In recent years, "IoV" has become one of the hottest industry buzzwords, with each and every player holding different opinions about it. What exactly is the IoV, and what kind of issues is the industry facing?
Over the past few years, like the blind men trying to size up the elephant —taking a part for the whole, we’ve tried to find a standard answer to the IoV among the complex network technologies, from 3G to 4G, from touch screen to speech recognition, and from being enclosed to AI-empowered.
Taking the ten-year development of PATEO as a blueprint, Ken (Yilun) YING, founder and Chairman of PATEO CONNECT+, deeply analyzed the technical nature of the IoV from a vertical perspective, and revealed the core logic of the IoV in detail.
The following content is the refined transcript of the IoV Development and Business Models course delivered by Ken for XY University. For more information, please click the audio, or scan the QR code on the poster to watch the video.
Ken (Yilun) YING: Any closed business form will only lead to a dead end
From XY University
Since the birth of the first motor car, the interactive relationship between human and vehicle has never stopped. After entering the era of new energy, this relationship has roughly undergone four levels of changes, while the IoV is the top-level structure.
In early Mar. this year, 23 departments, including the National Development and Reform Commission (NDRC) and the Ministry of Commerce of the People’s Republic of China jointly issued a document, proposing to accelerate the construction and commercialization of information infrastructure such as 5G network, support the application of 5G technology to transform and upgrade the cable TV network, realize the wired & wireless and large-screen & small-screen interactions in homes, and promote the deployment and application of the IoV.
Though with policy support in place, it is still too early to say that the IoV has entered its first year of the business model era.
The development of the IoV is stepwise. New energy and traditional vehicles fall into the traditional automotive and parts industries, while autonomous driving and the IoV represent the real intelligence sector, but it’s divided into two parts: the human related intelligentization is referred to as the IoV; and that related to the road, the vehicle, or even the future road network is actually autonomous driving. It will take at least ten years to realize the real intelligent drive, so IoV entrepreneurs all have to make arduous efforts.
The Toyota e-Palette is a good industry case. It’s not only a demonstration of intelligent drive, as well as a sample solution to a highly efficient business model in the Mobility as a Service (MaaS) field, but also a representative vehicle model. This is exactly where the real explosion of the automotive industry lies.
As we all know, the top GDP contributor in China is real estate, followed by the automotive sector that is divided into premarket and aftermarket, with a total size of more than ten trillion yuan, among which the former takes up 3 trillion; refueling and charging, also 3 trillion; insurance, approx. 700 billion; highway, also approx. 700 billion; and the aftermarket, approx. 2-3 trillion.
For the moment, the 3-trillion size of the premarket will definitely witness a drop, which is theoretically estimated to be 40%; and the charging market will probably drop by 30%. With the development of the IoV, theft insurance is in fact not needed, not to mention autonomous driving, so insurance will also sharply decrease by about 30%; the diversification of urban transportation will allow for more choices for long-distance journeys of over 150km, with road usage charges reduced by about 20%, while the popularization of NEVs has reduced the market size by at least 30%.
The considerable cost cuts pose great challenges to both the country and the industry. Therefore, the development of the IoV requires that the business model must be dozens of times the original industry scale. For example, if you could expand the current scale of 12 trillion to 30 trillion, then it will do.
As previously mentioned, the development of the IoV follows a stepwise pattern. In the early days, the IoV was “Security Focused”, represented by the best-known OnStar, and of course WirelessCar and G-BOOK, etc.
In Stage II from 2010 to 2012, the IoV was “Aftermarket Installed”.
Stage III was the era of the "Mobile Phone Mirroring IoV”, which was different from the current mobile phone based IoV, mainly including CarLife, CarPlay, Android Auto, MirrorLink, Blue Link, or whatever the mobile phone connection protocol, and the time was 2013.
Stage IV started in 2015, known as the era of the “Mobile Phone Based IoV" or the "Entertainment Focused IoV", which mainly integrates the iFLYTEK Voice, AutoNavi maps and Ximalaya Music, etc., with features stacked together like a mobile phone. From 2018 onwards, Internet giants like BAT and Huawei have begun to expand into the market.
So the IoV is constantly evolving, during which process, many companies have died, while many others have survived, but PATEO is the only one that has truly kept to the path all the way.
Autonomous driving represents one of the future development trends of vehicles. Both the OEM and the technology company are working hard on its R&D, leading to the emergence of autonomous driving featured IoV. NVIDIA, MDC and Huawei, the ones focusing on the R&D of high performance computing (HPC) featured chips, all fall into this category.
The traditional IoV, or the "Security Focused IoV" is connected to a TSP platform, which is a tier 1 supplier of the OEM’s IoV project, as well as a participant integrating other links in the industry chain, logically including platform design / development / operations, as well as call center, content aggregation, cloud platform and data center, to implement E-Call, I-Call, B-Call and other features.
In addition, the IoV also includes the internal network of a vehicle. The TCU and BCM of NEVs will generate enormous data, of which the exchange and reconciliation constitute the internal network of the whole vehicle.
One level above are the IoVs respectively based on the automotive electrical & electronic systems and the software. Among them, the latter is the field we are most exposed to, which is divided into two schools: the first one is the Linux or QNX school, featuring hypervisor connections, and giving priority to security and real-time performance; the second one is the intelligent OS school, mainly including iOS, Huawei’s Harmony OS and Android.
The more advanced one is the cloud empowered IoV, of which the architecture is comprised of the IaaS layer, the one that communications operators and Internet companies like Alibaba, Huawei, Baidu, Tencent, China Telecom and China Unicom are working on, combined with the TSP-based PaaS and SaaS layers; of course, it also consists of AI, big data, OTA, in-depth access to third-party APIs, various CPs / SPs, map services and image services, etc.
Although the IoV belongs to the technology category, it eventually has to be put into practical application, e.g., new retail, new finance, new insurance, new service, and of course new mobility and smart city, etc. Hence, the IoV acquires a new property — the business service featured IoV.
In Jun. 2019, PATEO officially launched its mobile phone based IoV product, which comes with a technology architecture for mobility services. According to PATEO's technical logic, the IoV is classified into the IVI based IoV platform, the mobile phone based IoV platform, and the all-scenario platform.
Among them, the all-scenario platform, with unlimited expandability and space for imagination, will bring all new value to the user and the auto enterprise, including map, AI, payment, as well as mobility services inside and outside the car.
As is known to all, the IVI based IoV product has an inherent deficiency that its CPU lags behind in performance. Secondly, the cost is relatively high. We all know that the current automotive market environment is very unfavorable, so low-cost and high-performance products are needed. Thirdly, to download various apps, the user must first create a very complicated account, and then unlock. Of course, there will be the NFC-enabled key in the future, but before this, you will find that every feature you need requires extra cost.
By contrast, the mobile phone based IoV product is much more intelligent. At present, the capacity of a mobile phone chip is more than 10 times that of an IVI. Besides, the mobile phone comes with a GPU and an NPU, allowing its System on Chip (SoC) to perform image processing and AI processing; but the IVI doesn’t, most of them are only equipped with a CPU, so the performance of depth image processing (DIP) and AI processing is impeded.
So, the mobile phone based IoV is by no means a simple mobile phone connectivity solution, but encompasses a very intelligent ecosystem that allows the user to choose whichever music or map app they want. We call it “1+1+N”.
The IoV is the core of the middle office for the auto companies to carry out transformation in the future. Presently, the OEM, the automaker and the Internet company are all working on the IoV. PATEO doesn’t want automakers to be kidnapped by the giants, otherwise they won’t even be able to put their own services in. "Opening leads to survival, while closing leads to certain death”. Therefore, I believe any closed business form is actually a lost game.
I think, any company that tries to make money out of mobility is living in its own dream, at least for the moment. Why? Because no public service provider is making money, you haven’t seen a profitable metro company, nor a profitable bus company.
Therefore, mobility is not a profit point. The profit points and business models of CASE lie beyond CASE itself. The IoV functions to get vehicle connected to the network, and acts as the key for the automotive industry to enter the Industrial Internet era. It is of crucial importance for auto retail, finance, insurance, service, mobility and other scenarios, requiring the OEM to be more open.
We all know that good products are created in an end-to-end manner. Without this end-to-end capability, you won’t be able to make a good product.
With a good product in hand, you must consolidate the platform, which involves many dimensions, but no matter what, these several elements are more critical, i.e., OS, map, AI, payment and finance.
The current IoV has already gone from the inside to the outside of the car, and changed from the entertainment featured IoV to helping vehicle manufacturers build a complete set of IoV capabilities. If automakers don’t keep up with the pace of transformation and upgrading, it will be difficult for them to survive. According to the current most basic logic, the vehicle is a mobile commercial real estate, future cars are destined to become mobile real estate, and the profit model of vehicles in the future is destined to follow the business model of commercial real estate.
At present, the popular L5, 5G and V2X seem to be correlated, but are actually not. Now, if we do not think out of the box and make early preparations for the industry, we are doomed to be eliminated for the second time when the market gets truly mature, and this time it is the industry giants that will get eliminated. So, the head of a company needs to attach importance to it and carefully organize discussions and implementation. Time is ticking away, as the window period is only around five to eight years.
In the future, PATEO is going to realize a business scale of 30 billion per year. Although the beer opener is worth 30 billion, the true value lies in the barrel of beer.
Autonomous driving involves an ecosystem that requires 10-15 years of accumulation. What the IoV does is more than just connecting the vehicle to the network, ushering the vehicle into the Industrial Internet era, creating an ultimate user experience, or even increasing the original OEM revenue by 20%, 30% or maybe 100%, but it is a thorough change to the automotive business model.
The general idea of PATEO is that we work in collaboration with top clients, Internet & technology companies, as well as energy, finance, insurance, retail, industrial and other enterprises, to grow this more-than-ten-trillion market that’s facing imminent collapse by several or maybe dozens of times.