3.3 Optimizing the value chain The pace of change in the As the connectivity industry matures, be refreshed to enable monetization connectivity marketplace participants are re-evaluating their throughout a vehicle’s lifecycle. position in the value chain. As one OEM However, carriers need to address some is now so rapid that all put it, “We had to learn that technology fundamental challenges. As customers participants — OEMs, is not a business for us; it’s an enabler add more and more devices, they incur for our services business and so then we incremental charges for using these on service providers, insurers developed new ways to be connected at the network. At some point, this becomes and carriers — are having to a lower cost. Now we have connectivity prohibitive in terms of their cost for at different levels for customers, for our consumers. Since people do not want to rethink how they will price dealers, and for ourselves…we’re trying to pay separately for every device they own, and package their solutions drive as much cost out of that connectivity carriers need to understand and implement for maximum efficiency as we possibly can.” measures to bring purchase of cars into and effectiveness in a The role of technology in the value consumers’ existing payment plans as chain is attracting significant attention. cost-effectively as possible. fast- changing environment. With customers demanding increased Meanwhile, insurers continue to grapple sophistication and interconnectivity across with the economics of connectivity. As one all devices, participants recognize that at of them put it, “For the most part, there’s the end of the day, it is all about quality of no insurance consumer experience. At content and ability to deliver this as rapidly least not one they enjoy. It’s a very tight and intuitively as possible. market … US$25 per vehicle for a year. Advances in technology are creating That’s the kind of margin we’re working on, exciting opportunities for value creation. maybe US$50 if you’re lucky. And we’re Once OEMs have embedded their talking about a technology that has a burn connectivity architecture, continuous rate of US$150-200 a year, even before engagement with customers — e.g., via you spend the IT and external resources to satellite links — is a real possibility. Options get it up and running.” to download and install new content can “So we can service multiple head-units inside any “As an actuary I know that once you’re inside the car make, model, trim. One platform – multiple head-units. and you know how that car’s being operated, you have So the tools are there to deliver dynamically.” probably got the single most predictive actuary in the rating plan.” “So we have people working in core R&D to develop things and try and balance those investments from “Where is the supplier that comes in that says we say a technology push to a customer pull perspective.” understand scalability, where it is going. Why don’t you guys start here, this is the main focus of where “The percentage of revenue associated with your market is, it will cover you for five years.” connectivity is small compared to the overall value of connected services or connected products.” “As a carrier, we have put a toe in the water in Europe with some aftermarket services and I think that will be a business, which will grow significantly.” The quest for telematics 4.0 | 11