The connected car: transition to a two-sided market Strategies and prospects in value creation and distribution

Abstract

The advent of digital technology has deeply affected the economic scenario triggering inclusive dynamics which have totally disrupted the conventional linear value chain. Actually, the progressive digitization of the economy has led organizations to move well beyond their own boundaries so as to include in the “value network” even the digitalized customer. As a result, the linear value chain has been displaced by a feedback loop taking the shape of a continuous data exchange. The introduction of Machine-to-Machine technologies along with cloud services has enhanced significantly this feedback loop opening up completely new business prospects. Among others, car manufacturers have been able to take advantage from M2M technologies, thus entering the connected car business and, ultimately, expanding their scope over the application software sector. In so doing, each car manufacturer has passed from being a one-sided market to what apparently seems to coincide with a typical two-sided market. In the framework of multi-sided markets literature, the aim of this work is first of all to study how the advent of Machine-to-Machine technologies in the automotive sector has affected value creation and distribution. Hence, through the analysis of three case-studies, I intend to investigate the strategies adopted by car manufacturers in the attempt to pursue a value-creating growth, ultimately, providing further insights into the potential evolution of the whole sector.