IBM's Push To Bring Connected Cars To The IoT Cloud Makes IBM Stock An Attractive Mid-term Play

  • IBM announced a new initiative to bring connected cars to the Internet of Things (IoT) cloud.
  • 90 percent of new cars will have built-in connectivity by 2020, from 10 percent today.
  • Cars will be connected to the cloud and rely on IoT technologies and platforms to securely deliver data generated from cars directly to the cloud for near real-time analysis.
  • Automotive supplier Continental's initiative eHorizon, built around IBM's IoT cloud, is prototyping cloud services for connected cars.
  • The application of advanced technology to car manufacturing and driving is likely to boost IBM's stock in the mid term.
IBM brings cars to the IoT cloud article image

In what can be seen as a general push to apply advanced sensing and computing technologies to driving, IBM (NYSE:IBM) announced a new IBM Cloud-based service to help automakers turn driver and vehicle data into actionable insights for predictive vehicle maintenance, real-time diagnostics on engine trouble, and to guide drivers to the most efficient traffic routes. This follows the recent appointment of John Krafcik as head of Google's (NASDAQ:GOOGL) self-driving car project. The self driving car market has also attracted the likes of Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL) and Uber.

By 2020, according to the Connected Car Industry Report by Telefonica, most new cars will be equipped with extensive connectivity services. "The connected car market will achieve mass-market penetration in the next few years: the overall number of vehicles with built-in connectivity will increase from 10% of the overall market today to 90% by 2020," notes the report.

To make the most of this connectivity, automakers are increasingly using Internet of Things (IoT) solutions that help to securely deliver data generated from cars directly to the cloud for near real-time analysis.

The IoT is the upcoming network of billions of connected devices able to exchange information with data servers and other connected devices, and coordinate their operations autonomously or semi-autonomously with limited human intervention. IBM is developing an IoT platform to securely and easily connect devices, from chips to intelligent appliances to applications and industry solutions. Scaling through cloud-based services and using rich analytics, IBM IoT Foundation provides organizations with new insight for innovation and transformation.

Built on the IoT Foundation, IBM’s Internet of Things (IoT) for Automotive solution helps automotive manufacturers gather data from individual sensors that can be combined with other data for real-time analysis. The service provides driver, vehicle and environmental insights through analytics, tapping both vehicle and geolocation data collected in the car. It also delivers new insights from third party data such as from parking providers as well as an automotive manufacturer’s customer data and vehicle history.

"With the significant increase in connected cars, automotive manufacturers have the ability to take near-real time data and put it to good use for drivers in a variety of ways - from finding the nearest parking space and most efficient route, to maintenance alerts that help drivers expect the unexpected," said Dirk Wollschlaeger, General Manager, Global Automotive Industry, IBM. "By combining data directly from the car with other sources, the insights derived through the IBM IoT for Automotive solution have the potential to change how we interact with our vehicles moving forward."

A good example of advanced IoT applications for connected cars is eHorizon, an intelligence system for vehicle navigation developed by automotive supplier Continental. eHorizon integrates topographical and digital map data with sensor data, namely GPS receivers, for predictive control of vehicle systems.

"Future events, such as the uphill incline after the next corner, are exploited at an early stage in order to optimize the vehicle's response," notes Continental. "eHorizon interprets map and sensor data and automatically adapts the engine and transmission management. In the future, eHorizon will be able to save location-related vehicle data and transfer it to a cloud." eHorizon uses IBM MessageSight and IBM InfoSphere Streams, components of the IBM IoT for Automotive solution, as parts of its operations.

“The number of connected devices continues to grow at an extraordinary rate, and we are constantly on the lookout to use the data generated from those devices in a meaningful way,” said Brian Droessler, Head of Software and Connected Solutions at Continental. “Together with IBM, we can better manage complex streams of data and apply analytics in a way that’s secure, allowing us to create innovative solutions."

According to the Telefonica connected car report, 73 percent of drivers consider safety and diagnostic features as the most important, with many indicating that they would particularly like to be able to access vehicle diagnostics from their smartphone. Drivers are also interested in navigation services that have greater functionality than today’s satellite navigation systems, such as live traffic updates.

The initiative of IBM is to be seen in the larger context of a greater push to apply advanced sensing and computing technologies to driving, with a special emphasis on road safety. Recently Toyota (NYSE:TM) announced that it's establishing joint Artificial Intelligence (AI) research centers at MIT and Stanford, focused on autonomous driving and AI-assisted driving for enhanced safety. In the meantime Apple's project Titan has moved closer to reality as Google, Tesla, Uber and other companies are pushing ahead with their self-driving and high-tech-assisted car projects.

The marriage between Detroit and Silicon Valley - the application of advanced technology to car making and driving for enhanced safety, environmental protection, and quality of life - is one of the fastest growing technology trends. IBM is leveraging its world-class technology expertise and resources to grab a piece of the action, a smart move likely to boost IBM stock price over the mid term.

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