Telematics: Where the Radio Meets the Road
Lance A Ealey, Glenn Mercer · The McKinsey Quarterly · 1999
Communications technology will almost certainly transform auto industry - but how? Look to past technological revolutions for clues about future Incorporating new technologies in mass-produced automobiles has always been a risky business: unfortunate fellow who suggested that redesigned engine valves might improve performance of Henry Ford's Model T was pitched from a moving car into company parking lot by Ford's security chief. Although chances of suffering this particularly humiliating fate may have declined, in many ways difficulties of introducing new technologies into automobiles have not. One challenge is way unpredictable events outside auto industry can profoundly affect development of new vehicle-related technologies inside it. In late 1970s, for example, many US original-equipment manufacturers (OEMs) and their suppliers, betting heavily that fuel prices would reach astronomical levels by 1980s, planned to increase their production of four-cylinder engines significantly. When oil prices came down to earth and remained there, such companies - locked into a five- to seven-year product development cycle for these engines - had little time to react to a new market that demanded power rather than fuel efficiency. Even when industry's external environment doesn't change, predicting where, how, and when a technology will catch on is difficult. For starters, new technologies can have very long gestation periods. Automotive antilock brake systems, for instance, were first researched in United States in late 1950s, introduced there in luxury cars in late 1960s, withdrawn from market in late 1970s, and reintroduced in Europe in 1980s. Such currently ubiquitous technologies as cruise control, which inventor Ralph Teetor first shopped around in post-World War II Detroit, were not broadly accepted for two decades. Electric power steering, which has yet to be introduced broadly, was touted as the next big thing in Popular Mechanics magazine during 1950s. Another problem for those attempting to divine course of automotive technological change is fact that different countries accept new technology at different rates. In Europe, for example, resistance to automatic transmissions is only now weakening - decades after United States embraced them as standard equipment. Yet once a technology is accepted, it often sweeps market much more rapidly than many experts expected: radial tires zoomed from a 2 to an 82 percent market share in United States in only three years during 1970s. Government regulation further complicates picture. Technologies promoted by legislation often penetrate markets in much less time than those driven by market pull or by cost reduction and efficiency push of automotive manufacturers. Even at an application-specific level, successful approaches vary significantly over time. A variety of configurations of feedback carburetors and fuel injection systems, for instance, took turns dominating marketplace in 1970s and 1980s as OEMs struggled to meet tightening emission regulations. Airbag crash-sensor systems were at first mechanical but are now, after only a few years, electronic; early models with multiple crash sensors were quickly succeeded by models with only one, and they were followed in turn by models that again relied on multiple sensors, to differentiate among types of crashes. And airbag inflators seem to be on verge of migrating from pyrotechnics to inert-gas technologies because of health and safety concerns. The vast uncertainties surrounding prospects of all new automotive technologies and large investments and financial risks they demand - an airbag inflator plant can easily cost $1 billion - mean that senior managers both at auto companies and at suppliers must understand mechanics of technology dissemination. …