social networks. It also includes productivity services such as cross-linking the vehicle with a smart home (home integration). This allows the control of several household functions from the car such as regulating the heating or testing of security cameras and window sensors and access to mobile office (such as access to e-mails and conferences).

Awareness of safety and security features

Safety and security feature is the most demanded feature for manufacturers of the automotive industry. The safety and security features are highly improved in the connected car segment with the detection of critical situations before it happens and warning through appropriate alerts and notifications. The features include the ability to contact emergency services, the capability to track stolen vehicles, and vehicle diagnostics and directions.

“In due course of time, safety and security from hackers gaining access to cloud-connected vehicles is likely to emerge as a major concern among the drivers,” says Rakesh.

Growth in embedded telematics solutions

The integrated telematics penetration is increasing YoY in the US. This penetration is growing due to the growing demand for smartphones and the regulations for the safety aspects. In the age of exponential technological advancements, basic delivery of safety features in vehicles does not acquire any competitive edge.

A premium level of telematics solutions that include navigation, infotainment, and vehicle-to-vehicle communication is needed to satisfy the growing customer requirements.

The premium services increase the telematics retention and also raises ARPU. Next decade telematics industry will be driven by the two forces, wireless connectivity demand by the car occupants and the need of the auto manufacturers to connect wirelessly to the digital car services.

Demand for analytics in automotive industry

Many automobile, technology, and big data analytics companies are entering into partnerships to understand vehicle performance, analyze automotive businesses, and connect with their customers to improve brand loyalty and efficiency. From a safety and security point of view, it is easy for automobile manufacturers to monitor their vehicles, as these are also being monitored in real time by technology providers and big data companies.

Data analytics software is used to analyze vehicle and driver performance. Any fault in the vehicles can be easily detected and, in the case of emergency, consumers can be safely rescued.

However, IBM has built solutions that are based on some of the industry use cases such as connected cars, actionable customer insight, predictive asset optimization, and data warehouse optimization. The automotive firms can use big data and analytics to cater to some of the business imperatives such as optimizing the global value chain, transforming retail, and capitalizing on services opportunities for connected cars).

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