"Connected Cars & Future of the Mobile Ecosystem"
DigiWorld Economic Journal n°105
Interview with Thierry VIADIEU
Program Director for Connected Car & Autonomous Driving, RENAULT
Conducted by Yves GASSOT, CEO, IDATE DigiWorld Institute
DW Economic Journal: Could you describe the scope of your responsibilities at Renault?
Thierry VIADIEU: As far as connected cars are concerned, the field of endeavour for the Product Planning and Programs department covers on-board systems (multimedia systems), offboard systems (servers) and connected services. For autonomous vehicles, it covers autonomy and the components that enable that autonomy (sensors, radars, cameras, LIDAR, etc.).
Our task is to ensure that what we want to deliver to our customers (as set out by the Product Engineering and Sales and Marketing departments) is properly expressed, then taken into account by those in charge of development. We give them the budget they need, and we ensure that the plan they put into effect lines up with their mandate. These projects are then contracted with the Vehicles Program departments which will adopt these developments and we commit to results.
Over the course of its lifespan, we ensure that the project is on track and make the necessary decisions when it deviates. Top management receives progress reports on a regular basis.
We often associate the notion of the self-driving car with that of the connected car, as the latter is a stage in and a prerequisite for making a car autonomous. But users are not terribly clear on exactly what services a connected car provides. What does Renault offer its customers in this regard? And which applications do you believe are the most promising for the next five years? Can you share any figures on your connected car output?
Autonomy and connectivity cover two different technical fields, and exist independently of one another. But of course the autonomous car will be highly connected.
The connected car has been around for some time. For instance, the traffic information given by navigation systems requires connectivity. Today, through its RLink systems, Renault offers a range of connected services: traffic information, Coyote, access to e-mail, access to a variety of apps from the app store, data for fleet management or pay-as-you-drive insurance contracts, opening car doors using a smartphone for car-sharing services (RAccess), and so on.
In a not too distant future, the range of services on offer will be very broad and cover different value fields such as monitoring the state of the vehicle (preventive maintenance), remote actions (setting the vehicle's inside temperature, opening the boot for deliveries), easy driving (booking parking spots, travel recommendations), mobility services (opening doors with a smartphone, multimodal solutions), personalised virtual assistant with connections to one's digital devices (links to calendars, appointment bookings, restaurant reservations, etc.). Depending on their needs, each customer will choose the services they find most useful.
The job of the autonomous car is to gradually relieve drivers of certain driving tasks, aiming to take a complete control of the vehicle. This will give drivers more time to do other things during their drive time, so an advanced connectivity solution will be absolutely vital to the offer of autonomy. This offer could go as far as the ability to work in one's car, and videoconference from the vehicle.
The ubiquity of the smartphone and the apps designed for the two main platforms, iOS and Android, is pushing car-makers to offer drivers the ability to replicate the familiar digital environment on their vehicle's display. At the same time, car-makers also want to protect the independence of their relationship with customers for certain services, such as maintenance. What are the services that the car manufacturer must deliver directly or indirectly, but independently from mobile application platforms?
A fluid relationship between the customer's smartphone and the car's multimedia system (which we call smartphone integration) is key to ensuring the digital continuity our customers demand. That being said, we need to keep in mind that – while awaiting the autonomous vehicle – the driver is still in the driver's seat, and any activity that might distract her/him and threaten her/his safety must be avoided. This is why certain apps are "replicated" in the multimedia system, and in a very strict fashion. So drivers will have access to a very limited number of their smartphone's features.
As to the relationship with the two digital giants, Google and Apple, it is clear that all car-makers have certain concerns over the ultimate consequences of smartphone integration. Some have taken the path of defining integration standards that allow them not to rely on those developed by Google and Apple, while others have even announced they would not be offering those applications.
At Renault we have chosen to offer CarPlay (Apple) and Android Auto because we think that's what our customers want. On the other hand, we are very careful about creating a balanced relationship and about the data being relayed, by ensuring that it in no way jeopardises our customers, or our business models.
To illustrate the merits of having a good relationship between the car-maker and an application, let's use the simple example of looking for a petrol station. An application that indicates all of the petrol stations in the vicinity is clearly useful when we are driving and need to fill up. However, its value increases tremendously if it can also gauge how full the tank is and tell us the best time and place (cost, mileage remaining) to fill up the tank.
The car dealership obviously has a very important role in selling vehicles and promoting the latest innovations, and in maintenance and customer relations. In what way do you take this into account? What is their role today, and how will it change in future?
Renault dealers play a key role in our relationship with customers, and in informing them about our products. We believe this will continue to be the case with connected services. Naturally this relationship is evolving as customers are getting more and more information from the internet, and are able to discover products online from home, but it is undeniable that physical contact with a product and an informed representative will remain an important ingredient in quality of service. As proof, I offer up the direction being taken by certain major internet companies, such as Amazon, which plan on opening up brick and mortar shops in major cities. In this respect, the density and proximity of the Renault network is a major asset that we will be sure to leverage.
We can also cite the initiative taken by a number of Renault dealerships which offer what we could call "RLink genius bar sessions" to give customers an opportunity to familiarise themselves with the system.
When we move into the autonomous car stage, we have to stress the impact of regulatory imperatives, of consumers' reactions – be they enthusiastic or disoriented – and the influence and role of the internet big five (GAFAM) and of new entrants: could you comment on these central issues and challenges ahead?
Regulation is a very important, so as not to say crucial aspect. Laws and regulations will need to evolve to allow extensive use of the autonomous car, and Renault is naturally involved in the discussions that are underway on the matter. It is a difficult exercise because, as with most car-makers, we sell our models in a great many locations around the globe, and there is still no overall regulatory framework that applies to autonomous cars.
On the matter of users, I think they have a tremendous ability to adapt, and when the services on offer are useful and have been carefully designed, there will be no obstacles to adopting them. On the contrary!
For us, the internet giants are certainly potential partners. As with all of our partners and suppliers, we look closely at what they can offer us, while also be vigilant about the skills and responsibilities we want to maintain or acquire. Today, they appear to be positioned solely in the driverless autonomous car, and we don't know if one day they will be direct competitors.
What are the most strategic technological developments that self-driving car vendors will need to master? What R&D and partnership (with its peers, and with electronics and IT companies) policies is Renault putting into place? Do you think that the costs associated with the connected/autonomous car will drive a period of consolidation in the automotive industry?
When it comes to the development of autonomous cars, the different sensors that become the car's "eyes and ears" naturally play a major role. They will evolve, be able to "see" farther and under any conditions (snow, rain, etc.), will be increasingly reliable and especially increasingly affordable so that all product ranges can benefit from them.
But if there is one area in which all automotive manufacturers, and of course the Renault-Nissan alliance, are investing massively, it is the development of the software that will manage all of the vehicles' sensors and systems. We need to develop the right algorithms, incorporate elements of artificial intelligence, ensure the robustness of zero-fault execution (the bugs that are such a familiar part of our daily lives are "forbidden" in an autonomous car, whose software needs to be as robust and reliable as the software that drives the most sensitive installations) and have a self-learning capacity that allows it to improve on an ongoing basis.
I believe this is the key to the development of the mass-produced autonomous car.
As to the impact on a consolidation of the automotive industry, this sector has already undergone considerable consolidation in recent years, creating several "titans" that produce more than 8 million vehicles a year, and I expect to see more close partnerships over certain technologies rather than corporate mergers.
The autonomous car will generate thousands of Gigabytes, often with stringent quality and latency requirements that will mean connectivity costs cannot be overlooked in vendors' business models. What are your views on this? Do you believe, like some, that your business model will include monetising some of the data generated? How much are you banking on the advent of 5G which is currently mobilising the telecoms industry?
Today, the cost of relaying data over the GSM network is a significant element in connected services' business model. The use of a SIM card that allows users to switch from operator to operator, or plans that allow them to pool or spread out their consumption are important factors in limiting the impact of this cost. As is monetising generated data. That being said, data traffic still carries a high price tag in some countries which creates an impediment to deploying services to all of our customers around the world.
Regarding 5G, naturally we are keeping a close watch over its development, but current projections indicate that coverage will still be very slim in 2020, so we cannot concentrate our developments for the next five years around 5G.
We often stress the time lapse between automotive industry cycles (four to five years) and digital innovation cycles. But if we take the example of the transition from LTE to 5G we see that, even in the digital world, not everything progresses as quickly as the latest version of WhatsApp or the rollout of the latest smartphone model…
The vision for the connected car, as for the self-driving car, needs to be part of a more wide-reaching thought process devoted to the different components of the digital transformation that is affecting mobility: the servicisation of car use, the influence of the first car-sharing platforms and ride services, how cities are changing, smart roads, etc. What initiatives are you taking with respect to these various trends, and how would you describe a car-marker 10 years from now?
As with most other car-makers, Renault is not focusing all of its attention or investments on the development of the car solely, even if it is autonomous and connected. Either directly or by having a stake in other ventures, we are interested in all aspects of innovation in what we call the mobile digital ecosystem (car sharing, car pooling, multimodality, peer-to-peer rental, etc.). It is also an opportunity to engage in discussions and run trials in large cities such as Lyon and Bordeaux where Renault is partnered with Bolloré.
Here, it is likely that the development of the autonomous car will run parallel to investments in outfitting roadways (smart roads and motorways), paving the way for new forms of mobility. One of the challenges will be managing the co-existence of classic cars and autonomous (possibly driverless) cars within a complex environment.
To answer your last question, I tend to believe that ten years from now the car-makers that remain – and of course the Renault-Nissan Alliance will be among them! – will be similar to car-makers today in many respects. We will undoubtedly see a shift in the value chain, and an expansion of car-makers' business into mobility products and closer ties with the digital world. But at the centre of all this is an object – the car – which is more and more technologically complex and subject to increasingly stringent regulations (security, emissions, CO2). This is what constitutes an automotive manufacturer's core business, and what I believe explains why there are virtually no new entrants to the sector.
Thierry VIADIEU. RENAULT Program Director for Connected Car (since 2012) and Autonomous Driving (since 2016). Graduated from the Ecole Nationale Supérieure des Ingénieurs Electrotechniciens de Grenoble in 1985 and received a PhD in Material Science from the University of Grenoble in 1988. Entered RENAULT in 1988 as research engineer. Then RENAULT Powertrain Division from 1992 until 1999 working on programs and strategy. Moved to NISSAN Headquarter in 1999 after the signature of the Alliance, starting in Manufacturing Strategy. Moved to NISSAN Corporate Planning in 2003 as General Manager and became NISSAN Corporate Vice President in 2005. In 2006, moved to NISSAN Thailand as ASEAN VP. In 2009 became RENAULT-NISSAN b.v. Director for Alliance Powertrain Planning.
Aménagement numérique en Guinée Conakry : présentation des conclusions du SDAN par IDATE DigiWorld au Ministre des Télécoms
Directeur du Pôle Territoires Numériques
La Guinée Conakry occupe une position particulière sur la côte Atlantique de l'Afrique de l'Ouest avec six pays limitrophes (Guinée-Bissau, Sénégal, Mali, Sierra Leone, Libéria, Côte d'Ivoire), un fort potentiel hydro-électrique grâce à la présence de nombreux fleuves (Sénégal, Niger, Gambie, ...) et des ressources minières importantes comme la bauxite par exemple.
En matière de réseaux de communications électroniques, la Guinée a adopté le 13 août 2015 une loi qui doit permettre notamment une concurrence effective et un développement des investissements privés sur l’ensemble du territoire, avec l'objectif de supprimer toute barrière à l'entrée des opérateurs et de limiter au maximum les coûts de déploiement grâce à la mutualisation et au partage des infrastructures.
La Guinée bénéficie d'une situation relativement favorable en matière d'accès à la bande passante internationale via le câble ACE (entre la France et l'Afrique du Sud avec le raccordement de nombreux pays de la côté ouest de l'Afrique). Et l'Etat s'est engagé dans une politique volontariste d'aménagement numérique de son territoire, avec la mise en œuvre d'un backbone national fibres optiques de près de 4000 km, qui sera achevé fin 2017 et qui maille le territoire national avec la desserte de 76 villes. Ce backbone sera exploité et commercialisé par la SOGEB une société anonyme contrôlée à l'heure actuelle à 100% par l'Etat Guinéen mais dont le capital a vocation à être ouvert partiellement à des opérateurs privés, dans un modèle d'opérateur d'opérateurs avec un réseau neutre, activé, ouvert à tous les opérateurs de détail dans des conditions transparentes et non discriminatoires.
Le Pôle Territoires Numériques de l'IDATE réalise actuellement, avec ses partenaires LM Ingénierie et le cabinet d'avocats CMS Francis Lefebvre, le schéma directeur d'aménagement numérique (SDAN) de la Guinée et a présenté les conclusions du SDAN le 14 décembre 2016 au Ministre des Postes, des Télécommunications et de l'Economie Numérique, Monsieur Moustapha Mamy Diaby.
Le SDAN fait l'objet de préconisations déclinées en 5 axes et 23 mesures opérationnelles concrètes portant sur les évolutions réglementaires, la poursuite des investissements en complément du backbone national, le montage juridique et financier pour l'exploitation et la commercialisation du réseau d'opérateur d'opérateurs, le soutien à la demande en matière de TIC, et la mise en œuvre de formations initiales et qualifiantes dans le domaine des TIC.
En Guinée, la mise en œuvre d'un réseau d'initiative publique d'opérateur d'opérateurs, ayant vocation à accueillir des partenaires privés, neutre, activé, ouvert à tous les opérateurs dans les mêmes conditions apparaît comme la solution efficace pour l'aménagement numérique du territoire ... avec une singulière résonnance avec le "modèle français" mis en œuvre chez nous.
Pour suivre l’actualité de l’économie numérique, n’oubliez pas de vous inscrire à notre newsletter
Head of Smart City Practice, IDATE DigiWorld
The prospects opened up by the smart city are rooted in a more intense use of digital technologies in the multiple components that make up the urban ecosystem: transport, security, network management, environmental management, waste management, transforming commerce, tourism, relations with government services, etc.
It is well understood that smart city projects can only develop successfully if the applications are relevant (useful and accepted) and if they are gradually interwoven with a cross-cutting momentum on a city-wide scale.
Beyond that, the success of these initiatives will depend in large part on users’ trust in the digital infrastructure and services on offer, along with the project’s ability to mobilise all of the urban ecosystem’s stakeholders. Taking proper account of these prerequisites must be central to governing any smart city project.
How to persuade users of the benefits of smart city projects?
- How to exploit the full potential of participatory democracy (civil tech) when running a smart city project?
- How can open data help strengthen trust in smart cities?
- How to prevent a smart city project from becoming just a juxtaposition of separate initiatives, bereft of synergies?
- How to talk about the risks of cybersecurity in a smart city project?
- What process needs to be in place to ensure the development of a resilient smart city?
DELVE DEEPER WITH THE FOLLOWING IDATE DIGIWORLD MARKET REPORTS
Lead IoT Expert , IDATE DigiWorld
Although the Internet of Things is a powerful concept, it is not necessarily a market in and of itself. IoT encompasses a very disparate array of fields that need to be examined separately, to obtain an accurate understanding of their particular features, and their true growth potential.
More operationally, beyond cost savings opportunities (mainly through various internal optimisations), with more and more connected objects, new services will emerge – chiefly through the connectivity itself (remote control applications), but also via the data generated by the machines. Leading industrial heavyweights already have their own data-oriented department.
On the industrial side, two approaches can be distinguished: traditional machine-to-machine and the ‘industrial internet’: the latter referring to an interconnected ecosystem and the former to a more siloed approach. In the main, the creation of value in the industrial Internet lies in data collection and analysis. The main question then for market players is how to collect data and analyse them, to then generate revenue. The bulk of M2M revenue should come from software and IT integration as primary applications, with the aim of enabling massive savings within verticals. Consequently, all providers are working on delivering an end-to-end solution with a strong service bent – even if this might require acquisitions for some verticals.
Applied to the consumer world, the Internet of Things (IoT) refers to smart home and connected objects in general, relatively new markets that are starting to take off. Even if questions are being raised over the sustainability of their adoption. The main reason is the lack of services attached to these objects, apart from remote use, through a mobile app. Many applications would be based on data generated by those things. However, unlike the industrial market, data privacy is a major concern here as it involves consumers’ approval. The blurred lines around privacy regulation have made all of the ecosystem’s players reluctant to provide consumer market solutions. Another hurdle is to determine what value-added comes from connecting these objects, and how to monetise the data they generate: will all objects be connected? Will all data be valuable? If so, how valuable?
DELVE DEEPER WITH THE FOLLOWING IDATE DIGIWORLD MARKET REPORTS
• Smart Home, A promising market, taking off slowly, Dec. 2015
Debate over the crucial role that trust will play in the digital economy’s future
The 38th annual DigiWorld Summit will run from 15 – 17 November 2016, and have as its central theme: The Internet of Trust. It will be an opportunity to engage in a meaningful international debate over digital trust issues – starting with security and privacy – which have become major sources of concern for all of the ecosystem’s stakeholders.
As the number of reported cyber-attacks worldwide is growing by close to 40% a year, we expect that upcoming stages in digital technologies’ evolution will only amplify the phenomenon. And this to such an extent that any future scenario is possible: from a continuation of the current chaos to a breakdown in trust that would lead to the construction of a new digital economy, which will no doubt differ in many respects from the one we know today.=
• Are we reaching a tolerance threshold for online trust?
• How can veteran digital industry players (equipment suppliers, telcos, IT companies) capitalise on the current climate?
• Are verticals threatened by the situation or, on the contrary, on the winning side of trust and security issues?
• Do we need a new regulatory framework to govern, or reassure, market players and consumers?
> Including the 120 speakers on this edition:
• Eva BERNEKE, CEO, KMD
• Anne BOUVEROT, CEO, Morpho
• Isabelle FALQUE-PIERROTIN, Chairwoman, CNIL
• Pierre, CHAPPAZ, Co-founder & Executive Chairman, Teads
• Didier LAMOUCHE, President & CEO, Oberthur
• Joseph LUBIN, Founder & CEO, ConsenSys, Co-Founder Ethereum
• Carlos LOPEZ BLANCO, Global Head, Public and Regulatory Affairs, Telefónica
• Stéphane RICHARD, Chairman & CEO, Orange
• Corrado SCIOLLA, President Europe, BT Global Services
• Nicolas SEKKAKI, CEO France, IBM
Choosing the theme for the 2016 DigiWorld Summit came about quite naturally. The vast majority of IDATE DigiWorld were eager to tackle the topic of trust.
For some time now, trust has been recognised as a vital ingredient in the success of a brand, an economy or a society. This is all the more true in a world being transformed by digital innovation. In its scenarios for 2025, IDATE DigiWorld underscored that trust was one of the key variables in tomorrow’s digital ecosystem. To shore up this belief, we need only look at some recent headlines:
• the cyberattacks against telcos, TV networks and government agencies,
• the legal wrangles between Apple and WhatsApp and government authorities wanting access to the encryption key for the devices or messages;
• the very drawn out European Union negotiations over new data protection rules;
• the end of the Safe Harbor transatlantic agreement and ensuing debates over the new Privacy Shield;
• questions over the dangers surrounding connected/driverless cars, and the growing ubiquity of the IoT in general;
• the ad–blocking phenomenon;
• questions over what impact multiple FinTech solutions will have on the soundness of the banking system, and blockchain’s ability to replace today’s trusted third parties;
So trust is a focal point for telcos, cloud computing companies, Internet giants, start–ups, governments and regulators, but also for every economic sector across the board, not to mention consumers and citizens.
And, as always, acknowledging risk must not prevent us from also analysing opportunities, in terms of innovation, differentiation strategies and the competitive advantages available to many market players.
Once again this year, the vital meeting place that this international conference has become, will include plenary sessions that will provide a springboard for a series of high–level specialty forums. These forums are an opportunity to delve deeper into the main trends we expect to see in mobile networks with the advent of 5G, ultrafast broadband, the Internet of Things, the TV market’s transformation in Europe, FinTech, video games, the digital promise in Africa and what makes a smart city.
A unique international forum for debate and networking
|> DigiWorld Week
A week devoted to understanding what makes our new digital world tick (12 – 20 November 2016)
|> The DigiWorld Awards
Recognising the best digital start-ups created by French entrepreneurs abroad
Key facts & figures
Europe’s trailblazing conference on the digital economy
The DigiWorld Summit is an annual event organised and hosted by IDATE experts, with the support of DigiWorld Institute members. Every year it holds ultra high-level international debates on the core issues shaping the digital economy, with the finest speakers and industry insiders.
• Participants: 1,200 participants at the DigiWorld Summit and more than 5,000 at DigiWorld Week
• Speakers: 120 speakers from around the world; 400 at DigiWorld Week
• Partners and sponsors: over 100 partners and sponsors (businesses, public sector, media…)
• Social media: 15,000 tweets (trending topics) and 2,000 live followers
For more information, visit our website: www.digiworldsummit.com
Hao Yi Emerging technologies expert, IDATE DigiWorld
The development of the mobile payment market was still heterogeneous in 2015.
The m-commerce payment market grew steadily, whereas the in-store mobile payment market remained nascent given the transaction volume, although the release of Apple Pay one year earlier had seemingly put an end to the doubts about near field communication (NFC) being the right technology for in-store proximity payment.
IDATE DigiWorld estimates that the worldwide m-commerce market revenue will likely grow from 2015 to 2019 at a CAGR of 26.5%, growing its share 26% of the overall value of the e-commerce market to 44.2%. As regards the arrival of in-store mobile payments with NFC technology, QR code, mobile wallets, mobile point-of-sale (mPOS) solutions and other mobile payment methods, IDATE DigiWorld values their transaction volume to grow at a CAGR of 74% between 2015 and 2019. The volume of in-store mobile payments is tiny compared to the trillions of USD of all point-of-sale (POS) transactions.
On the in-store payment market, no one has really ‘wined out’ as yet, although Internet giants (Apple, Google and Samsung) as well as card networks (Visa and MasterCard) are very active, and numerous new entrants are flooding in.
In addition, NFC payment working with mobile wallets did not see the expected explosion in volume. Even though the technology and NFC-enabled POS terminals have been progressively in place for many years, the perceived value of such services is low for consumers.
From the perspective of merchants, mobile payment alone is not enough to bring about mass adoption.
Find out more about this market in our dedicated report
Senior Consultant, IDATE DigiWorld
This market is considered one of the most promising in the Internet of Things sector with a number of connected things could climb from 200 to 900 million between 2015 and 2025.
The concept of the smart home can be understood as home automation for the Internet era, but it is a concept that has not yet really caught on.
It encompasses all of the machines in the home that could potentially be connected to the Web. It also includes a wide array of applications, from consumer electronics to home appliances, by way of light bulbs and presence sensors. Today’s market is focused mainly on selling hardware with a built-in connectivity module and which can be controlled remotely using a mobile app. But it now also includes hubs, i.e. central systems that allow the different devices to talk to each other.
Many of the currently available products are connected to managing energy consumption and personal security, as consumers are more inclined to invest in solutions that allow them to lower their electrical bill and/or feel safer in their own home.
A large and heavily populated ecosystem
The digital home ecosystem is vast, populated by a multitude of players from a wide range of industries, including veteran CE and appliance manufacturers, along with power companies and players from the lighting and security industries. Samsung is particularly active in this market, especially since it acquired the start-up SmartThings in 2004. The South Korean giant is selling a complete smart home solution, including a hub to which both the manufacturers’ and its competitors’ equipment can be connected. Philips also has a solid presence in the smart home market thanks to its Hue line of smart bulbs.
The marketplace is also populated by newcomers such as pure players specialised in connected devices – marketing smart thermostats, light bulbs and security cameras. Telcos too have joined the fray, taking advantage
of their modems already deployed in customers’ homes to roll out new initiatives. The Internet giants are also on hand: Google through its acquisition of Nest, a start-up that specialises in smart thermostats, and Apple with its HomeKit smart home development platform.
An ecosystem awash with solution providers means that there are multiple communication protocols at work. The current battle for supremacy between standards is pitting a number of initiatives backed by industry giants against one another.
Adoption of the smart home raises severalquestions
This market, fl edgling as it is, is considered one of the most promising in the Internet of Things sector. IDATE estimates that the number of connected things could climb from 200 to 900 million between 2015 and 2025. Most of the market’s revenue today comes from hardware sales, whose prices are still too high compared to virtually identical products without smart capabilities. Several issues, then, need to be resolved before the market can really take off: the price of connected devices and appliances, privacy concerns raised by the use of personal data, a business model that needs clarifying (including monetising data) and the fragmentation of core technologies.
Discover the perspectives, key trends, and scenarios about the Internet and Smart Living market for the next decade through our dedicated report.
Director of Studies, IDATE DigiWorld
The connected object market today shows a real complementarity between the major players in terms of their current positionings, aligned with their core business.
In the longer term, however, IDATE DigiWorld anticipates that competition will grow in ferocity, around the platforms and services which are set to be the next source of revenues.
The automotive market
Around the connected car business, is key for Internet giants and telcos. Competition today is, in the main, on the platform side as both telcos and Internet giants are aiming to position themselves here today. Indeed, it is the platform that is the cornerstone of the next connected car strategy. Looking further ahead, the main competitors will most likely be OTT service providers, as they will offer services by exploiting the data generated by sensors in the vehicle – Uber-like companies are one example. Some industry incumbents are already engaged in the battle: earlier in 2016, GM invested half a billion USD in Lyft, the main competitor to Uber. The major involved players are AT&T and Verizon on the side of the telcos and Google (and Apple to a lesser extent) for Internet players.
The wellness market
This market is very recent. Telcos are absent from its value chain, with the exception of very limited volumes of cellular objects. They only focus on the distribution side, where the reselling business can grab them a sale commission on wearable objects, linked to smartphones. OTT Internet players are eying this promising consumer market for the opportunities it will offer in the near future to manipulate and monetise masses of personal data.
The healthcare market :
A specific market for a long time, its very promising market has been in the growing numbers of potential ‘clients’ as their age increases. The key objectives of healthcare applications are to optimise the treatment of disease and to save costs for national healthcare services. Even though solutions will be provided in partnership with experts, both telcos and Internet players will be push platforms and services.
The smart home market
It will be the arena for immense competition in the next few years. It is considered as a growth area for fixed telcos which are already facing competition from cablecos. On the side of the OTT Internet player, smart home applications are seen as a complementary way to follow their consumers/audience, even though they have different approaches. Competition – again, it will be heavy – will on the platform and services side as all players will be wanting to manage the data.
Today, the industrial Internet market is considered as an extension of the Industrial M2M business for telcos. The Internet giants are notable by their absence, even though some could provide cloud-based tool: Google, and Amazon with its specific IoT AWS offering, are prime examples. Analogous with traditional online services, the main threat for telcos is that they yet again become the pipe, and only the pipe. They have, however, anticipated the connectivity commodity trend by offering data platform solutions and related services. The ARPU from connectivity is very limited and the telcos expect only a small share of connected devices will be equipped with a SIM card. Before services, telcos have backed their core business, by setting their eyes on LPWA technologies (SIGFOX or LoRa) or collaborating on LPWA-like cellular ones such as the NB-IoT ahead. They are also backing the next 5G technologies, which aim to empower various verticals, including healthcare, manufacturing, smart cities and the automotive. It will be a tough battle, given that Internet giants are global by definition. Moreover, compared with traditional Web services, the main difference is that Internet giants manufacture their own objects, providing almost an end-to-end solution of product, platform and services on top. Faced with this kind of solution, traditional players in the industry will also suffer from the invasive nature of the OTT Internet players and their fierce competition.
Find out more information on "Telco's Connected Objects Strategies" in our dedicated market report
Head of Consumer Electronics & Digital Entertainment Practice
By 2020, nearly 660 million smart toys could be sold, generating estimated revenues of 3.8 billion EUR, or 10.8% of the video game market.
The 'smart toys' or 'toys-to-life' phenomenon is generating a lot of interest because of its massive and rapid success. Smart toys are creating a new form of entertainment without really breaking with the function of toys or that of video games, and are at least as immersive as the two pastimes in their own right. Smart toys now constitute a new market segment, halfway between the video game and toy industries. Four industry players comprise the bulk of the market:
• Activision Blizzard with its Skylanders series, which has sold nearly 300 million figurines worldwide (8 games published since 2011)
• Disney Games with Disney Infinity, which brings to life its own characters and the universes of its subsidiaries: Pixar, Marvel, Star Wars
• Nintendo, which offers 'amiibo' figurines of its most popular characters (more than 10.5 million figurines sold in six months)
• At the end of 2015, LEGO gatecrashed the market with LEGO Dimensions and, after experimenting with smart toys with an earlier product called LEGO Fusion, its entrance was successful.
Other industry players, toy manufacturers and video game publishers, such as Hasbro and Mattel, are still at the trial phase or performing 'market tests'.
The main lessons learned from events in 2015 reflect the challenges faced and the successes achieved.
• The 'user experience' is central to the smart toy phenomenon, combining tangible objects — which may or may not be connected — with digital entertainment applications. This has given rise to the term 'phygital' to describe the experience.
• Business models based on the collection of figurines, dependent on video games to varying extents, continue to evolve and could incorporate Free-to-Play.
• Development models are primarily based on a so-called 'first party' or 'second party' approach. These operating models still leave little room for new entrants.
• There is a clear dichotomy between 'mainstream' smart toys, produced by industry giants for fixed and visible platforms on the big screen, and new entrants offering their solutions on mobile platforms, where the barriers to entry are not so high.
• The success of LEGO shows that convergence between toy manufacturers and video game companies is effective and can lead to AAA toys built around AAA video games.
The success of the smart toys video game segment is based on familiar universes that already have an audience of fans. There are still many fantasy worlds as yet untapped and therefore represent promising avenues for growth.
More information about smart toys market in our dedicated report
For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.
Director of studies, DigiWorld IDATE
In 2018, the wearables market in value should exceed 22.5 billion EUR. Again, the growth will differ from object to object mainly because of the different price per object.
Wearable objects refer to daily consumer objects like wristband, watches, glasses, headsets or activity trackers with embedded sensors and connected mainly indirectly to the internet though a device/hub (through short range technology mainly). Wearable products are used in different applications, even though fitness, wellness and lifestyle are obviously the major segments, in volume notably. Some opportunities could be seen at the entreprise level which aims to integrate into their premises wearable solutions to improve process and productivity.
The wearable ecosystem is mainly dominated by object manufacturers which are very numerous. Some of them are pure players like Fitbit or Jawbone, others are traditional consumer electronics manufacturers (Sony, Samsung, etc).
Other manufacturers come from the sports world like specialized sport accessory players (Garmin, Suunto or Polar) or sportswear brands with Nike and Adidas chiefly. On the connectivity side, very few M2M mobile carriers are involved in the wearables market, only AT&T has a real involvement in this segment. Data-centric players are positioned on the platform business. Most of the pure players like Runtastic, Runkeeper benefit from the product makers allowing them to collect information from their different objects.
The platform is actually the enabler to build services on the top of devices. On the top of the wearable devices, new services should emerge thanks to data exploitation/exchange. In terms of market adoption, surveys show that it is still very limited for now. They illustrate that watches are the most excited wearable devices, but a majority of the consumers seems not to be so enthusiastic to buy one of them. On the market side, according to IDATE, in 2018, 123 million wearable devices should be sold representing a 70% CAGR from the 10 million sold in 2013. Nevertheless, this growth is not homogeneous for each category of wearables. The smart watches will lead the market with 80 million units by 2018 mainly because of the Apple Watch sales starting from 2015. In 2018, the wearables market in value should exceed 22.5 billion EUR. Again, the growth will differ from object to object mainly because of the different price per object.