In June seven companies, including CloudMade announced formation of The AutoLabs (TAL), an alliance of suppliers to the automotive industry, with the dedicated purpose of accelerating the adoption of connected car technology.
We spoke with Juha Christensen, CEO of CloudMade about his company and the new alliance.
Among its key activities, TAL intends to develop demonstration vehicles incorporating innovative technology that is designed to appeal, in large part, to Millenials.
Christensen told us that today “even connected cars, don’t really connect to people and their lives.” Specifically the group is concerned that younger people who are immersed in their digital lifestyle are increasingly going to choose their vehicle brands based upon the degree of connectivity they are being offered.
TAL puts the proposition as follows: “Millennials think and behave differently from all other age groups before them; that is, they consume in new ways, thinking in terms of digital services, not products. The automotive industry’s in-car experiences must follow this model to compete, or risk losing a generation to new, software-driven competitors.”
Since the group is focused on Millennials (roughly speaking anyone born since about 1980), we asked Christensen for his views on the tendency of these younger people to have less interest in owning cars and, in many cases, even in learning to drive.
He told us that this trend was not unique to the U.S. and in fact was occurring around the world, starting with urban environments and spreading to suburbs. He also pointed out that in many places older people were finding it harder to maintain their drivers’ licenses.
This led to our question for Christensen as to whether he sees a new paradigm arising in the automotive industry. After all, mobilecloudera is dedicated to tracing how the increasingly rapid rate of adoption of cloud and mobile technology is going to change business models and paradigms across major verticals.
Automobiles have historically been all about ownership and pride in one’s vehicle. Could we be looking at an emerging era of reduced ownership, consistent with the “sharing” economy.
He allows that this is quite possible, with a transformation to what he describes as “a services model, not hardware ownership,” that would result in a higher rate of utilization of autos than occurs under the ownership model. In any case, Christensen and his TAL partners are convinced that brand loyalty will be increasingly tied to the quality of the in-car experience, which will mean, the connection to the individual’s digital life.
CloudMade works entirely with automotive manufacturers (OEMs). They have a focus on what Christensen describes as “self-learning vehicles.” This is based, in large part, on their expertise in predictive analysis.
Their technology can build a profile on each individual driver of a vehicle. This enables helpful features, such as the system’s ability to anticipate the driver’s destination and obviate the need for the driver to type in the address. He also points out that their detailed driver profiles can dramatically improve driver safety and that the company has already demonstrated a reduction in accident incidence.
As CloudMade states regarding cars using its Predictive Learning System: “They know the driver’s next destination recommend their preferred route or their driving style. They react to adverse road conditions caused by traffic, weather or other factors. They recommend the right restaurant, cafe or gas station at just the right time.”
Christensen also stated that the company has started work on using its technology to predict items related to major car elements such as chassis settings and drive shaft.
CloudMade currently has about 75 employees. The company has been financed through venture investment and is able to finance its growth through cash flow. It views Asia as a potential growth area. However, it is not currently interested in acquisitions or new partnerships, as its focus is on the development of TAL.
Regarding the alliance’s mission, Christensen points out that they are trying to help the automotive industry overcome its historical record of slow innovation in software systems.
He believes that the OEMs are challenged by the potential incursion by mobile/IT giants, specifically Apple and Google, who can seize control over the personal digital experience. He emphasizes that for Millenials, “electronics will be a bigger factor in vehicle choice.”
TAL’s other members are: Cogniance (software and hardware product development); Nebula Systems (vehicle data analytics platforms); peiker (components of in-car infotainment and entertainment); Navmii (satellite navigation app and location-based services); Parkopedia (parking information – over 28 million parking spaces in 40 countries); and Pelagicore (Open Source software for vehicle infotainment). The alliance is financed entirely by its members and the alliance, as opposed to members, will not deal with customers.