Looking out #5
Software as premium, subscriptions to movement, building better seats and Breezewood, Pennsylvania
2nd August, 2019
A newsletter about the auto industry, mobility, design, and the cultures that surround us. Brought to you by Joe Simpson and Drew Smith of The Automobility Group. If you like what you see, tell your friends!
Auto
Software as the new premium?
Why it’s interesting: BMW’s decision to make Apple CarPlay a premium subscription service in its new cars, has raised ire. But it may represent the start of a big shift in how manufacturers charge for services.
Firstly, the outrage ignores a few facts. BMW used to charge £300 for CarPlay functionality (UK prices - other markets similar). The subscription provides the first year free, with following years at £85. It represents a cheaper proposition than before over the typical ‘first owner’ period of 3 - 4 years.
It’s also future proofs the car and is more democratic – an Android owning first owner doesn’t pay for something they won’t use. Yet the software and functionality is on-board, so the second owner can still pay and use Carplay, even where the first owner hasn’t. It also gives BMW a direct communication line with multiple future owners – something that’s almost non-existent in the industry today.
What’s most interesting is whether this signifies a shift to a more software-orientated premium. What do we mean by that? BMW and Mercedes have always charged more for features customers of mainstream brands take for granted. Witness the extra charge for a basic radio head unit, well into the 1990s. Today that remains the same. Want folding mirrors or keyless entry on your BMW? Extra, in most cases.
But as the definition of ‘value’ is changing for the end user – moving to software and tech-based functions – brands like BMW face a challenge. The current hardware options (big profit generators) may slip away. If the customer just doesn’t see value and won’t specify them, OEMs are left with production complexity masquerading as the (unnecessary) offer of individualisation.
Cars themselves are becoming subscription items – in the UK 86 percent are now bought on finance products or leases. While charging a subscription for a premium, in demand service is very much in-line with wider customer expectations (hello Netflix, Spotify). This approach also circumvents the rising occurrence that some owners are turning to – a cheap software flash to enable features like this, too.
The question is, can BMW set the trend – will customers accept or resent this change, and will we see other (premium) OEMs follow suit? Or will it simply be seen as price gouging? Place your bets.
Pair with Georg Kacher in Automobile Mag: What’s going on at BMW?
| JS
Ford’s scooter evolution
Why it’s interesting: an automotive manufacturer is getting hooked to a different development timeline, raising interesting questions for their core business.
As Joe mentioned a couple of issues ago, one of the best ways to change the way your business operates is to learn from those that sit outside your sector.
While you could argue that Spin is Ford and Ford is Spin, the fact that one builds cars and the other provides scooters means that Ford now has an in-house case study for analogous research.
Apart from learning lessons about service provision and scaling up a new business (Spin’s gone from 15 cities to 50 in just over 6 months), I’m most interested in what the core car making business will learn about product development.
In an industry in which product development timelines are measured in years, the fact that Spin is on to the third iteration of its scooter product since it launched in February 2018 must be pretty bracing for those watching from the galleries (if indeed they’re watching).
With a Cambrian explosion of eMobility underway, the rapid development approach of the technology sector is again having a dramatic impact on customers’ expectations of products. It’s going to be interesting to see that same rapid development will have a similar impact on OEM’s expectations of their own product development processes.
| DS
Mobility
Uber’s movement subscription
Why it’s interesting: in a stark demonstration of understanding customers’ jobs to the done, Uber offers a subscription to movement, not to a product.
Implicit in every OEM’s launch of a car subscription is the assumption that people want access to a car.
But what if movement is the thing that people really need?
Uber is the latest company to trial a monthly subscription for their services, joining the likes of Lyft and Citymapper.
What’s different about Uber’s offer, however, is that it offers to do more than just move the subscriber around a city.
It also offers the movment of goods from across the city to the subscriber, incorporating free delivery on orders placed through the Uber Eats platform.
In this way, Uber doesn’t just help you go out, it helps you stay in, by bringing merchants to your door, much like Amazon Prime does for consumer goods.
It’s yet another way in which transport network companies can remove the friction of moving around urban environments.
The announcement of the service raises interesting questions for retail beyond food. How might Uber leverage its understanding of urban environments to provide cheaper, faster deliveries of groceries, or other goods, for example?
In this context, a subscription to a car looks a little one-dimensional.
| DS
Design
Turning the worst seat on the plane into the best
Why it’s interesting: a newly approved design innovation looks set to upend conventional airline seating logic, massively improving the experience for 1 in 3 customers. Could the same approach work in other sectors?
We’ve all been there. You check in for your flight, and all that’s left is the hated middle seat. But before long, you might actively choose it, because of a revolutionary design. You'll have probably have seen Molon Labe's staggered airline seating pattern before. It pushes the middle seat slightly rearwards relative to the aisle and the window to give everyone more room.
But while the design’s been around since 2015, only last month did the federal aviation authority (FAA) approved the S1, as the design is known, for commercial fight. Already one un-named US airliner has signed up, and will install the design on 50 of its planes in the next year.
The design's significant because it turns the worst seat – the middle of the three – into potentially the best. The standard industry airline seat width is 18 inches. But the middle seat of the S1 design comes in at 21. And the armrests have two levels – so no more elbowing your travelling neighbour to stay comfortable. You basically get your own.
It got us thinking about the middle seat in the rear of a car. Most cars, though technically 5 seaters, are set up for 4. The middle of the bench is a hump – significantly compromised compared to the outer two. And - as many families with 3 kids discover - that middle seat is a fight point. And it's no use for child seats, especially given the minuscule number of cars on the market with 3 rear isofix/latch points in the back. A missed opportunity? With the coming of electric cars and flat floors which do away with transmission tunnels, there's surely an opportunity to rethink the rear seat set-up in cars, too, and appeal to families of 5, not just 4.
| JS
The right to repair (and understand)
Why it’s interesting: as systems become ever more difficult to understand, it raises important questions about who really owns our stuff.
In 2016, I was driving my beloved W140 Mercedes from London to Aberdeeshire and all was not well. Occasionally, the mighty V12 would slip in to limp-home mode or, even more alarming when travelling at 90 miles an hour, cut out all together.
A panicked phone call to my mechanic in London suggested I find a Mercedes specialist with one particular type of diagnostic reader and make my way to them, stat. It was the only way we could get some insight in to what was going wrong.
The W140 was so complex that it needed a piece of specialist hardware to diagnose. I, by turns, was at the mercy of who owned that specialist hardware, someone who could charge me what they liked to access it, and someone who then had the upper hand in knowledge to effect a repair at whatever cost they deemed appropriate.
This trend of locking consumers out of understanding the products that they own, and determining their own maintenance path has only accelerated in the years since the W140 came to market. BMW treats their vehicles as end-of-life beyond 300,000 kms, making it impossible to reset service systems. The modularisation of major vehicle components means that things like gearboxes are replaced, rather than repaired. And the trend that’s been playing out in the automotive realm is mirrored in the world of consumer electronics. But there’s a counter-movement developing.
As Navneet Alang writes this week:
Many modern digital devices are difficult to repair — and this is by design. What's more, companies like Apple will often void consumer warranties if their devices are fixed at a local mom and pop shop rather than by their own company's professionals. This annoying reality has given rise to the idea of a "right to repair": a movement designed to give consumers the ability to both fix and fiddle with their devices. At its core, the right to repair movement has emerged because the digital era has fundamentally challenged what it means to own something.
But what happens when it’s not just physical products that we can’t understand, or repair, but ways of thinking? That’s the question posed by the unregulated development of artificial intelligence, which prioritises the what can it do? of practical application, over the why and how does it work? of theoretical analysis. This comes with substantial risks. Writing in The New Yorker, Jonathan Zittrain says:
This approach to discovery—answers first, explanations later—accrues what I call intellectual debt. It’s possible to discover what works without knowing why it works, and then to put that insight to use immediately, assuming that the underlying mechanism will be figured out later. In some cases, we pay off this intellectual debt quickly. But, in others, we let it compound, relying, for decades, on knowledge that’s not fully known.
For me, the implications for design practice are clear, especially as we start to integrate ever-more advanced machine learning systems in to our vehicles. Not only do we as designers need to be able to understand how these systems operate in order to be able to design their human interfaces. We also need to design interfaces that allow end users to understand their mode of operation and the extent of their capabilities. Otherwise, we risk disempowering and alienating the people we intend to serve.
Back to Zittrain:
A world of knowledge without understanding becomes a world without discernible cause and effect, in which we grow dependent on our digital concierges to tell us what to do and when.
Pair with: The Fixer’s Manifesto.
| DS
Culture
Breezewood, Pennsylvania
Why it’s interesting: in a great critique, Amanda Kolson Hurley argues that this increasingly iconic photo can be of only one place on earth. The lessons it contains about car-induced land use, however, are universal.
I love road stops. They punctuated the road trips of my childhood, providing an opportunity to badger white-line weary parents for another soft drink or bag of lollies. Occasionally, I’d see a really cool car and sidle around it, enjoying the opportunity to be on the outside of a car looking in after hours of being on the inside looking out.
They punctuate the less-frequent road trips of my adulthood, too. White-line weary like my parents, I stretch legs, sample catering (the Marché Restaurant chain across Southern Germany and Switzerland being the best), and observe cars and their owners.
While they’re often blights on the landscape they inhabit, they’re also places where disparate worlds intersect, interact and transact, much like the great cities but rendered in miniature. For the 10 to 20 minutes that I’m a citizen of a road stop, they’re endlessly fascinating.
But this lovely article exploring the emergence and memeification of an American icon reminded me of another thread that’s emerged over the last couple of years. It concerns the real estate devoted to cars, and how we value that compared to other uses, like housing, commerce or retail.
It was Ben Evans who first made me aware of the second order consequences of electrification and autonomy on land use. What happens, he asks, to sales of tobacco and candy if gas stations become redundant?
More recently, Horace Didieu and the crew at Micromobility Industries have been discussing how parking space is vastly undervalued, given the utility it removes from the market (I’ll be tuning in to his Q&A on the topic on Monday, if anyone is interested in the notes).
And after speaking with Mark Streeting, of L.E.K, a strategy consultancy, I’m getting up to speed with their work to help airport operators understand how ride-sharing and hailing is impacting short-term profitability of parking, and the long-term impact of autonomy.
We’re also seeing parking software companies like SpotHero starting to adapt their business models for a future that sees increased car sharing and the emergence of autonomous commercial fleets.
Historically, OEMs have benefitted from a culture that has heavily subsidised the refuelling and storage space for the vehicles they produce. In future, as cities look to solve issues like housing crises, the climate emergency and improve the amenity of their environments, it’s not clear that cars, their owners or their manufacturers will have such an easy ride.
| DS
Nudge theory
Why it’s interesting: In the context of growing alarm about climate change, does nudge theory present a largely untapped opportunity to drive behavioural change in cities?
Nudge taps into basic human psychology to drive behavioural change by showing people what to do, what others are doing, what’s acceptable and using a social frameworks to guide and ‘nudge’ people towards a desired outcome. And it’s quite a lot more successful than simply hoping that people will do the right thing – which, as this blog post exploring the specifics of future sustainability mobility in Manchester points out – is basically what’s happening right now.
How does nudge work? To quote again from the Manchester blog mentioned above:
"Signs that say 75% of people choose to keep their towel for another day because it’s good for the environment" are twice as successful as signs that don't mention other people. This is because...humans... have a deep seated fear of being socially isolated, because in early evolution a great risk in life was being shunned by a group and left to fend for oneself alone."
Why’s this important? Cities are starting to get serious about driving out the car, and as Drew mentioned last time, it’s legitimate to ask the question, at what point does driving a car become the new Flygskam? To the Manchester blog again:
"Jumping in the car to drive round the corner and back. I firmly believe this will become as unacceptable as smoking in front of babies in years to come."
So it may already be happening. Pair with this story in the Economist (subs req).
Cities pushing back against car use is definitely rising up the agenda, but it’s being driven today by technological change and physical interventions (introducing e-scooters, taking away parking spaces). Yet car use in cities is a deeply cultural issue. Simply taxing and outlawing cars can leave citizens feeling squeezed and resentful, and ultimately sat in a traffic jam.
Cue Automobility Group friend and associate, Abhay Adhikari. Abhay uses nudge theory as part of his Urban Sustainability Labs. Abhay’s work brings citizens, city authorities and private businesses together through workshops to identify pain points, then develop public-private pilot projects and he achieves results - in part - by using these to nudge the behaviour of people.
As cities grapple with ever more challenging future scenarios, we’re working with him as he moves into the realm of mobility, a challenge that increasing numbers of cities are asking his team for help with. Abhay’s currently looking for partners who operate in the mobility and transport space, to get involved with pilot projects in a number of European cities. If that’s of interest to you or your company, get in touch.
| JS
Jobs
Interaction Design Researcher - Nissan
Design Thinking Catalyst - Ford
Interaction Design Lead - Ford
Lab Communications Lead - Ford
Thanks to Alex Mitchell, Frank Brown, Abhay Adhikari and Navneet Alang for inspiring us this past fortnight.
That's it for this issue. We love feedback (positive and negative), and to answer any questions you have. So email Joe or Drew and we’ll get back to you.
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