New digital technologies disrupt auto industry

Posted on 9 Dec 2015 by Michael Cruickshank

Automotive manufacturers across the world are facing an unprecedented era of disruption within the industry.

This disruption, primarily driven by networked systems and software technology is rapidly changing what customers expecting of an automobile, as well as the way in which they purchase them.

An autonomous future

One of the most frequently reported disruptions within the industry is the shift towards driverless cars. Almost every major car company is working on this technology, and some – such as Tesla – have already brought cars to the market with significant autonomous capabilities.

Manufacturing such vehicles requires a shift away from thinking of cars as purely ‘hardware’ products, towards seeing them as (large) software-enabled devices.

Such a shift in thinking, and the transformation of automakers into tech companies – or the opposite in the case of Apple and Google – also opens the industry up to many more disruptions.

The rise of ride-sharing

Through seeing a car as a connected, ‘internet of things’ device, automakers and software companies have room to experiment with a number of new ideas.

Among the most disruptive of these is a concept being pushed by Uber and its competing ‘ride sharing’ apps. These companies view automobile transport as a service rather than a tangible product which you can own.

Users of these services engage with automobiles in a non-traditional way and, as such, automakers need to be aware that as these services grow to become more popular, they may present a whole new and unique set of demands on what customers want from automobiles.

Taking this even further, Uber has been reported to be investing in autonomous car technology itself, meaning that it too has the desire to manufacture its own vehicles, something which may trigger further disruption down the line.

Automobiles as software platforms

One final set of companies which are already disrupting the auto industry are makers of mobile operating systems (OS). Both Google and Apple have developed software specialised for automobiles, allowing these vehicles to link up with products and services offered by each respective company.

For manufacturers of automobiles there is now less-and-less need to develop their own control systems for their vehicles, when functions can be carried out by a smartphone or tablet running an auto-focused OS.

Due to the aggressive competition between the companies behind these software platforms, the automotive industry could be drawn into similar battles which we have seen in the consumer electronics industry. Individual brands may have to choose which company’s software they will use in their car, with significant ramifications for their customers.

All up, these factors will significantly disrupt the automotive industry. Twenty years from now the industry will almost certainly be radically different from that of today. Despite this, like many times in the past, it will be the companies which are the most flexible, mobile, and accepting of change that survive and prosper.