BMW – Heaven and earth.

Dare I hope that BMW is beginning to see the light?

• BMW’s move to make access to CarPlay free in its vehicles gives me a little confidence that BMW is beginning to realise that its digital future depends on user engagement with the infotainment unit.
• Following the launch of CarPlay BMW reluctantly made it available in its vehicles but then went on to enrage its users by charging them for both the option in the vehicle as well as $80 per year to be able to access it.
• Its excuse was that BMW infotainment units are more complicated than those of its peers and so more engineering effort is required to add, and then maintain CarPlay.
• This argument has no merit in my opinion as the fact that BMW’s infotainment units are more difficult to work with is not the fault of the user and therefore he should not have bear the consequences of BMW’s over-engineering.
• This incident was yet another indication of how short-term BMW’s thinking is.
• RFM research indicates that BMW and all of the OEMs face an existential threat from a potential 65% decline in demand for vehicles caused by the transition to electric and autonomous vehicles over the next 20 years (see here).
• Their one hope is to have a seat at the table in delivering digital services to users of their vehicles meaning that they should be able to earn a share of the revenues generated.
• These revenues have the potential to be both large and profitable and could replace the profits that will be lost from lower vehicle demand.
• However, in order to get access to this opportunity, the user’s digital engagement must remain in the infotainment unit.
• Therefore, all OEMs should be moving heaven and earth to ensure that the smartphone remains in the user’s pocket as much as possible.
• If users continue to use their smartphones and digital services in the vehicle are delivered over the smartphone, OEMs will be cut out and will have nothing with which to offset declining vehicle sales.
• Charging users more money after they have just parted with a large amount of money for a vehicle is a sure-fire way to ensure that users continue to use their smartphones encouraging the emergence of over-the-top alternatives to vehicle services.
• BMW should be incentivising users as much as possible to engage with its services because this will ensure engagement with the infotainment unit opening the way for more services to be offered via the vehicle as they emerge.
• Unfortunately, BMW still seems to be charging for services (see here) ensuring that engagement will be less than it otherwise could have been.
• If I was running BMW digital services, I would immediately make all BMW services free to use (or charge a small one-off fee at the time of purchase) and defray the cost as a long-term investment.
• Users engaged with BMW services would drive loyalty to the brand, help keep Google out of the vehicle and create a market for others to sell services to BMW users from which BMW could earn a commission.
• This is how the devastating impact of falling vehicle sales can be offset or even turned to BMW’s advantage.
• The problem is that this requires a change of how BMW thinks about digital services and a focus on its outlook for the next 20 years rather than the next quarter.
• The move to make CarPlay free to use is a step in the right direction but much more is needed to point BMW in the right direction.
• I am a little bit more hopeful but not overly optimistic.