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November 21, 2013

Report: Big Data Will Represent Billions in Automotive

Isaac Lopez

Connected cars will represent a huge opportunity in the big data landscape, say analysts at IHS Automotive, who have just released a report projecting that automobile data systems will yield approximately $14.5 billion in revenue from automotive data assets by 2020. And that’s just the tip of the iceberg.

“The opportunities for big data in the connected car are nearly endless,” writes Mark Boyadjis, an analyst with IHS Automotive, who says that while the data assets alone from the connected vehicle will reach $14.5 billion in that time, the value added opportunity could dwarf that number. “Value-added services or cost savings, individually, could be worth anywhere from $16 billion to $80 billion depending on scale and scope,” he says, noting that these growth projects are based on a forecast which puts 152 million actively connected cars on global roads by 2020, creating a huge market for developers who are able to use this data to create value.

This data growth won’t come without its challenges, said Boyadjis, who notes that automakers will be plagued by the same “4 V’s” data issues that the rest of the world is facing. While automakers in 2013 are collecting a manageable total of 480 terabytes of data (total market), that number is set to grow exponentially, ballooning to 11.1 petabytes in 2020 – a figure that Boyadjis says represents 350 megabytes a second across the industry.

“Big data in the connected car is perceived to be mostly a volume problem,” said Boyadjis. “But it is much more than that. The automotive market will struggle to cope with the variety of data sets as most of the best insights and subsequent solutions will be driven from massively unstructured data that traditional database tools cannot work with. That variety will be subject to a significant velocity and variety that will require bandwidth to bring it efficiently, and security protocols to ensure its reliability and accuracy.”

Of the data, Boyadjis says that four categories are emerging that will represent the most value to automakers, suppliers, third-parties, and the end user. These categories include the following:

  • Diagnostics
  • Location
  • User Experience (UX)/Feature Usage, and
  • Advanced Driver Assistance System (ADAS)/Autonomy data

Of these four, Boyadjis says that the ADAS data are expected to outstrip all other data by far. “If car companies or their software partners expect to drive innovation toward automated – or autonomous – driving, then lots of very reliable ADAS sensor data needs to be collected,” he writes. “This will, in turn, drive a market for this information to upwards of $10.8 billion worldwide by 2020.”  Boyadjis adds that while data collection rates for location and diagnostics will see a 35% compound annual growth rate this decade, ADAS/Autonomy data will see a 50% compound annual growth rate starting in 2015.

Already we’re seeing new vehicles touting connected car features. This week, Audi announced that its 2014 Audi A3 Sedan due next spring will launch with 4G LTE service, complete with everything from navigation features, social media, mobile apps integration, and high definition video streaming for up to eight connected devices in the car. Longer term, Audi says it expects to be able to use it vehicles broadband wireless data connection to access big data services, and potentially communicate with smart infrastructure, parking garages and other connected cars. Through 2016, Audi says that it will invest about $17 billion on new products, facilities, and technologies.

In the meantime, Boyadjis says that while collecting data is great, turning it into value is the real challenge that data prospectors face. “Without understanding…the value proposition, the collection of data from the connected car is literally a waste of time.”

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