With traditional automotive firms seemingly facing imminent rivalry from the likes of Apple and Google, they have to position quickly and smartly for the era of the digitalisation of the car. We spoke to the man in charge of BMW’s efforts, Dieter May, at the Paris Motor Show.
Electrification, autonomous tech and digitalisation - these were the 3 buzz items at the recent Paris Motor Show, but while the first two are generally well understood, the latter is not... and yet, it is arguably the most important.
With the pervasiveness of connectivity in the automotive space only set to snowball in the next few years, car companies are scrambling to secure resources and skills to effectively compete with new challengers from the likes of Google and Apple.
The reward for a successful “digitalisation” strategy is not only going to be relevance and survival, but also significant financial reward. Last year consultancy firm McKinsey & Co. predicted that the revenue from data streams and connectivity components would total an estimated 180 billion Euros per year by 2020! That's a pretty attractive incentive...
South Africa is not excluded from this process, with the local launch of BMW South Africa’s ConnectedDrive store and MyConnectedDrive customer portal this month (October 2016).
The man in charge of the BMW Group’s strategy is Dieter May, formerly from Nokia, Infineon, Motorola and IBM - at the latter company he was an R&D project leader. Officially, he is the Senior Vice President of Digital Services and Business Models… a position that did not exist at BMW a mere 2 years ago...
Car firms have to operate like internet companies
Smartwatch support has already been rolled out in several world markets.
Dieter smiles when we start discussing how “disruptive” the digitalisation process is, and will be in the next few years. “That’s the challenge, that’s why I like this job,” he enthuses. “You have 2 dimensions - the first one is the disruption of the traditional automotive industry and if you want to cope with that one you have to operate differently,” he explains.
“So we started from scratch 2 years ago, and we built all R&D internally. We have a development centre in Chicago with pure Internet guys, in Shanghai for the Chinese market, and then Munich. We are operating like an Internet company, which means we have 6 weeks release cycles. If you take BMW Connected as a platform, we launched in the US with a version 1 at the end of March, and by August we’ve had 2 intermediate releases. In August, we also went live in Europe, and in 4 weeks we rolled out 18 countries in Europe. In September, we announced Android, smartwatch integration from Samsung, and a few weeks later we introduced the Amazon Echo integration as another touch point. We have to be this fast because the sustainability of digital value propositions are much shorter because the barriers to replicate are pretty low,” May continues.
"The car will become the ultimate mobile device," says BMW's Dieter May. (pic. Youtube)
Speed, indeed, is crucial. Smartphone users have become used to regular updates to apps and software, and the same will happen to the car. But unlike hardware, copying software is far easier and can be done much faster…
“We’ve already had a competitor do a press announcement where you can see a copy/paste of our experience,” May laughs. “So you need to be really fast, and that is the key if you want to compete.” He also points out that the likely new competitors in the automotive space (Google and Apple) have an advantage because they’re operating from their core competency – speed.
“The fight against them (the tech companies entering the automotive space, ed.) is the key thing, and nobody knows how this will end. We have a lot of assets that we can differentiate through the assets we have in the car, and make digital better than a Google or Apple can,” May believes, indicating that it may be easier for car companies to venture into digital, than it is for digital companies to become car makers... Indeed, recent reports suggest that Apple have scaled back plans to introduce its own car.
“But we can’t be tied to car launches that happen every 5 years, where I need to deliver my software 2 years in advance. My planning visibility right now is 12 months, I know what I’m building next year, but right now I’m freezing what I will deliver in the fourth quarter this year! So there’s an intrinsic difference, and challenge also.”
The car as a digital touchpoint
May points out that BMW’s ConnectedDrive services are hardly new. In fact, the offering has been around for about 10 years! The next challenge is to build on top of this existing connectivity because, after all, the pipeline is already there.
“We believe now that the car will be an ingredient of the digital life of all consumers,” May explains. "It’s not an isolated thing, where you put an app in, you need to think about the car being part of your daily life, like your smartphone, your digital watch, your Amazon Echo device... all these digital touch points. The car is one of those touch points, so we want to bring the best services at the right moment to the consumer.
Almost anything is possible in the long-term
“We first concentrate on what we call the ‘journey of mobility management’, because this is core to us, and I give you a simple example; Today you get into the car, and you have traffic information service. The problem is that if I’m in the car, and it tells me I have an hour traffic jam, it’s a bit late, so that means the journey, for the consumer, needs already to start much earlier. You should get an earlier wake-up call, receive notifications, you get a tank stop built into your journey, and all with the ambition that you still arrive on time at your appointment. These are the things we are building with BMW Connected as a platform, enabling us to accompany the user and make mobility seamless for him.”
Journey management is the focus of the first available Connected functions.
But that’s just the start… Using systems such as Amazon Echo and Alexa voice-recognition tech, you could soon start to form a much closer relationship with your car.
“To its full extent, let’s say you have one fully configured car with reduced production complexity, and you can personalise it on demand. You could put seat heating in there, for example. We know it’s winter, it’s -20C outside, and he now has to drive to the office. We also know it’s damn cold inside the car, so why don’t we ask him if he wants seat heating and convert that into a purchase.”, May ponders.
“So there are so many things possible, because we understand the consumer behaviour, the context that he is in, what he likes, doesn’t like, what he uses, and you can basically then sell additional car functionality and you can also sell additional devices. Today we offer, for free, the integration with Amazon Echo (American market, ed.) and you can also put Alexa in the car. Let's say you see your kids in the back of the car causing terror, then you can simply say, ‘Alexa, please stream a video to my rear seat entertainment’, and you are immediately engaged with another eco system.
The core is really that we have a consumer profile that lives, which is basically dynamic, and we can adapt all experiences in a very contextualised and personal way. The good thing is also that whenever you change your car in the future, you just take your profile with you.”
It's bigger than apps
“The digitalisation of the car is not about apps, which is a word I hate,” May points out. This is much bigger. It’s about engaging with the consumer, being a digital platform... to be able to play the experience out, however you want. The app paradigm is something that is still there but it's probably not the thing of the future.
“We serve all digital touchpoints, that’s our approach, to be as seamless as possible. And we have it. We have it in operation. We’re not selling a vision here. That’s the thing. Because we’re operating like an Internet company. Get something out, and iterate and only make it better. There’s a great opportunity in this revolution, but also a lot to lose.”
What does it mean for South African BMW owners?
The BMW ConnectedDrive store brings selected Connected services to local BMW owners.
With the launch of BMW ConnectedDrive store in South Africa, owners of suitably equipped BMW models can start experiencing the digitalisation of the car for themselves.
BMW Connected uses a flexible platform called the Open Mobility Cloud as a basis, and is claimed to seamlessly integrate the vehicle into the user’s digital life via multiple touchpoints, such as an iPhone or Apple Watch. Initially, most of the services focus on journey management for the vehicle, to help the user reach their destination on time and stress-free.
So how does it work? To begin, the user has to set up a ConnectedDrive account and complete a short online registration process. Then they create their BMW Connected customer profiles quickly and easily.
If you’re a BMW owner and you’re keen to try it out, go here. Note however, that initially, BMW Connected is only offered for Apple iPhone users.
Once registered, BMW Connected scans for any mobility-related information, such as the addresses and arrival times contained in calendar entries and notifies the driver of the ideal departure time for arriving at their destination punctually.
Other functions already available for purchase in the South African store include; Remote, Real-Time Traffic and Concierge Services etc.