Driving the Future: Omdia Forecasts 18% Growth in Connected Cars, Unveiling Lucrative Revenue Opportunities

July 29, 2023
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Key Takeaways:

  • Omdia’s latest outlook predicts an 18% growth in connected cars in 2023, paving the way for lucrative revenue streams.
  • Over 900 million connected cars are expected to hit the roads by the start of the next decade, making it a bigger market than popular consumer devices like pay-TV set-top boxes and tablets.
  • Tech giants, including Google, Apple, and Amazon, are vying to become key gatekeepers in the connected car environment with their software solutions.
  • Car OEMs are also developing their own software solutions to retain control of the consumer experience and establish a strong foothold in this rapidly evolving market.

About Omdia: Empowering Smart Growth Decisions

As technology continues to reshape various industries, one sector that’s experiencing a profound transformation is the automotive market. Omdia, a leading technology research and advisory group, has recently released its latest outlook into the media landscape of the automotive industry, focusing on connected cars. The report forecasts a significant 18% growth in connected cars in 2023, opening up potential lucrative new revenue streams for companies looking to capture this burgeoning market.

Omdia’s deep knowledge of tech markets, combined with actionable insights, empowers organizations to make smart growth decisions. The automotive sector, in particular, is witnessing a seismic shift as connectivity becomes an integral part of modern vehicles. The growth in connected cars is set to surpass the installed base of popular consumer devices like pay-TV set-top boxes and tablets. This transformative trend is driven by the increasing demand for in-car services and the convergence of automotive and technology industries.

The Rise of Connected Cars: A Lucrative Opportunity

The automotive landscape is evolving rapidly, and connected cars are at the forefront of this transformation. According to Omdia’s research, over 900 million connected cars are projected to be on the road by the beginning of the next decade. These vehicles will offer passengers a wealth of connected services, including video and gaming options, facilitated by the proliferation of screens in the front and rear of the car cabin.

David Tett, Principal Analyst at Omdia, highlighted the potential growth opportunities in the automotive sector: “There is ongoing uncertainty as to consumers’ willingness to pay extra for in-car services, particularly as they correlate it with value for money given average journeys range between 15-30 minutes. Although it has been difficult to monetize, native car-based services are expected to provide such opportunities over the coming years. This potential has meant many stakeholders consider automotive as a key area for future growth.”

The potential for monetization has attracted the attention of tech giants like Google and Apple, who are positioning themselves as key gatekeepers within the connected car environment. Both companies are introducing their in-car software solutions to establish a dominant presence in this emerging market. Amazon is also joining the race by bringing its popular Fire TV entertainment solution into vehicles, aiming to capture the media consumption market.

The Battle of Platforms: Tech Giants vs. Car OEMs

The entry of tech giants into the automotive industry has sparked a battle for dominance over in-car software solutions. Google and Apple, known for their successful platforms in other product categories, are now leveraging their expertise to become key players in the connected car space. By providing in-car software solutions, they seek to create a seamless user experience for drivers and passengers.

In response, car original equipment manufacturers (OEMs) are working on developing their own software solutions to maintain control over the entire consumer experience. This move allows them to retain customer loyalty and keep drivers within their ecosystems. This competition for platform supremacy is reshaping the future of the automotive industry, with the potential to redefine the driving experience for millions of consumers worldwide.

Standard Connectivity: Paving the Way for Repeated Revenues

As the automotive industry shifts its focus toward recurring revenues, standard connectivity is becoming a standard feature in all new car sales. This connectivity enables a range of services and subscriptions within the car cabin, marking a significant shift in the traditional automotive business model. Manufacturers are moving beyond one-time vehicle sales and embracing the concept of continuous service offerings.

Monetization strategies are already being put into action, with add-on subscriptions for various services, from cloud gaming solutions to personalized in-car amenities like heated seats. Additionally, the potential for over-the-air updates allows car manufacturers to deliver software improvements and additional features, further enhancing the value proposition for consumers.

In-Car Services: A Path to Future Growth

The ongoing evolution of connected cars and in-car services has made the automotive sector a key area for future growth. As technology continues to advance, consumers are increasingly demanding seamless connectivity, entertainment, and personalized experiences during their journeys. Omdia’s research indicates that while there may be initial uncertainty about consumer willingness to pay for in-car services, native car-based offerings hold great promise for future revenue opportunities.

The competitive landscape in the connected car market is set to intensify as technology giants and car manufacturers vie for dominance. The success of these players will depend on their ability to cater to consumer preferences and offer compelling in-car experiences. The rapid growth in connected cars presents a world of opportunities for innovative companies to drive the future of the automotive industry and pave the way for a more connected and immersive driving experience.

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