1. The Internet of Cars
Spawning New Business Models
Andreas Mai
Director Product Management
Smart Connected Vehicles
October 2012
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2. Internet of Cars: Unlocking $1,400 in
Benefits per Vehicle, per Year
Internet of Cars Vehicle User
Service Providers  Lower insurance
 Traffic guidance, navigation,  Lower operation cost
emergency services
 Less time stuck in
 “Google on wheels,” $ 550
traffic, more productivity
PAYD insurance, $160
location-based services
$300
Auto OEM/OES $420 Society
 Lower service/warranty costs  Fewer crashes
 New profit pools  Lower traffic/road/toll
 Architectural savings operation costs
Benefits per vehicle, per year
 CO2 reduction
Source: Cisco IBSG Automotive and Economics Practices, 2011
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3. The Internet Takes to the Road…
Running Transportation on
Networked Information
Transportation Services Delivered by Technology
Safety and Operational Travel Revenue
Security Efficiency Experience Generation
Source: Cisco IBSG Automotive, 2011
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4. THE “Savior-App”: Strategic Asset for
the Entire Car Insurance Value Chain
Usage &  PAYD, PHYD, MHYD 10% - 30%
Behavior Premiums
 Vehicle and driver health monitoring
 Safest-route
Crash  ADAS + V2V + V2I 20% - 35%
Prevention of Crashes
 eCall/ ACN
 Virtual Black Box
Fast & Correct  Driver vitals to first responders 5% -15%
Response  Investigation costs Savings
 Fraud prevention and reduction (~80%)
Claims & Cost  Stolen vehicle tracking / location 30% - 80%
Containment Savings
 Pay as you speed
 Virtual violation detection and notification
Connected Law  Automated payment 20% - 30%
Enforcement Savings per connected vehicle and year: Savings
$280 for insurance/ owner + $100 for society
Source: OctoTelematics, Cisco IBSG Automotive 2010
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5. U.S. Roads and Highways Are Congested,
Deficient, Lack Desirable Safety Features
$270 B
Needed 4.2 T 2030
+38%
+41% 2010
25% 2.2 T 1990
Cost Budget:
+ 55% $100 B
Vehicle-Miles
Travelled (Trillions)
Source: America’s Top Five Transportation Headaches, AASHTO, Victoria Transportation Policy Institute, 2009
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6. THE Future “Finance-Application”:
Connecting for Smart Road Pricing
Smart Road Pricing / Vehicle-Miles-Traveled Tax
Time of Day Occupancy Congestion Speed
Weight Road Type Fuel Economy Emissions
CO2
Source: Cisco IBSG Automotive 2011
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7. New Battleground: From Building Cars to
Selling Travel Time Well Spent
Extended Design
Connecting Marketing,
and Supply Chain the Value Chain Advertising, CRM
CONNECTED CONNECTED CONNECTED CONNECTED
within the car to personal devices around the car to the cloud
Travel Experience & Distribution and
Location-Based Services Service Network
Source: Cisco IBSG Automotive, 2011
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8. Emergence of New Business Models
Smart Parking Mobility On-Demand
Source: Web Research, 2011
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9. Off-Loading Data and Switching Is Key
to Improve Experience and Contain Cost
HOME ROAD OFFICE
Home
Security &
Automation 3G/LTE WLAN
Media DSRC City Mesh Hotspot
Cable / DSL “Switching” Ethernet / LAN
Source: Cisco IBSG Automotive 2011
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10. Service Providers Are Well Positioned
to Enable Key Business Operations
Service Providers / Network as the Platform
Internet of Cars Service Provider
TSP PAYD EV Clearing ITS And more…
Internet of
Data Service CRM/ CC Payment
Cars Business Acquisition Aggregation Service Processing
Operations
Vehicle User Vehicle Road
Source: Cisco IBSG Automotive 2011
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11. Internet of Cars is a Scale Business
Scale
Industries &
Applications
…
Regions
EV Clearing
ITS
Insurance
TSP
Captive Entire Industry Customers
Source: Cisco Smart Connected Vehicles Team, 2012
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12. End-to-End Architecture is Essential –
Especially for Scaling Globally
Public Cloud Private (OEM) Cloud Enterprise Cloud
Services
Subscription-based Data Center/Virtual Enterprise Video, Voice,
Services Servers Data
VNO
Operation
Policy Enforcement, Flow-based Energy Service Providers
Management, DPI (Smart Grid)
Mobile SP 1 SP 1
Mobile
Communications SP 1
Mobile SP 1 Service
Mobile
Providers, “Fog”
Infrastructure
Mobile WiFi Offload DSRC Roadside Consumer Network Electrical Charging Network
Wi-Fi Hotspots, Infrastructure Home/Dealership Wi-Fi Hotspots, Charging Stations, Other
802.11u, 3G/4G 802.11p (V2I) Femtocells Services
V2I/Upstream Communication (Wi-Fi, 3G/4G, 802.11p, etc.)
Vehicle
Software Client
V2V Communication (802.11p)
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13. New OBU and RSU Business Models:
Enabling Internet of Cars Services
TSP PAYD EV Clearing ITS And more…
IoC
Services
Network
OBU RSU
NewCo NewCo
Subsidize OBU Upgrade Build & Operate
For Right to Monetize WiFi + DSRC Network
Data & CV Services to Monetize Off-Load and
ITS & LBS Services
Source: Cisco Smart Connected Vehicles Team, 2012
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14. The Connectivity Infrastructure Could be
a Profitable Business at 1/10th ¢ / VMT
U.S. Roadside Equipment (RSE)
PPP Revenue Model [US$ Million] 1/10th
CapEx P&L ~3,000,000,000,000
Initial Total 5 Year RSE
6,261 626
Investment (10 Depr.)
=
Repair/ Replacement 616 62
Operating Expenses 440
Subtotal RSE Cost 1,128
Hypothetical Margin 100% 1,128
Per Month
Revenue Required to
2,256
Fund “RSE Business”
Source: Vehicle-Infrastructure Integration (VII) Initiative, Benefit-Cost Analysis, Version 2.3, US-DOT, 2008
Cisco IBSG Automotive, 2011
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15. Connecting 1/3 of All Vehicles = $116
Billion in U.S. and $345 Billion Globally
Benefits of Connecting All Road Vehicles Per Year By Penetration [$ Billion]
$282 $837
Internet of
32 96 Cars SPs
United States Worldwide
64 191 Auto OEM
85 251 Society
$117 $345
13 39
27 79
$35 35 $105 104 Vehicle User
101 299
42 123
10%
10% 33%
33% 80%
80% 10%
10% 33%
33% 80%
80%
Source: Cisco IBSG Automotive and Economics Practices, 2011 Note: Core Regions NA, EU, AP, Excl. 22% RoW
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16. Resolving the “Chicken & Egg” Dilemma
15-20% Savings = $6-8 B
~$110 B+ ~$60 B
RSE
ITS CV SPs Infra REITS
Auto
OEM
PAYD
40 1.3T 20%
1/10th
Society
Policy
OBU
Vehicle Fuel Tax Share
VMT User
20
Bottom 33% of Cars 20% of Roads
Line $20-30B
550,000 Jobs $1.3T
Source: Cisco IBSG Automotive 2012 Budget
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17. Making the Internet of Cars a Business
No One CanWe Can…
Together Do It Alone
Automotive Government
Service Provider Infrastructure
Insurance ITS
Source: Cisco Smart Connected Vehicle Team 2012
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19. More Food for Thought on the
“Internet of Cars”
 Executive Summary: A Business Case For Connecting Vehicles
 Government: A Catalyst to Unlock Societal Benefits of Transportation
 Carriers: Service Providers at a Crossroads
 Automotive: From Building Cars to Selling Travel Time Well-Spent
 Insurance: The Business of Preventing Crashes
Andreas Mai: andmai@cisco.com
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