How Collaboration is Defining the Future of the · PDF fileHow Collaboration is Defining the...

US Headquarters: 199 Wells Avenue, Suite 108, Newton Centre, MA 02459 USA Tel : 617.614.0700 Fax: 617.614.0799

European Headquarters: 171 Midsummer Boulevard, Milton Keynes, MK9 1EB. UK Tel: +44 1908 423 600 Fax: +44 1908 423 650

of 14 | © Strategy Analytics 2015

STRATEGY ANALYTICS INSIGHT

Automotive Multimedia & Communications

March 16, 2015

As the awards keep piling up, Ericsson, AT&T and Volvo Cars are redefining the possibilities and unleashing the future of the Connected Car

Snapshot

Supplier relations within the automotive industry have typically been highly adversarial and competitive. Car

makers often pit their suppliers against each other to compete on the basis of price and quality. In a hardware-

centric world, this dynamic is often conducive to maximizing quality and minimizing cost. However, the growing

importance of the connected car has prompted a rethinking of how suppliers can not only work together but

also with car makers to create a solution that embraces their individual core competencies to deliver a superior

solution. Through seamless collaboration Ericsson, AT&T, and Volvo Cars are making the next generation

connected car a reality.

Analysis

COOPETITION

“Coopetition,” is a term that was overused and under-implemented in the early 2000’s. Flexibility is

increasingly important to car makers. While the ability to provide an end-to-end service is important, it is

increasingly rare that any one company has all the competencies needed to create a best-in-class solution.

How Collaboration is Defining the Future of the

Connected Car:

http://www.strategyanalytics.com/default.aspx?mod=Terms




In the case of Volvo’s connected car, Ericsson provides its Connected Vehicle Cloud (CVC) solution as a managed

service. Through the CVC solution, Ericsson enables the creation of customized services and apps that can be

brand specific to Volvo Cars. AT&T provides the SIM cards and network connectivity to Volvo Cars, which has

determined that this approach best suits its business needs and will appeal best to its consumers.

AT&T is taking a different approach, recognizing that many car makers might prefer a solution in which AT&T

as an operator manages their services. As a result AT&T offers a unique set of capabilities by leveraging

Ericsson’s CVC solution, extending it to include other assets and running the service on AT&T’s network. This

creates an interesting dynamic and demonstrates an understanding that suppliers seeking to deliver a single out

of the box solution will have little success gaining traction with car makers whose needs are often disparate. It

also suggests an understanding that it’s better to receive a smaller part of the value chain than desired than be

excluded from the solution altogether.

COMBINING BEST-IN-CLASS ASSETS

Ericsson is a technology vendor with over 100 years in the communications business; a pioneer in mobile

technology such as GSM, 3G, LTE and Bluetooth with an emphasis on investment in innovation and a focus on

Machine to Machine (M2M) communications in the automotive, transport, utilities & shipping industries. Ericsson

has two and a half (2.5) billion managed telecommunications subscribers on its licensed software and 1 billion

subscribers managed via Ericsson Managed Services today. Ericsson has an undisputed track record of delivering

high quality, scalable communications products with more than a hundred year track record in meeting the

needs of its customers.

These achievements coupled with Ericsson’s CVC (Connected Vehicle Cloud) Solution makes Ericsson an

extremely valuable partner. Ericsson’s CVC solution is implemented on its proven Service Enablement Platform

which actually runs in the network, in real-time and has demonstrated a proven ability to scale and support

mission critical processes.

AT&T is a Communications Service Provider (CSP) that boasts 117 million global mobile subscribers

(access/coverage for 290 million) and a presence in 225 countries with 17 million connected devices on its

network today, AT&T’s mission is to “connect people with their world, everywhere they live and work, and do

it better than anyone else.” AT&T claims to have the “most reliable 4G LTE network” in the United States and

leads the nation in 4G deployments.





Recognized as one of the global leaders in “IP-based communications services…” AT&T is a valuable partner in

creating a reliable, secure, and global solution.

Volvo Cars is a premium auto manufacturer with a global presence and a solid history of innovation and safety.

Volvo Cars has delivered on strong, sustained growth with a major presence in China, a key growth market in

automotive. Volvo Cars is a human-centric brand focusing on driver and passenger needs and behavior, rather

than technology for its own sake. Volvo Cars is a pioneer in telematics and remote smartphone car control,

Volvo Cars boasts an award-winning connected infotainment system available globally across all car models.

Volvo Cars is the perfect canvas to showcase what is possible when three technology giants embrace and marry

their best in class competencies.

PARTNERS COLLABORATE ON SOLUTIONS THAT COMPETE

Ericsson provides a software solution that enables the connected vehicle via the network. Auto-manufacturers,

CSPs (Communications Service Provider) and others can either license the software offered by Ericsson or they

can access it via the Ericsson cloud as a managed service. AT&T and Volvo Cars have both bought into Ericsson’s

CVC platform but their implementations are very different. This creates two potential collaborative models.

1. Volvo Cars has decided to leverage Ericsson’s CVC platform as a managed service offered directly by

Ericsson. In this model, Volvo cars will access the Ericsson solution by first connecting to the local

wireless network (provided by a local CSP) then by gaining access to the Ericsson CVC solution in the

cloud.

Volvo Cars has decided to create its own ecosystem, where it works with partners to integrate and build

apps and add them to the Ericsson managed environment’s app store which makes the apps available to

the consumer.

Volvo cars can connect to the network via an integrated SIM card or via a tethered smart-phone

provided by any driver. The look and feel of the in-dash system’s interface and the apps can be

automatically updated through the built-in or tethered SIM card which is owned by the specific driver in

the car at any moment. Additionally, Volvo Cars is working with AT&T and can install AT&T SIM cards in

the vehicle. Volvo Cars is bringing this new reality to 20 markets with more to come around the world

revolutionizing how consumers look at automobile connectivity.





2. AT&T’s focus is on enabling auto manufacturers. AT&T has licensed the Ericsson CVC platform,

implemented it in the AT&T Cloud and provides access to car maker customers via a managed service

that AT&T will provide. AT&T offers a variety services and applications from which the car maker is

free to customize their solution, allowing them to customize based on marques, trims, and even

regional needs.

TECHNOLOGIES THAT ENABLE THE FUTURE OF THE CONNECTED CAR

Ericsson’s Connected Vehicle Cloud

Figure 1 Ericsson’s Connected Vehicle Cloud

Source: Ericsson

Ericsson’s cloud-based implementation means the system is “always on.” In the past, telematics systems were

only thought of as an emergency response system. In an “always on scenario”, the system monitors vehicle

performance in order to anticipate potential system failures as well as the needs of the driver. Some might call

this scenario Telematics 2.0.

This type of functionality is new and disruptive to the automotive industry combining proven regional and

global assets and leveraging a disparate ecosystem and partners to deliver required content, applications and





services as needed. Ericsson notes that the system runs in a virtualized environment, can be deployed in any

regional data center, and can leverage Ericsson’s global presence in order to tap its local resources or set up

agreements with local infrastructure and connectivity providers. Meanwhile, the entire system can be operated

and managed from a single operations center while integrating with a multitude of CSP networks.

The Ericsson connected vehicle cloud is designed to cut across the functional silos normally associated with a

connected car system. In fact, the Ericsson solution cuts across internal auto manufacturer organizational silos,

supplier and distribution channels and leverages cloud technology to manage storage and distribution of

content, data and functionality.

Platform Overviews

According to Ericsson, the following are key Components of the Ericsson CVC Solution:

Cloud Management: The Ericsson solution is built by design to be deployed on industry standard cloud

infrastructure platforms. Adding new nodes on the fly is a fundamental design capability used for dealing

with temporary data peaks but also for fast action on business changes. “Always on-line” is a top priority.

To maintain a great customer experience the CVC solution is ready to be integrated with operation

support systems in order to manage up-time and make sure that operations identify and solves potential

issues before drivers are impacted. The CVC solution is built in a hierarchy with a Central Node that

connects to the car makers’ back-end systems and synchronously or asynchronously makes parameters

available in the cloud and distributed to regional nodes.

Business Logic: The business logic in the CVC solution is where the car maker or their agent can

manage and facilitate relationships between different actors in the ecosystem and create use cases.

Service Classification manages on the highest level what service is available during which circumstances

for whom and how. The CVC solution includes a full Identity Management system to keep track of policies

and privacy settings for drivers, car owners, vehicles and partners. It works in a hierarchy where business

logic is managing services globally and distributed to different regions. The services are priced and

charged by the combination of the Product Catalogue and the Commerce Engine and are controlled by

the Rule Engine that executes on policies and context rules in real time.

Partner Management: Partner Management provides everything needed to support the business

processes and workflow for managing the relation with all the different partners that the car-maker is





working with. Both internal car-maker systems and partner systems are integrated through APIs to the

CVC solution. The procedure for connecting internal actors and external partners are the same and this

design is important to allow use cases to evolve and scale over time.

API Management: The CVC solution comes with numerous documented APIs that can be used for easy

integration with partners and external systems. API management is a key component for establishing a

developer network. It is used to expose any API or capability of the CVC solution and make it available as

a business-to-business (B2B) offering by the car-maker. A key strength of the platform is the ability to

combine APIs from several sources to present a single uniform API to fulfill specific partner needs. API

access is throttled (to protect against overload) and validated against the partner SLA.

Screen and Headunit Management: Screen & Head Unit Management capabilities simplify the complexity

of communicating with the user over the variety of screens and terminals deployed inside and outside the

vehicle itself. It includes the tools for managing the full life-cycle and version control of both thick and thin

clients. It also has a complete Application Store. The user experience for each of these devices can be

designed through easy-to-use graphical tools.

Application Execution Environment: To allow for fast development of services in the car the CVC solution

can host and monitor applications in the cloud developed by either the car-maker or its partners. These

applications run in a secure environment called the Application Execution Environment (AEE) which

deploys, configures, monitors and hosts Hosted Web Applications (HWA) built in Java.

Vehicle & Device Data Connector: Vehicles are securely connected through a bidirectional

communication link supporting multiple protocols and notification mechanisms such as SMS Shoulder

Tap, HTTP, and MQTT. Status information and data are collected and sent to the CVC solution, where it

is normalized, stored, aggregated and combined with data from other systems and sensors. This data is

distributed (in part or in full) to the CVC applications and actors that have been granted the relevant

access rights. The fine grained access control makes it possible to only expose the precise subset of

information needed by the subscribing service, for instance an analytics system. Events are defined for

notifications when a particular set of conditions apply.

Security: The CVC is a complete solution for authenticating and establishing a secure communication

channel between CVC’s Cloud Entry Point (CEP) and the vehicles. All communication is encrypted and

authenticated using certificates distributed by a Certificate Handler. Mutual authentication ensures that

both device and cloud (i.e. server side) can verify authenticity of each other.





Figure 2 Components of the Ericsson CVC Solution

Source: Ericsson

The AT&T Drive Studio

Located in Tech Square in Mid-town, Atlanta, the AT&T Drive Studio is an innovation center dedicated to

exploring the connected car space. Physically located in a converted parking garage, the Drive Studio consists

of a front-of-the house showroom used to highlight innovations and demonstrate new concepts as well as a

“back-of-the house” consisting of working automotive bays, labs, and collaborative spaces where AT&T can

work with partners to bring the next generation of connected car to life. All of this to promote thought

leadership in developing solutions that would transform the level of integration, automation, convenience and

safety that the automotive consumer could experience via their car. These innovations are and will be used to

support AT&T Drive’s Platform which provides car makers with a unique suite of integrated technologies to

meet their needs.

The 5,000 square foot facility is not only a testament to AT&T’s commitment to the automotive industry but

also a space in which a broad Networked Society ecosystem can be explored and leveraged into value-add

commercial solutions. Just a block away from AT&T’s Atlanta Foundry (a business unit that focuses on

evaluating cutting-edge technologies and creating proofs of concept) and across the street from Georgia Tech,





the Drive Studio enjoys a prime location for hosting organizations from technology giants to 3rd party

developers to academics and at times members of the public. This position gives rise to engendering a unique

understanding of what could be possible in the connected world especially given AT&T’s many assets including

its network, its uVerse content (and possibly DirecTV), its Digital Life technology, as well as technology in

sectors such M-Health.

Figure 3 AT&T’s Drive Studio

Source: AT&T

AT&T Drive Platform

While AT&T has some preferred partners for its platform, it is highly modular and can be customized to utilize

any vendor that a car maker or aftermarket vendor prefers. On the back end, Ericsson software allows third

party vendors to integrate into AT&T’s platform, creating a solution that is very much plug and play. On the

front end, Ericsson has worked with AT&T to create a virtual assistant that coordinates between the head unit

and the cloud allowing these applications to be seamlessly controlled through the human voice. This is very

different from other platforms that generally dictate an end-to-end solution rather than allowing the car maker

to elect which services it would like and from what vendor. This means that car makers have greater control of

product differentiation and greater control of price. For instance on AT&T’s platform, one car maker may





elect a specific Telematics Service Provider (TSP) that it prefers while a different car maker could choose a

different TSP.

According to AT&T, some other key differentiators the company is bringing to the connected car include:

Wi-Fi Hot Spots: The ability to create to allow vehicles to take advantage of in-vehicle Wi Fi. AT&T has

created landing pages with properly secured, authenticated and federated land paging that allow for

multiple users with multiple devices accessing Wi Fi in the vehicle, while preventing unauthorized users

from gaining access. Additionally these landing pages can be customized to not only differentiate the car

maker but to promote new products and services.

Split Billing: AT&T’s platform allows the car maker to charge different tariffs for different events. The car

maker can elect to pay wholesale for basic telematics services, while charging consumers individually for

infotainment services or for Wi Fi usage. In addition, the platform has the advantage of allowing for

sponsored data, revenue sharing, and session based purchases.

Voice Enablement: AT&T has long been a leader in voice enabled technology, including the creation of

Watson. AT&T is highly committed to reducing driver distraction and believes that speech is a key

technology in preventing this. AT&T is highly committed to its “It Can Wait Campaign” which aims to

discourage drivers from texting.

Automotive Apps Store: AT&T Drive Platform is developing a growing catalogue of automotive apps that

will sit on the head unit, many of these apps featuring voice enablement. Functions, thus far include

streaming music and other content as well as location based services.

Big Data/Data Analytics: As car makers identify what data they would like analytics built around, AT&T

can uniquely capture, store, and persist data related to the connected car. AT&T then has the capability

to analyze this data using advanced algorithms.

Firmware over the Air (FOTA): AT&T can provide the security and network speed to enable FOTA. AT&T

can even create separate payable events where the car maker elects to pay for some updates, while the

consumer can pay for an update like a map upgrade.

CRM: AT&T through its customer care centers can help car-makers, dealers, and consumers

troubleshoot any problems they are having with their connected car. Through partnerships, AT&T can

help link car makers to dealers as well as customers. This helps to fill a major gap in the industry where





dealers are often at odds with car makers with the consumer ultimately suffering. AT&T also has vast

expertise around retail/franchise management which will surely be valuable as dealers better understand

the connected car value proposition.

Global Scalability: AT&T has global SIM technologies which enable car makers to scale globally. Car

makers working with AT&T have access to a global network and can set up accounts and reconcile bills

across the globe. In fact, AT&T has been announced as OnStar’s partner in Europe and Mexico.

Mobile Share: For a small charge to the consumer, one can have their car added as another AT&T

mobile device on their shared data plan, no different than if one were to add a tablet or a fam ily member’s

new phone.

VOLVO CARS’ SENSUS CLOUD: REALIZING INNOVATION

On the automotive side, Volvo Cars is making rapid progress compared to other auto-manufacturers. Of the long

list of auto-manufacturers focused on telematics, only BMW comes close to Volvo Cars as measured by the

scope of its global deployment and partner ecosystem. But BMW spent a decade to prepare and is already

following Volvo Cars in many markets and in overall pace of innovation. Interestingly, OnStar, the global leader

in terms of market-share, is still only available in Mexico, the U.S. and China and does not compare in overall

capability to what Volvo Cars now offers. At a high level, Volvo Cars breaks the functions into three categories:

Drive Time: “Making the most of my journey.”

Connected Life: “The car as part of my life.”

Big Data: “Leveraging the car in the broader connected society.”

Volvo Cars’ objective has been to hit multiple global markets simultaneously with the broadest service portfolio

possible. The company also wanted a system capable of scaling to provide new capabilities where they could

connect with their customers and improve safety and quality associated with the Volvo Cars brand.

In the globally launched Sensus Cloud, Volvo Cars connects with the driver for the duration of the car’s

lifetime. Software and applications are updated remotely, interfaces towards repair shops and dealers enables

the hassle-free car ownership. New safety features can be deployed automatically where the car receives this

new programming information on an unsolicited basis from the cloud.





Figure 4 The Dashboard of the All-New Volvo XC 90 and Volvo Cars' Innovative Driver Interface

Source: Volvo Cars

Volvo Cars is innovating further, as the car maker distinguished itself with imaginative use cases that suggest

new forms of commerce and Networked Society-type connectivity. The package delivery solution demonstrated

at Mobile World Congress in 2014 was a novel concept that captured the imagination of the entire industry for

its ingenuity. Imagine that you shop online for groceries and merchandise and provide a one-time digital key to

your car’s trunk. The digital key would be available to the delivery person on their smart phone and would be

valid for one-time use on a single date and timeslot allowing the seller to actually deliver your goods to your

trunk at a pre-agreed time – without a requirement for you to be present.

Volvo Cars followed this up in a collaboration with sports gear manufacturer POC and Ericsson in developing an

app-enabled bike-helmet that communicates with the network to understand where Volvo cars are on the road

and to avoid accident between bicyclists and Volvo cars. On a more mundane, though no less useful note,

Volvo Cars’ connected solution allows users to reserve a parking space, accept the equivalent of an e-ticket

when entering the lot and pay the bill upon departure. All of this is driven in the cloud and driven via the car’s

in-dash terminal and Ericsson’s CVC solution.

Combining the core competencies of the three companies the possibilities one can imagine are vast.





Imagine a world where cars could capture and share real time data collected via their traction control and GPS

systems. We’ve all had to commute during bad weather. What if your car could become one car in a swarm of

cars on the road capturing data related to spinning wheels during acceleration or skidding wheels during

deceleration and could then share that data making it available to other cars on the road via their navigation

systems.

Imagine a car that could automatically download new instructions for gear shifting in an effort to provide a

better driving experience; a car that can tell you it needs maintenance and even book your next maintenance

appointment at your preferred mechanic or dealership.

The possibilities are endless and again, the platform components have already been proven to scale and enable

the launch innovative solutions. Finally, the fact is that all of this is happening today. In early March, at Mobile

World Congress in Barcelona, Volvo and Ericsson showed how they are taking the connected car to the next

level by not only offering a superior driving and ownership experience, but by demonstrating how they are

saving lives. To do this, Volvo is working not only to connect the car and the driver, but to connect the

complete environment around the car including; pedestrians, cyclists, roads and road authorities or the

complete transportation system. Volvo believes that their zero vision of no fatalities or major injuries in new

Volvo cars by 2020 will become a reality.

Figure 5 Volvo Cars In-Dash Terminal Parking App

Source: Volvo Cars





CONCLUSION

Analysts and press are often flooded with press releases and PowerPoints that are often little more than paper

ambitions and vapourware. This is particularly true when the vision shown is as complex as the one laid out by

Ericsson, AT&T, and Volvo Cars. This is even truer when the business interests of the partners are possibly

conflicting. Level of interest and investment are often misaligned, project ownership gets muddled, and the

results for the end user are either underwhelming or the project is abandoned.

The fact that Ericsson, AT&T, and Volvo Cars were able to realize this vision in a production ready vehicle is

refreshing as it shows the ability of AT&T and Ericsson to collaborate with and support Volvo Cars in the

development and execution of its vision. This is a rare case where would be competitors chose to become

collaborators and the end product is impressive. At the same time, AT&T and Ericsson recognize that they may

compete for the managed services piece of the value chain for other car makers — a reality they have chosen to

embrace.

Perhaps most striking or admirable of all is Volvo Cars’ larger Vision Zero initiative. Under Vision Zero, Volvo

Cars has set its eyes on achieving no fatalities or injuries in Volvo cars by 2020. Working with Ericsson and

AT&T, Volvo Cars is showing with each step, with each new app, with each new enhancement a steady advance

toward that goal. This is perhaps the greatest achievement of all three parties in delivering a system that

stands apart in its performance and execution.

In the end, what makes the variations of these solutions so unique and so appealing is the willingness of these

three companies to cooperate and combine their respective strengths. Moreover, the desire of these companies

to collaborate despite the obvious competitive challenges, to create an environment of innovation and options

that the market demands. Visiting the Drive Studio and listening to representatives from Ericsson, Volvo Cars

and AT&T, it was evident that there is a kind of mutual respect, a belief that the pie is big enough for all three

parties, a will to succeed and a sense that all three of these companies are focused on what they can achieve

together as well as independently. Of course, none of this would be possible without the superior technology

that each party brings to the table, particularly the underlying Ericsson CVC solution. But most of all, it is the

commitment of this team and the tradition of quality that spans these organizations that promises to make

their vision a success.

Others are noticing too. In September, 2014, AT&T was awarded the Governors Highway Safety Association

Special Achievement award. And over past two years, Ericsson has won as many as 8 major industry awards,





including Best Telematics Service Provider in June of 2014, awarded by Telematics Update who also awarded

Volvo Cars Best Infotainment System.

Expect more great things to come.

Contact Information

To explore this topic in more detail, or to hear how our solutions (Workshops, Presentations, Consulting

engagements, annual multi-client services) can support you, please contact us

www.strategyanalytics.com/solutions.html.

The author of this Insight, Roger Lanctot, can be reached at [email protected]


http://www.strategyanalytics.com/solutions.html

How Collaboration is Defining the Future of the · PDF fileHow Collaboration is Defining the...

Documents

Transcript of How Collaboration is Defining the Future of the · PDF fileHow Collaboration is Defining the...