After being acquired by Audi, BMW and Mercedes-Benz, and fending off interest from China, Here has committed itself to an internal restructuring of sorts – as its new owners look to embrace the opportunities presented by the wider IoT market. The company hosted RIoT in its Berlin offices, where we dived into its plans and strategies for the looming turbulence in the connected car and IoT markets.
It was reassuring to hear that Here’s new owners saw it as an asset to help keep the likes of Google and Apple at bay. Following the acquisition, the company is undergoing an internal restructuring, with a focus on addressing the IoT opportunity, bolstered by a large developer community driving a horizontal offering that can be adapted to meet the most lucrative verticals.
The restructuring sees Here consolidate into two main business groups – one remaining focused on its automotive offering, and the other the product of merging its consumer and enterprise divisions. Automotive remains the bulk of its offering, and while Here doesn’t publish its numbers, we’ve been told that annual revenue is north of €1bn.
The Open Location Platform is essentially the end-goal, as a solution to the problem of siloed location data, with Here customers and stakeholders contributing the location data that they generate and receiving access to this shared resource in return – with different views available to different customers, depending on the privacy concerns.
In terms of monetizing the Open Location Platform, there’s an opportunity to turn the platform into a marketplace – which would allow users to sell their data assets to other companies if needed. For Here to persuade companies to make enough of their data available for free as standard might require some negotiation, but the more data that is traded on the platform, the more revenue Here can generate – as a % of each transaction.
It’s worth bearing in mind that these stakeholders would already be paying for Here’s services, however, so the smaller % per transaction is likely not going to be a particularly big stumbling block if it turns out that the corporations can’t be persuaded to freely share their siloes. But Here is definitely becoming a databroker – a role that it has to navigate while retaining the trust of all parties involved in the platform.
But Here is aggressively confident that it will win-out over Apple’s CarPlay and Google’s Android Auto – mostly due to the nature of the auto industry. A slide in its plethora of presentation PDFs notes that brand differentiation is key for auto OEMs, and that this is essentially anathema to the Apple and Google branding.
Similarly, Apple and Google alllow very limited control over the content available through their platforms – something that Here think the auto OEMs won’t stomach, as it’s a “massive shift and a highly unfamiliar situation for OEMs.” Compounding the issue is the loss of data ownership, as Apple and Google would be capturing much of the on-board data and would consequently be loathe to part with that resource. Here also adds that the technical support that its customers have received from the respective Apple and Google developer teams has been sub-standard – and hardly inspiring of confidence.
The Apple and Google model makes a lot of sense on the surface, and would be ideally placed if the auto industry was full of disruptive new entrants. The argument that a new vendor wouldn’t have to spend the time and money developing and IVI platform and could simply adopt CarPlay or Android Auto is similar to other offerings from technology providers looking to provide components that would slot into a modular stack.
However, there aren’t any new entrants into the auto industry that can compete at scales large enough to justify this argument. The incumbents seem completely against ceding to Apple and Google, for the above reasons, and due to the economies of scale inherent in the manufacturing process, this isn’t a reality that is comparable to a new smartphone maker asking an ODM to skin up a few million units with stock Android. Cars exist in a very different world to most consumer electronics.
Alex Mangan, Here’s head of Product Marketing, talked us through the Automotive offering in considerable detail. He noted that the division is still providing the bulk of Here’s revenue – although the restructuring in Here, with greater cooperation between the two wings is an attempt to balance operations.
TomTom is Here’s closest rival, although Harman is a looming threat with massive reach. Continental is a similar proposition, but still the biggest danger to Here is the creeping presence of Apple and Google – leveraging their smartphone penetration. Mangan added that it was a strange time in the industry, with lots of overlapping RFQs.
In his view, connectivity is now forcing the OEMs to change, and this has led to hardware and software being separated in those RFQs – a shift from the integrated systems of yesteryear. OEMs are waking up to the value of the data that is trapped inside their ecosystems, in both the vehicles as well as in the dealerships, and that they need to change their dinosaur thinking. Here cites forecasts of 33m connected vehicles on the roads by 2020, generating 163m terabytes of data.
Mangan said that his initial use of ‘dinosaur’ was a little harsh, but that these OEMs have now seen that this data is like the oil of a new industry – and that they need to shift from being the hardware/product providers into mobility service providers. He noted, however, that the RFQs are still lagging behind this dawning realization – with some particularly outdated examples of structural search terms instead of contextual search emblematic of the conflicting internal requirements of the auto OEMs (the classic manager vs. engineer).
Another industry shift has been the move to global suppliers, rather than regional ones, which has seen greater simplification thanks to greater hardware sharing between brands. This means that the days of a company using Here for North America but TomTom for Europe are fading, in a similar way that they are looking to technology like eSIM to simplify their production lines.
A term that was clarified for us was ‘probe,’ something that RIoT had (in-passing) assumed was a dedicated piece of hardware. Mangan explained that a probe was simply the readout from a device that listed latitude, longitude, speed, and direction – i.e. a phone, or a car, most typically. These sensors give an almost real-time (<2 seconds) picture.
The difference between the simple data from the probes, which is used to flesh-out the Here platform and the performance of roads. However, the most valuable data doesn’t originate from these probes – instead, it comes from the Rich Sensors that the OEMs are realizing are trapped in the CanBUS of their vehicles. Things like cameras, airbags, tyre pressure, HVAC, and ECU readouts, are all very useful pieces of data by themselves, but can form hugely informative and collaborative ecosystems when shared with other stakeholders besides the OEM.
Mangan said that Here’s work with Jaguar Land Rover has been particularly productive. JLR was the first company to use Here Auto, the complete IVI offering from Here, which allowed the company to tear down the archaic IVI practices of old. The turnaround in JLR’s Kelley Blue Book rating looks like proof of the software’s capabilities.
Following the JLR launch, Here also unveiled its HD Live Map platform at CES, with a demo that provided a visual demonstration of how a car using the platform would merge the data pulled from its onboard sensors and the locational data provided from the cloud.
Mangan walked us through the demo, explaining that the system is comprised of 2km2 tiles that the vehicles will download when they have a network connection – taking cues from the navigation system to download the tiles ahead of time, if needed. Each tile is essentially a 3D reconstruction of the physical world, which the connected car can then use as reference points for locating itself on the road.
We saw the demo car use roadsigns and camera gantries, basically any street furniture, as fixed points, which it could then orientate itself with. Similarly, a representation of the GPS-shift was also shown, which demonstrated why a system like this was important – as the GPS alone wasn’t particularly precise. Here would, of course, be updating and maintaining the map as a service, (and uses a team of 1,500 people in 200 countries to do so) but blending the data shared from its customers would help simplify this process. Mangan said that there were 10 R&D pilots for HD Live Map underway.
As for the consumer offerings, Here had been planning on becoming the dominant player on the third mobile platform that had threatened to emerge – with Amazon’s Fire OS, Samsung’s Tizen, and Microsoft’s Windows Phone all using the map app. However, that third ecosystem has failed to emerge, and so Here shifted strategies to one that targets mobile apps rather than mobile platforms. In the coming quarters, the enterprise and consumer offering is going to be a core development focus for the company.