“There were several research projects we were discussing with Google, as you need somebody with the size of Google to
push the industry into this open space, but they said they will go into the car industry once they have done tablets and TV.

“Now they have formed OAA and brought in several car manufacturers as they always said they were looking for more
volume. It will be very interesting to see how OAA develops and whether they can standardise an open platform across
several car manufacturers, because there is a lot of traditional thinking in the automotive industry. We are seeing semi-open
platforms for infotainment in cars, but we were looking at the engine management system and other digital systems in the
car. After all, there are 500 vehicle signals which are pretty similar in all cars. They have different protocols and different
systems of language, but if it was standardised you would have much a larger volume to create new apps. But this will take
time for the car industry. It took 15 years to introduce ABS brakes in large scale, so that gives you an idea of how slowly the
car industry moves.”

Falkås reveals a project she worked on with Saab and the Swedish road authority which gives some idea of the potential
value of connecting all makes of cars across a digital platform.

“Icy roads are a big issue in Sweden, so we wanted to develop an app where you would know exactly where and when a
road was slippery and even in what direction cars were sliding,” says Falkås. “That information is available in cars today.
These cars would relay instantly to the authority which road was slippery and how slippery so that they could pinpoint their
efforts, because it is very expensive to keep roads safe in the winter and salt is bad for the environment.”

That was with just 50 Saabs, but imagine if all cars were relaying this information to the Highways Agency and to drivers as
well in real time, it would surely help make roads safer. Falkås’ only problem was the business model as it produced cost
savings for the road authority but little value for the car manufacturer.

But Henfridsson argues that is one of the points of opening up access to cars’ data - third-party developers will work out
business models and apps we can’t even dream of, as happened with smartphones. As Falkås says: “You can try to guess
what apps would be invented, but you will probably be wrong.”

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And these developers will be focused on the drivers and the user experience more so than car manufacturers, who have
been tinkering with suspensions for decades.

“In the past if you wanted to be successful in the car industry you needed a huge amount of investment,” says Henfridsson.
“The car industry has been so focused on scale, that it is only a few companies who own those resources who have been
controlling what has been going into the car. Now, we will see the birth of customer-driven DIY developments in the car.
An app store for cars, that is what is coming, everybody can design an app for a car.

“Instead of one navigation system you might have 10, or some navigation aid nobody has thought about before and you
might be able to sell advertising through this app. Plus opening up to the crowd addresses some of the customisation issues
car manufacturers make for local markets. Traditionally they want to minimise them because it drives up cost, but this turns
it around, as a small app developer in each country can do those adaptations and it won’t cost the car manufacturer a penny.

“Also, normally in the car industry you need a four or six-year cycle in car development to get your investment back, but
this will change. Software can be reproduced at a minimal cost, at the point when you share with the Android community.

“GM asked a company to develop their navigation system. It took them 18 months to develop something new - it’s an
expensive process and would then be expensive for the customers. The Android community contains up to 20 navigation
systems at the moment, it can very easily be adapted for a bigger screen for the car. Suddenly you already have these
developments, that cost is so much lower and quicker.”

Other industries would love to get their hands on car data, one obvious one being insurance companies.

“Very soon we will have insurance setting up deals with customers to gain information on how they drive,” says
Henfridsson. “You would be able to have lower fees for those that drive carefully, but at the point you speed you would lose
that deal, it would be personalised to each individual.

“This will cut across industries, because digitalising the car means it becomes another sensor within a huge network.
Google might not want to sell cars, but it definitely sees them as another source of information that they can use to become
even better in digitising the world. Eh how is the traffic situation in Los Angeles? - Search Google cars and find out?

“Also, in the Android world developments are being pushed out and customers are testing it for you. The car industry is
totally different where it has to be perfect for the customer before it is on the market, but releasing a new patch for the
software doesn’t cost anything.”

It could be the end of all those costly recalls to adjust the steering system or throttle, just send out a system update and it
would be done - though repairs done digitally could have a serious impact on car dealerships, a relationship that car
manufacturers would be loathe to hurt. And talk of app developers being allowed into the engine, suspension, and brakes of
a car must send many car executives into convulsions. Who is liable if something goes wrong if there is a crash? Is the
insurance company going to turn to the app developer or the car manufacturer?

Falkas reveals how at Saab they planned to open the engine management system to developers in stages.

“You could select certain sensors and data to publish as ‘read only’,” says Falkas. “The next step for selected third
companies with whom the car manufacturer is in partnership is to give them the ability to write into the system, as you
would still have liability. There would then be possibilities to have a bundle for something like additional horsepower, it
would be a gradual process.”

Liability is one issue that has to be resolved, but Henfridsson is sure it will be and believes whoever moves first to totally
open up their car will have a big advantage. The big worry for the car manufacturers is that if they don’t do it somebody
else will, somebody of the scale of Google or Apple. They could make a standard car and then send it out as an open
platform vehicle, transforming the industry and potentially killing off some big manufacturers.

“An app that can tune your engine could have been done 10 years ago,” says Henfridsson. “At the point GM or Audi allows
third-party developers to design apps to tune their engine there would be hundreds of them. They may not allow access to
the braking system, engine, or power train immediately, but it will soon come.

There is a middle ground, where you can have 60 or 70 trusted vendors. Then it is a different business, the car will become
a platform. Why not have other people innovate on your platform? That is what you want to be, a platform owner like
Facebook. It is very old fashioned to sell a whole product these days.

“This is coming, the car manufacturers know it and they can’t stop it. We will see a totally new car industry when digital
takes over. It will change everything, there will be new brands that might be connected to Google rather than a car
manufacturer. It is a do-or-die issue for the car industry.” (
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