OBD Dongles: The Next Big Consumer Electronics Market?



There is a lot of discussion about OBD dongles these days: do they create issues to the car (warranty, liability)? do they suck battery life? what kind of data do they really provide? etc… All of that is interesting but frankly the whole opportunity is lying beyond pure engine data. Let me explain why.

The OBD port - and a dongle connected to it - offer many business advantages.

First, it can be self-installed, which means sold off-the-shelves everywhere: e-commerce, big box retailers, etc. not only at a dealership or a repair shop, unlike products that require a professional installation.

Second, it is self-powered: it does not need to be recharged and can stay on its port for years.

Third, it is working 24/7 once installed. Unlike a standalone app that is often buried within tens of apps and forgot about in a matter of weeks, the OBD dongle will record 100% of car usage.

Fourth, it can easily communicate with a cloud through Bluetooth, Wi-Fi and a consumer smartphone data plan, or directly via its own embedded wireless modem.

Fifth, this is rather inexpensive to manufacture.

Last but not least, this is hardware. In a world of digital services increasingly disrupted by the app store model where the pricing trend is towards free - freemium at best - hardware offers a physical, identified value for the customer which means a price - and therefore margins for the vendor - in addition to in-store visibility, branding, etc. It is obviously more complex to operate as a hardware company but surely more profitable as a long term business.

This is already a lot, even without car data or with only minimum engine data from the dongle. And based on MEMS inertial sensors that might be embedded in the dongle you can identify and reconstruct a lot of information: gear changes, idle time with engine on, etc.

But even without engine data, if you think about car location and movements, historical data, driving patterns and behaviors, plus the many sensors embedded in the phone, all of that offers zillion possibilities for new services and monetization. This can be either through a direct service offered to the driver based on his car data, or indirectly through big data processing of a fleet of cars to offer both B2B or B2C information: fleet patterns, real-time traffic service, free parking spot location, etc.

Market opportunity
Therefore we forecast that OBD dongles will be a cornerstone of many new start-up and probably create a consumer electronics market segment that is on par with what Personal Navigation Devices were 5 years ago.

Continued...

Tuesday, January 27th 2015


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