Connected Car: is there an early mover advantage? - Carnectiv

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Connected Car: is there an early mover advantage?

The presumption of early mover advantage

We hear the mantra “first is best” a lot. Indeed, we assume that it’s the raison d’être of many an R&D department. Furthermore, the consumer advertising of most new model cars either asserts or infers that such and such a feature is a “first” in class. Or, put another way, I can’t recall a commercial saying “here we are, at last, catching up with everyone else, offering you the feature that everyone else has had for a couple of years now”.
In the work place too, how often do we hear how important it is for us to be “first” securing early mover advantage? “Who dares wins”.
But what if first is wrong? What if it’s better to wait (and see) how things develop before taking the leap? What if being first (or nearly first for that matter) is expensive and too risky? Is the world today full of first or very early movers who became giants? Let’s look at higher tech or so-called Internet businesses, where one would expect early mover advantage to be particularly relevant. Well, Amazon comes to mind…but then who? Maybe there are some others, but most dominant players over the years weren’t first movers (Apple, Microsoft, Google, Cisco). Anyway, maybe there are some strong arguments for moving early, so let’s look at them. But let’s also balance them with some arguments for waiting and seeing.

Arguments for early mover

Among the several text book arguments put forward by advocates of early mover advantage, three are fairly universal:

  • Access to resources. It is claimed that by starting early, a business secures human and capital resources relevant to the tasks and strategy. It becomes more difficult and more expensive to secure such resources later.
  • Market acceptance. By being the first, the market accepts the brand in question as a leader, conferring an advantage thanks to the association of that brand with the category it created. It is claimed that it becomes harder and costlier to unseat an entrenched incumbent the longer you leave it.
  • Head start. Simply by starting earlier, all other forms of advantage throughout the so-called “value chain” start to accrue to the early mover, such as securing channels of distribution, ability to evolve development faster etc etc

Sounds pretty convincing eh?

Arguments against early mover advantage

Those who argue against early mover advantage likewise have their logic. They say:

  • Risk is too high. Until it’s clear that a particular gambit will work, the risk of failure is too high. Pioneers often get it wrong. Failure hurts reputation and morale. Failure makes it hard to “come back” and regroup. It’s better to have waited.
  • Cost. The costs of moving early are too high. Capital and human resources are at a premium until a market sector starts to normalise (even commoditise?). It’s hard to get a payback with such premium costs. Costs typically get lower over time, and it’s false to claim an advantage by securing resources early.
  • Exclusive access to resources is increasingly irrelevant in modern world. People and capital move more freely than ever now. Corporations can’t easily monopolise them. Barriers to movement and switching are much lower. A top R&D person is increasingly a free agent and cannot be “secured” by one (early mover) business alone.
  • Head start concept is erroneous. As soon as something takes off, it spreads fast everywhere. It has to. No-one remembers who was first anyway.

I could go on. Suffice it to say, the later mover crowd seem to have a good argument too, don’t they? They can then build upon their prime assertion saying that being a successful later mover is down to quality, efficiency and consistency of execution, once it’s clear what the right direction is, rather than sprinting off in the wrong one. They’d claim that winning is about great execution and refinement, not about being the pioneer of the original ideas.

For connected car OEMs what might this mean?

So much for the text book 101 recap. Sorry about that. What does this mean in the world of connected cars? Well, we know that right now there is huge debate over what kind of platform or technology strategy is right. Big businesses are placing bets. These bets are on different horses. They can’t all win. Maybe none of them will, and the real connected car technology environment is yet to emerge and stabilise.

We’ve seen in the “connected home” where early movers insisted that deeply in-built infrastructures into the fabric of the home would be needed. What have we got now? The emergence of point solutions using Wi-Fi and Internet to communicate via independent servers to smart devices. Connected home is becoming an agglomeration of devices from different manufacturers using Wi-Fi protocols: thermostats, Apple TV, AirTunes, wireless speakers, security cameras. All they really have in common is Wi-Fi. Who would ever contemplate buying a fully integrated (white elephant) connected home infrastructure? A few geeks and billionaire early adopters maybe.

So, in this devil’s advocacy here, we might consider the following connected car strategy for an auto OEM:

  1. Wait for a platform to emerge as dominant. See which one is emerging as the one which customers start to accept. Don’t gamble on one pioneering technology.
  2. Use alliances. Spread risk, cost and seek safety in numbers. The more are in the alliance, the bigger the vested interest in it working.
  3. Work with automotive component suppliers. Don’t assume they’re doomed to be overtaken my computer tech giants. They will be an important part (but perhaps not a leading one) of emergent winning solutions.

What else?

If this later mover strategy is to succeed, we’d still need to keep very alert. How to get timing right? How long to wait? When is the transition point from early movement to late movement? What is the tipping point? Keep a close eye on the risks of delaying and be clear in advance on when to recognise when the tipping point is reached.

Can lip service be paid meanwhile? We can already see that many OEMs are striving to “look like” pioneers, and some of the most advanced looking are actually utilising relatively lean R&D budgets coupled with smart alliances and emphasis on user-features on the surfacerather than highly expensive pioneering R&D on deep infrastructure gambits. Do we notice which is which? Perhaps. But does a consumer, and will they care right now? Being absolutely clear on what the consumer wants (sometimes easier said than done, especially with genuinely “new” features) can be very helpful in working backwards from that to get the development strategy right.

About Jens Mueller

Writing as Jens Mueller, Jens has over 20 years experience in IT and communications systems, working in Europe and the USA. He has been involved in connected car programmes for the past couple of years, and contributes to Carnectiv on a regular basis.

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