It's ironic that with all the headway being made in infotainment systems in automobiles, and global telematics in commercial fleets, it is 3G networks -- rather than the technically superior 4G -- that will typically carry the data. It will not be until after 2020 that 4G becomes the leading connection technology for OEM telematics revenue globally. And what are the odds that 4G will be leading edge five years from now?
It is common for verticals with lengthy product lifecycles, such as automotive, to show delayed adoption of next generation technologies, such as 4G, due to slower penetration into the installed vehicle base. The type of connectivity that will drive revenue largely depends on where a business is located.
“For instance, in the United States, Japan and Korea, 4G will lead revenue generation," said Dan Shey, ABI Research VP and IoT Practice Director. ABI publishes the subscription-based IoT Market Tracker. "But, interestingly, it will take until 2018 and into 2019 for 4G to carry the majority of the data traffic driving OEM telematics revenue. 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 revenue in 2020.”
The kinds of supply chain services generating connected car revenue are equally diverse and highly country dependent. Although professional services including hardware and software integration, consultancy and project management generate the majority of global IoT supplier revenue currently, by 2019, sales from OEM telematics platform vendors such as Ericsson, Verizon, Wireless Car and Airbiquity will take the lead. Data and analytics revenue will also become a major revenue generator later in the forecast period exceeding connection, security and network services.
“By 2020, the connected car supply chain will start seeing some dramatic shifts," said ABI Research VP and Automotive Practice Director, Dominique Bonte. "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."