Move over connected cars (Reality Check)
4 reasons IoT on wheels is accelerating and will be bigger than the connected car market
With headline-grabbing bells and whistles, the growing cult around connected cars is understandable. The booming market for connected services is expected to hit $250 billion—it’s undeniably hot.
Wearables, the connected home, and other consumer applications for connected personal vehicles get all the hype, but the truth is that there are industrial segments of “IoT on wheels” such as farm equipment, freight trains, big rigs, and construction equipment that are moving faster toward full-on IoT connectedness. In fact, the market is projected to exceed the connected car market and hit $300 billion. Here are four reasons why:
1. Mobile telematics – Big piece of the market pie
Commercial vehicle telematics, according to one study, could reach $47.6 billion by 2020—over three times the size of the vehicle market and double its market value today. These industrial business applications and services are the underlying technology that enables eCall, fleet management, remote diagnosis, and usage-based insurance (UBI) services and more.
2. Industrial applications = ROI
It makes sense to see stickiness and adoption here since industrial applications tend to contribute to the bottom line in a more immediate and direct way than consumer. And for industrial customers, the machines are already a “sunk” cost and the connected features just become a huge value-add with vehicles that are already in use. These services, already leveraged by Catepillar and John Deere, are relatively inexpensive to deploy, and pay for themselves very quickly.
Many companies are providing “add-on” services that dramatically increase productivity (e.g. automated fleet management and predictive maintenance alerts) and that decrease loss (e.g. geo-fencing that eliminates overnight equipment theft).
3. IoT for agility
In another model, IoT on Wheels enables businesses to utilize a pay-per-use model, which allows companies to move with more agility and less capital expenditure. This is the same reason so many enterprises have moved toward the use of cloud-based IT infrastructure (like Amazon Web Services) rather than building and hosting their own IT infrastructure. It can reduce extremely high costs of entry and gives industrial users a whole lot more flexibility as they are never stuck with machinery sitting idle that they bought for project X that won’t be used for project Y and Z.
4. Telematics can help fix heavy construction problems
In just the last couple of years, many heavy construction vehicles have received upgrades that are having a dramatic impact. By leveraging now-mature telematics and the same set of almost ubiquitous technologies that make IoT a reality (internal sensors, GPS, satellite/cellular/WiFi connectivity, etc.), companies like Trimble, Caterpillar, Arsenault, and others are providing services that fix many problems that have plagued heavy construction for years.
For example, by monitoring the sensor streams coming from a bulldozer, a fault can be detected early, the equipment replaced before it fails, and a lost day’s work can be avoided. The same geo-fencing technology that can prevent a 16-year-old driver from straying too far from home can prevent a million dollar tower crane from “straying” from the job site in the dead of night. And GPS-based fleet management applications can improve efficiencies in large-scale earth-moving operations by an impressive degree, up to 22% according to one study performed by the Canadian Journal of Civil Engineering. In a $500K operation that’s a savings in excess of $100K realized in a single job, with the IoT systems that enable these efficiencies costing a whole lot less.
Go-to-market requirements for connected vehicles
The challenges currently facing connected vehicles have little to do with the IoT-connectivity technology itself. The main hurdles for those seeking to capitalize on the connected vehicle business have more to do with the infrastructure that needs to be employed, enabling lucrative recurring revenue and usage-based models. Most organizations just don’t have the back-office capability to handle selling, billing, and provisioning rapidly changing products and services sold via usage or subscription. Adopting a cloud-based billing system sophisticated enough to handle these and a myriad of future business models is essential.
Needless to say, the examples above have obvious analogs (and available gains) across any vehicle-centric industry. But industrial applications for connected vehicle services will likely continue to pave the way for the rest of the connected vehicle sector—literally and figuratively—in the coming years.