While 4G networks would be preferred by automakers to power the connected car, it is 3G networks that will carry the data driving the majority of its global telematics and infotainment services revenues. In fact, it will be after 2020 that 4G becomes the leading connection technology for OEM telematics revenues. It is typical for verticals with long product lifecycles, such as automotive, to show delayed uptake of next generation technologies, such as 4G, due to slower penetration into the installed vehicle base. Similar cellular technology adoption data for over 30 of the largest IoT application segments can be found in ABI Research’s recently launched IoT Market Tracker.
Dan Shey, VP and IoT practice director, ABI Research comments: “There are exceptions. For instance, in the United States, Japan and Korea, 4G will lead revenue generation. But interestingly it will take until 2018 and into 2019 for 4G to carry the majority of the data traffic driving OEM telematics revenues. In India, 2G will stay the dominant telematics network carrier for the next 5 years; China’s revenue segmentation is similar to India but crosses to 3G driving the most revenues in 2020.”
The types of supply chain services generating connected car revenues are equally diverse and highly country dependent. Professional services including hardware and software integration, consultancy, and project management generate the majority of global IoT supplier revenues. But by 2019, revenues from OEM telematics platform vendors such as Ericsson, Verizon, Wireless Car and Airbiquity will take the lead. Data and analytics revenues will also become a major revenue generator later in the forecast period exceeding connection, security and network services revenues.
Dominique Bonte, VP and automotive practice director, ABI Research comments: “By 2020, the connected car supply chain will start seeing some dramatic shifts, which are reflected in the changing revenue ratios between the different service categories in ABI Research’s IoT Market Tracker. Open source hardware reference platforms, third party mobile ecosystem integration, and the shift towards cloud-based approaches will start eating into traditional Tier 1 professional service revenues, forcing vendors such as Harman, Bosch and Continental to move into new areas and competences including data analytics, OTA and security monitoring services.
