The

Digital
Matrix
in the
automotive
sector
 Smarter and Safer: Car or Driver? • 1

June 2017

Smarter and Safer:

Car or
Driver?

Source: Mercedes-Benz
2 • The Digital Matrix in the Automotive Sector
A quick history on the
Digital
Giants
T
HE DIGITAL BUSINESS trans-
formation of the automotive
sector has been happening—
at least over the last two
decades. GM introduced
OnStar telematics service in
1996. Onboard diagnostic
codes were standardized
across the USA in the same
year. Several other manu-
facturers followed suit
with their own proprietary
telematics service. Toyota
launched Prius Hybrid car—
with significant deployment
of electronics—in Japan in 1997 and
in USA in 2000. By 2008, some cars
were fitted with WiFi connectivity.
Today’s modern automobile runs
on 100 million lines of code with
Smarter and Safer: Car or Driver? • 3
sensors, software and cloud connec- and Windows Automotive but with and now operates in over 525 cities.
tivity as the new core competencies limited success. Lyft, a competitor to Uber, began in
required of the automakers. Tesla announced its June 2012 and now operates in
Apple’s “iPod Out” arrival into the automotive 200 US cities and has completed
experimentation with scene with its Roadster elec- over 160 million trips by
BMW launched in Mini tric sports car in 2008 but rose January 2017. GM has invested
2011 subsequently came to prominence with the debut $500 million in Lyft.
to be known as iOS in the of Model S—electric luxury Automakers such as
Car in 2013. The current sedan in 2012. Major auto- Daimler, GM, Ford and others
rebranding as CarPlay makers now offer all-electric are now beginning to experi-
happened in 2014 and has cars with Nissan Leaf consid- ment with transportation as
support of several leading ered the best selling model services to complement their
brands of automobiles. (more than 250,000 sold since historical business models
Google responded to Apple 2010 as compared with 186,000 for focused on designing and delivering
with its Android Auto in Tesla at #2). automobiles.
June 2014 and released Android Auto Uber, which began as a taxi-
mobile app in March 2015. Micro- hailing app in 2009 in San Francisco,
What will be the shape
soft experimented with Windows is now Uber Technologies—privately of the transportation and
Embedded Automotive under the valued at over $64 billion. By July mobility services by 2020?
names Auto PC, Microsoft Auto 2016, it had completed 2 billion rides by 2025?
4 • The Digital Matrix in the Automotive Sector Smarter and Safer: Car or Driver? • 5

The Digital Matrix

3 Players & 3 Phases REINVENTION AT THE ROOT

experimentation
at the edge
COLLISION
AT THE CORE
DIGITAL Giants

Participation in DARPA
Grand Challenge
Alphabet’s Waymo as a
Extension of self-standing entity
Computer OS to cars
Apple CarPlay

Cloud functionality

What are patterns of business models in the

intersection of automotive and mobility?
INDUSTRY Incumbents

What are the dominant ecosystems?

Incumbents deal with new
Telematics in cars What are the key partnerships to shape the future?
business models focused
Wifi connectivity on mobility and develop- What are the major opportunities and challenges
ments in autonomous drive with technologies and related areas?

Tesla as a new entrant

TECH Entrepreneurs

ramps up

New models of Uber redefines mobility

electric cars as service
6 • The Digital Matrix in the Automotive Sector Smarter and Safer: Car or Driver? • 7

Five levels of

Vehicle
Autonomy

Level 0 Level 1 Level 2 Level 3 Level 4 Level 5

No automation:
The driver is in
complete control of the
vehicle at all times.
Driver assistance: Occasional self-driving: Limited self-driving: Full self-driving under Full self-driving under
The vehicle can The vehicle can take The vehicle is in certain conditions: all conditions:
assist the driver or control of both the full control in some The vehicle is in full The vehicle can operate
take control of either vehicle’s speed and situations, monitors control for the entire trip without a human
the vehicle’s speed, lane position in some the road and traffic, and in these conditions, such driver or occupants.
through cruise control, situations, for example will inform the driver as urban ride-sharing.
or its lane position, on limited-access when he or she must
through lane guidance. freeways. take control.

Source: NHSTA
8 • The Digital Matrix in the Automotive Sector
five Illustrative
Experiments focused on
Mobility as
A service
Founded in 2009 and
headquartered in San
Francisco, Turo is a
car rental marketplace where trav-
elers can rent any car they want,
wherever they want it, from a vibrant
community of local car owners.
Travelers choose from a totally
unique selection of nearby cars, while
car owners earn extra money and
help fuel their adventures.
Maven™ is a
mobility service
offered by General Motors.
The app from Daimler
Corporation for
Android and iOS
unites various
mobility services,
comparing travel time and cost
between different transportation
providers. car2go, Flinkster, mytaxi
and Deutsche Bahn can already be
Smarter and Safer: Car or Driver? • 9
booked and paid directly via the app
in Germany. One single account
handles booking and payment –
making it easier to review all trips.
Recently, Moovel has been intro-
duced in USA.
Ford Motor
Company
established
Ford Smart Mobility as a separate
subsidiary to design, build, grow and
invest in new mobility services,
expanding Ford’s business model to
be “both an auto and a mobility”
company.
Book by Cadillac is a car
subscription service that
provides access to the
latest top-of-the-line
Cadillac vehicles, plus
the ability to exchange
vehicles up to eighteen times per year.
10 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 11

Automakers Race to Win with

Autonomous
Drive

Source Daimler
12 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 13

Mary Barra, CEO of GM, announced that GM will build autonomous Chevrolet Bolt
electric cars in 2017 with the goal of becoming one of the high-volume manufacturers of
autonomous vehicles over the next decade. In 2016, GM acquired Cruise Automation—a
leading autonomous driving technology company—reportedly for about $1 billion.
Source: GM

Fiat Chrysler has introduced The Chrysler Portal concept car in 2017, which is capable of
Level Three semi-autonomous operation and the driver has the option to turn driving
control over to the vehicle under certain highway situations. The vehicle is equipped
with an array of sensor technologies (LIDAR/radar/sonar/vision) that constantly
monitor conditions outside and inside the vehicle. The car is engineered to upgrade to
higher levels of autonomy as technology progresses and could well help FCA become a
partner of choice for Alphabet’s Waymo.
Source Fiat Chrysler Automobiles NV
14 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 15

Toyota’s dreamers and

designers have sketched out
automotive UX that is intelli-
gent, friendly and helpful. They
envision intelligent cars that
continually learn, and, keep
getting smarter. The cars also
get to know the drivers and
their needs and preferences
and then start to anticipate
them. Toyota’s Concept-i—
which stands for Yui—is a
liaison between the car, the
driver and the passengers, and
is built with artificial intelli-
gence and machine learning at
the core.
Source: Toyota
16 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 17

Ford aims to deliver high-volume, fully autonomous vehicles for ridesharing in 2021.
“The next decade will be defined by automation of the automobile, and we see
autonomous vehicles as having as significant an impact on society as Ford’s moving
assembly line did 100 years ago. We’re dedicated to putting on the road an autono-
mous vehicle that can improve safety and solve social and environmental challenges
for millions of people – not just those who can afford luxury vehicles.” Mark Fields,
Ford President and CEO.
Source: Ford

Nissan believes that we need a Seamless Autonomous Mobility system [or SAM],
where millions of autonomous cars can operate safely and smoothly because the
system helps cars to navigate unforeseen situations that occur on city streets such as
accidents, road construction or other obstacles. Nissan’s view is that with SAM, the
autonomous vehicle becomes smart enough to know when it should not attempt to
negotiate the problem by itself. The vehicle brings itself to a safe stop and requests
help from the command center. The request is routed to the first available mobility
manager – a person who uses vehicle images and sensor data (streamed over the wire-
less network) to assess the situation, decide on the correct action, and create a safe
path around the obstruction. The mobility manager does this by “painting” a virtual
lane for the vehicle to drive itself through.  When a policemen waves the vehicle past,
the manager releases the car to continue on by itself along the designated route.  Once
clear of the area, the vehicle resumes fully autonomous operations, and the mobility
manager is free to assist other vehicles calling for assistance.
Source: Nissan
18 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 19

“Anyone who focuses solely on the technology has not yet grasped how autonomous
driving will change our society,” emphasises Dr Dieter Zetsche, Chairman of the Board
of Management of Daimler AG and Head of Mercedes-Benz Cars. “The car is growing
beyond its role as a mere means of transport and will ultimately become a mobile
living space.” The visionary research vehicle was born, a vehicle which raises comfort
and luxury to a new level by offering a maximum of space and a lounge character on
the inside. Every facet of the F 015 Luxury in Motion is the utmost reflection of the
Mercedes way of interpreting the terms “modern luxury”, emotion and intelligence.

One core theme of the innovative interior concept is a continuous exchange of informa-
tion between vehicle, passengers and the outside world. Six displays are installed to this
end all around, tastefully mounted in the instrument panel and the rear and side walls,
making the interior of the F 015 Luxury in Motion a digital living space – a perfect symbi-
osis of the virtual and the real world. Passengers are able to interact intuitively with the
connected vehicle by means of gestures or by touching the high-resolution screens.
Source Daimler
20 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 21

In 2017 Volvo began recruiting people living in Gothenburg, Sweden to take part in
Drive Me – their research project on autonomous driving. It takes place on public
roads, and will involve local drivers integrating our autonomous driving technology
into their daily lives. Volvo’s ambition is to validate their human-centric technology,
enabling drivers to switch from a supervised mode, to an unsupervised mode in the
future – where it is safe to sit back, relax or work instead of keeping eyes on the road all
the time. To make safe self-driving cars a reality, they are putting people at the heart of
their experiment to help Volvo evolve from supervised to unsupervised driving.
Source: Volvo

in 2016, Honda equipped its Acura line with the latest version of the autonomous
driving systems for tests at the GoMentum Station—a 5,000-acre proving ground in
the Bay Area. This station was designed to challenge autonomous and connected car
systems with 20 miles of paved, city-like roadway grids and buildings. Honda aims
to deploy automated driving technologies by 2020. The car has been equipped with
the latest generation of Lidar, GPS sensors on the car’s roof and with new cameras.
Moreover, under the hood are more advanced CPUs and GPUs, along with upgraded
circuitry and cabling to enable more intelligent software algorithms to help sensors
and cameras perform at their peak.
Source: Honda
22 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 23

By 2021, BMW hopes to have highly automated driving a reality – where most BMW
models have the capability to drive themselves without input from the driver. The
BMW iNEXT model will be the foundation for the autonomous driving strategy and
serve as the basis for fleets of fully autonomous vehicles, not only on highways but also
in urban environments for the purpose of automated ride-sharing solutions. To achieve
this vision, BMW Group has joined forces with Intel, and Mobileye.
Source: BMW Group
24 • The Digital Matrix in the Automotive Sector Automakers Race to Win with Autonomous Drive • 25

VW has established the Electronics Research Laboratory in Silicon Valley to experi-

ment with autonomous drive. This laboratory worked with Stanford University in the
area of autonomous drive to have two winners in the DARPA Grand Challenge. VW’s
first winning entry was known as “Stanley,” an autonomous Volkswagen Touareg
engineered to endure the rigors of driverless operation through 132 miles of desert
racing. Two years later, the teams came together again to produce Junior, a Volk-
swagen Passat wagon, for the DARPA Urban Challenge. Such accomplishments have
served as the basis for VW’s roadmap towards incorporating autonomous drive into
its cars over the next five years.
Source: VW of America

Audi piloted driving is a strategic and systematic approach to harnessing technolo-

gies to assist drivers and make driving safer. Audi is balancing advances in automated
driving with owners’ desire to maintain control of the driving experience. In addition,
it is working with nVidia to design the next generation of autonomous drive.
Source: Audi
26 • The Digital Matrix in the Automotive Sector Beyond the Automakers, Other Industry Players Step Forward... • 27

Beyond the Automakers,

Other
Industry
Players
Step Forward…

Source: Intel
28 • The Digital Matrix in the Automotive Sector Beyond the Automakers, Other Industry Players Step Forward... • 29

Continental in Germany is experimenting with a

concept of Holistic Connectivity—whereby the vehicle
is the next Smart Device. It will link the vehicle to your
daily life, personal network and will provide visible
and invisible services around and beyond the vehicle.
Their vision is to make the vehicle a central part of the
‘Internet of Everything.’
Source: Continental
30 • The Digital Matrix in the Automotive Sector Beyond the Automakers, Other Industry Players Step Forward... • 31

nVidia’s belief in the future of autonomous drive was based on the principle that driver-
less cars weren’t possible until researchers adopted an AI technique known as deep
learning. That deep learning relies on powerful GPUs, access to vast troves of data,
and sophisticated algorithms for deep neural networks to solve complex problems.
Deep learning is essential for autonomous vehicles because no one can write software
that anticipates every possible scenario a self-driving car might encounter. With deep
learning, the car’s computer can learn, adapt, and improve. It is working with Audi to
put the world’s most advanced artificial intelligence (AI) car on the road by 2020.
Source: nVidia
32 • The Digital Matrix in the Automotive Sector Beyond the Automakers, Other Industry Players Step Forward... • 33
AT&T: The Connected Car
Making Cars Smarter and Safer
A A: Advanced Diagnostics
Future cars will generate thousands of
data points per second, providing both
customers and auto dealers the infor-
mation they need to predict potential
B vehicle issues before they happen.
H G
B: Telematics
Drivers have a wide range of security
F features that keep them connected
and safe in the event of an emergency,
including automatic crash notification,
C stolen vehicle tracking, and roadside
assistance.
C: Remote Services
J Customers can control their connected
vehicle from their wireless device. These
remote services include locating their car
in a parking lot, sending directions to the
vehicle, and starting it remotely to warm
E up on a cold day.
D J: Connected Media
D: Global Services
AT&T is working with automotive manu-
facturers to make connecting vehicles
easy, in countries across the world.
E: Rear Seat Infotainment
4G LTE speeds available via built-in
mobile hotspot enables services such
as Internet radio, video streaming, web
browsing and more.
F: Family Tracker
Receive notifications and track a young
driver when they have traveled beyond
predetermined boundaries or crossed a
preset speed limit.
G: Voice Recognition
Contextual voice control enables hands-
free services and more, helping to create
a safer driving experience.
H: Automotive App Store
Connect and download specialized
automotive applications for all your
entertainment and connected vehicle
needs.
I: Vehicle Updates
Have your vehicle updated to the latest
firmware and software without making
an appointment at the dealership.
Passengers can purchase and download
songs, audiobooks and maps, and stream
music on the go.
© 2014 AT&T Intellectual Property. All rights reserved. AT&T and
the AT&T logo are trademarks of AT&T Intellectual Property.
34 • The Digital Matrix in the Automotive Sector Digital Companies Jockey to Influence the Transformation Roadmap • 35

Digital
Companies
jockey to influence the
transformation roadmap
36 • The Digital Matrix in the Automotive Sector Digital Companies Jockey to Influence the Transformation Roadmap • 37

Tesla is leading the way with Autopilot now. The

future functionality includes “Full Self-Driving
Capability” based on eight active cameras at safety
levels at least twice as good as the average human
driver. Tesla aims to provide individuals to be able
to conduct short- and long-distance trips with no
action required by the person in the driver’s seat.
Source: Tesla
38 • The Digital Matrix in the Automotive Sector Digital Companies Jockey to Influence the Transformation Roadmap • 39

Uber is in the very early stage of testing self-driving capabilities in its Advanced Tech-
nologies Center (ATC) in Pittsburgh, Pennsylvania. At this point in time, the prototype
car—a Ford Fusion fitted with advanced technologies—is collecting mapping data and
different self-driving functionalities under real-world conditions.
Source: Uber

Waymo—Alphabet’s new entity—is focused on “building a safer driver that is

always alert and never distracted.” Their vehicles have sensors and software that
are designed to detect pedestrians, cyclists, vehicles, road work and more from
a distance of up to two football fields away in all directions. Their sensors and
software detect and predict the behavior of not only the cyclist, but of all the road
users around us. They rely on two million miles of real-world experience to teach
their cars to navigate safely and comfortably through everyday traffic.
Source: Alphabet, Inc.
40 • The Digital Matrix in the Automotive Sector Digital Companies Jockey to Influence the Transformation Roadmap • 41

MIT-spinoff nuTonomy is a start-up “tackling the most diffi-

cult challenge in self-driving cars: urban driving.” Its first
pilot began in Singapore late 2016.
Source: nuTonomy

Apple’s CarPlay is Apple’s

way to make using the iPhone
safer in the car. CarPlay
integrates the iPhone with the
car’s built-in display, enabling
users to easily access direc-
tions, make calls, send and
receive messages, and listen
to music.
Source: Apple
42 • The Digital Matrix in the Automotive Sector Digital Companies Jockey to Influence the Transformation Roadmap • 43

Microsoft is not developing an in-car operating system to

compete against Apple or Alphabet’s Waymo. It is offering its
Azure-based cloud platform for car manufacturers in areas
such as predictive maintenance, improved in-car productivity,
advanced navigation, customer insights and help building
autonomous driving capabilities.
Source: Microsoft.

The Hyundai Blue Link Skill allows Hyundai vehicle owners the ability to Remote Start,
set the desired interior cabin temperature, Remote Lock/Unlock, Remote Start Charge/
Stop Charge, Remote Horn & Lights and more using Alexa.
Source: Hyundai and Amazon
44 • The Digital Matrix in the Automotive Sector Reinvention at the Root of the Auto Sector in 2020 • 45

REINVENTION
AT THE ROOT
OF THE AUTO SECTOR IN 2020
Many Different Players Aim for Relevance During the
Reinvention of the Transportation Sector
46 • The Digital Matrix in the Automotive Sector The Digital Age • 47

Integrative
(ecosystem)

Platform Solution

THE DIGITAL-AGE Upstream

(in the lab/
factory)
Distinctive
Expertise
Downstream
(closer to the
customer)

Product Service

Focused
(single-firm)
48 • The Digital Matrix in the Automotive Sector Digital Business Transformation Trajectories • 49

Machines
Digital
Business

Locus of Vehicle Control

Transformation
Trajectories
in Automotive & Mobility

Human

Products Nature of Business Models Platforms

& Services & Solutions
50 • The Digital Matrix in the Automotive Sector The Reinvention Phase • 51

 aymo is working with FCA (to develop mini

W
vans capable of autonomous driving) and also
with Honda to figure out how best to install
sensors and software into Honda automobiles.

Daimler has agreed to introduce and operate their

self-driving cars on Uber’s ridesharing network.
We are beginning to see moves
by different incumbents to
position for the

reinvention GM acquired Cruise Automation for more than

$1 billion in early 2016 and has invested $500

phase
million in Lyft.

Ford Motor Company has taken a majority

investment stake ($1 billion over five years) in Argo
AI to build AI-based technologies to accelerate
self-driving cars.

 MW is collaborating with IBM Watson IoT

B
to explore potential applications of cognitive
computing in automotive with the goal of cars
getting to know their drivers better.
52 • The Digital Matrix in the Automotive Sector Your Map of Automotive & Mobility Solutions in 2020-2025 • 53

Your Map of
REINVENTION AT THE ROOT
Automotive &
Mobilit y Solutions
in 2020-2025

T
HINK ABOUT the transportation and mobility space in the time frame
2020-25. During this time frame, we expect mainstream deployment of
levels 2 and 3 of vehicle autonomy—with cars capable of limited self-
driving. We also expect to see a portfolio of business models—some involving
ownership, others involving subscriptions or ridership across multiple
different modes of mobility.
Reflect on the following questions:

1. What would—in your assessment—be the relative mix of the four busi-
ness models—product, service, platforms and solutions? Focus on
specific geography if necessary.

2. Where might the new business value be created? What pool of existing
value (profits) might disappear?

3. Who would dominate the different business models? Would they be

existing companies or entities formed through some combinations of
mergers and acquisitions or entirely new companies that we haven’t
yet seen?

4. What do you think could be key patterns of alliances and relationships

between the different companies?

5. What new technology developments might accelerate the transformation

and make this reinvention happen?

Use the space on the next page to sketch out your vision for
2020-2025 reflecting your answers to the five questions.
54 • The Digital Matrix in the Automotive Sector About the Author • 55

Professor N. Venkat Venkatraman is

the David J. McGrath Jr. Professor in
Management at the Boston University
Questrom School of Business and is that
author of The Digital Matrix: New Rules for
Business Transformation Through Technology,
Published by LifeTree Media in 2017.

thedigitalmatrixbook.com

nvenkatraman

NVenkatraman
design: labordaycreative.com