VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE

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VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
VIRTUAL AND
AUGMENTED
REALITY IN
AUTOMOTIVE
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
IMMERSIVE TECHNOLOGIES WILL FORM
        THE NEXT WAVE OF DIGITAL DISRUPTION
                                                                                                                           AR / VR / MR
   IF WE CONCLUDE FROM THE PAST,
   IMMERSIVE TECHNOLOGIES                                                                               MOBILE
   WILL REWRITE THE RULES…
                                                                          WEB 2.0
                                                                                                                                                   ?
                                                WEB 1.1                                                                    Peer-to-Peer Networks
                                                                                                                           In-app Purchases

                                  WEB 1.0
                                                                                                        Social Networks
                                                                                                        Personalized Ads

            PC                                                              Search
                                                                            Paid Search

                                                                                                             …IN TERMS OF BUSINESS
                              Hardware Access
                                                Internet Access
                                                Subscription
                                                                                                           MODEL,ARCHITECTURE AND
                              PC Sales                                                                        DOMINANT PROVIDERS
Source: Based on Digi-Capital (July 2016)              Copyright 2017 Accenture. All rights reserved.                                                  2
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
AFTER SEVERAL DECADES ATTEMPTS –
        AR AND VR ARE NOW POISED TO TAKE OFF
                   Trial and Error        (1950s - 2000s)                                                        Modern Age              (since 2010)

   1950s – THE SENSORAMA                              1987 – VR IN ARCADE                                                                  2017 – ARKIT & ARCORE
   First commercial VR use. Morton                 Virtuality Group begins to sell VR                                                      Apple‘s & Google‘s developer tools make
  Heilig offers virtual motorcycle ride                                                                                                    (mobile) AR available for mass market
                                                    gaming machines for $70,000                   2014 – GOOGLE GLASSES
    through NY for 25 cents per ride
                                                                                             Google releases first light-weight device
                                                                                             for consumers starting wearable AR trend

                                                                                                                                            2016 – POKEMON GO
                                                                                                                                            Breakthrough for AR with
                                                                                                  2013 – VW MARTA                        Pokemon Go: Downloaded more
                                                                                                  VW develops Mobile AR                    than 500m times worldwide
                                                                                             Technical Assistance (MARTA).
1968 – SWORD OF DAMOCLES                    1991 – COMMERCIAL VR GEAR                        It uses built-in camera on tablet
                                                                                                                                            proofing revenue potential
Ivan Sutherland created first VR HMD        Jaron Lanier is first to sell VR goggles            to display vehicle service
 with NASA. Due to its weight, it was           ($49,000) and gloves ($9,000)                    information in real-time
 fixed to the ceiling (hence the name)

    Source: Accenture (2017)                                    Copyright 2017 Accenture. All rights reserved.                                                              3
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
MAINSTREAM ADOPTION OF IMMERSIVE
     TECHNOLOGIES IS ONLY A MATTER OF TIME
               Head-Mounted Devices                                                                                                Handheld Devices
                  HMD Device Shipments [in Million]                                                                  Installed Base of ARKit and ARCore [in Million]

70                                                                                                         2.500
                                                                         61
60
                                                                                                                                                                           2.052
                                                                               Viewers
                                                                                                           2.000
50                                                      47                                                                                                         1.695
                                                                        VR HMDs

40
                                                                                                           1.500
                                         32
                                                                                                                                                                           983
30                                                                                                         1.000                                                   853
                         21                                              20                                                                         814
20                                                                                                                                    586
          14                                                                                                                434                       740
                                                        10                                                   500                     391
10
                                          3                              AR HMDs                                            72
           0              1                                                                                                                                                 (iPads not included)
0                                                                                                               0
         2017           2018           2019            2020             2021                                                2017      2018          2019           2020    2021
                          VR Devices           AR Devices                                                                                   ARKit         ARCore

           HMD device shipment growth                                                                          ARKit and ARCore bring AR to mass market
      @ CAGR 54,1% to reach 81,2M IN 2021                                                                     REACHING MORE THAN 3BN users in 2021
Source: IDC (2017); Accenture based on Digi-Capital & Artillry (2017)      Copyright 2017 Accenture. All rights reserved.                                                               4
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
TECHNOLOGICAL ADVANCEMENTS HAVE
       UNLEASHED THE FULL POTENTIAL OF AR-VR
                                                                                                                           5. Keen Sensors
                                                     3. Sharp Cameras
                                                                                                                           Sensors to detect real-world objects, visual
1. Fast Connectivity                                 Video cameras with 60 fps rendering,                                  positioning and cognitive recognition
                                                     12 megapixel (iPhone X) compared to                                         Speech          Visual       Gesture
 Networks enabling high                              30 fps and 3.1 megapixels (iPhone 3GS)
 speed data transfer
  1G         3G           5G

2.4Kbit/s   2 Mbit/s    25 Gbit/s

       2. Powerful Processors
                                                               4. Affordable Devices
       High computation power. iPhone X                                                                                             6. IoT Penetration
                                                              2013: $1,300 (Google Glass),
       (2.3 GHz) is 6 times faster than the
                                                              2016: $600 (Oculus VR),                                            IoT penetration is driving the demand for faster,
       first iPhone (400 MHz)
                                                              2017: $600 (HTC Vive), $100 (Zeiss VR                              more intuitive visualization and interaction
                                                              One), $15 (Google Cardboard)                                                        2015           2020
                                                                                                                                       IoT
                                                                                                                                       Devices    10bn CAGR 15% 20bn+

    Source: Apple (2017), Google (2017), Oculus (2017), HTC Vive (2017)   Copyright 2017 Accenture. All rights reserved.                                                  5
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
BUSINESSES ALREADY STARTED TO REALIZE
THE BENEFITS OF IMMERSIVE TECHNOLOGY

                    VISION PICKING | Equipping warehouse employees                        AUGMENTED MAINTENANCE | Providing HoloLens to
                    with smart glasses that visualize where each picked                   service technicians to visualize machine and establish
                    item needs to be placed                                               direct communication with remote support

                            25% increase in operations efficiency                                Reduced average length of service calls by 4x

Source: DHL (2017), Thyssenkrupp (2017)                      Copyright 2017 Accenture. All rights reserved.                                        6
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
AND INDUSTRY EXPERTS ARE CONVINCED:
  AR-VR WILL CHANGE EVERY ORGANIZATION

                                   IT IS GOING TO CHANGE THE WAY
                                    WE USE TECHNOLOGY FOREVER.
                                           Tim Cook, Apple, November 2017

                                                                            EVERY ORGANIZATION
                                                                           NEEDS AN AR STRATEGY.
                                                                                        Michael E. Porter, HBR, November 2017

Source: Apple (2017), HBR (2017)               Copyright 2017 Accenture. All rights reserved.                                   7
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
NOW WHAT
   ABOUT                    OEMS?

Source: Volkswagen (2017)   Copyright 2017 Accenture. All rights reserved.   10
VIRTUAL AND AUGMENTED REALITY IN AUTOMOTIVE
A STUDY BY BVDW & ACCENTURE OUTLINES THE
  OPPORTUNITIES AND CHALLENGES OF AR-VR
       IN THE AUTOMOTIVE INDUSTRY

AR-VR IMPORTANCE            AREAS OF                                      RECOMMENDATIONS
 IN AUTOMOTIVE          VALUE CREATION OF                                     FOR OEMS
                              AR-VR

                               Qualitative Insights

                   25 External / Internal Expert Interviews

                         Copyright 2017 Accenture. All rights reserved.                 11
WHAT IMPORTANCE
             DOES AR-VR HAVE
             FOR OEMS?

Copyright 2017 Accenture. All rights reserved.   13
OEMS HAVE IDENTIFIED THE POTENTIAL
AND ARE RAMPING UP THEIR ACTIVITIES …

Source: Automotive News, CIO, Innovators Magazine,   Copyright 2017 Accenture. All rights reserved.   14
VRfocus, Haptic.AL (2017)
… WITH PROJECTED AUTOMOTIVE SPENDING
VOLUME IN AR-VR TO RISE TO $12,8BN IN 2021

                                                            2017                                                     2021

      $0,2bn                                                                                                    $12,8bn

                                 AUTOMOTIVE SPENDING WILL GROW
                             @ CAGR 182% TO REACH $12,8bn UNTIL 2020

 Source: Accenture based on IDC, Gartner, Frost Sullivan (2017)    Copyright 2017 Accenture. All rights reserved.           15
WHAT ARE THE
             OPPORTUNITIES
             FOR OEMS IN AR-VR?

Copyright 2017 Accenture. All rights reserved.   16
AR AND VR CREATE BUSINESS VALUE ACROSS THE
  VALUE CHAIN AND BY BECOMING PART OF THE CAR

                                        AREAS OF VALUE CREATION

                    1        Value Chain                                                      2 Product

                                                                                    AR-VR become part of car and
              AR-VR can IMPROVE PERFORMANCE
                                                                                ecosystem CREATING ENHANCED USER
            ACROSS ENTIRE VALUE CHAIN from R&D
                                                                              INTERACTIONS and helping OEMs to better
             to manufacturing, sales and aftersales
                                                                                   DIFFERENTIATE THEIR PRODUCT

Source: Accenture based on HBR (2017)        Copyright 2017 Accenture. All rights reserved.                             17
WIDE RANGE OF AR-VR OPPORTUNITIES
   ACROSS THE ENTIRE VALUE CHAIN OF OEMS
                                                                                                                                                              Non-Exhaustive

   Research                          Manufacturing                               Marketing
                                                                                                                              Aftersales
   & Development                     & Supply                                    & Sales

         AR Beta-Prototype Testing
                                                                                              Training
           with End-Customers

              Virtual Remote          Smart Glasses Assistance in                           Augmented
                                                                                                                                     Rescue Assist App
         Development / Prototyping        SCM / Production                                Car Configurator

                 Self-Driving             Quality Control by
                                                                                                       Showcasing Exterior Accessory Parts
                 Car Testing           Overlying Target Situation

                                          Augmented Control                                    Virtual                          Virtual Technical Handbook
                                          of Production Line                              Car Configurator                         (for service / workshop)

                                             Vision Picking                         Virtual Test / Training Drives
                                                                                                                               Augmented Damage Analysis
                                              in Logistics                             (inside / outside the car)

                                                                                               Virtual
                                          Virtual Factory Twin
                                                                                             Showroom

                                            Virtual Remote
                                         Control of Production                                                                                           AR     VR

     VR mostly used for                       OEMs already working on AR-VR since                                      ADVANCEMENTS IN AI opens up
TRAINING PURPOSES AND                        late 1990s – LARGE NUMBER OF USE                                         more sophisticated use cases, e.g. AR
  IN REMOTE SETTINGS                               CASES ALREADY IN PILOT                                            supported error recognition in production
  Source: Accenture (2017)                            Copyright 2017 Accenture. All rights reserved.                                                                 18
BMW AUGMENTED REALITY VISUALIZER
  ENABLES SHOWROOM EXPERIENCE AT HOME
Augmented Car
 Configurator

  Description                                                                         Benefits
   As a simple AR configurator, the BMWi visualizer allows                              The interactive visualizer creates an immersive and
   to change basic settings such as color or wheels and put                             engaging customer experience offering diverse future
   the car into different environments.                                                 potentials, e.g. in the direction of upselling or aftersales.

  Source: BMW (2017)                                Copyright 2017 Accenture. All rights reserved.                                                      19
THE DISRUPTIVE IMPACT OF AR-VR
       INTERFACES ON THE CAR AND ITS USAGE

               LOCATION-BASED
                                           INTERACTION                            GAMIFICATION
                VISUALIZATION

                     AR SIGNS           HOLOGRAM MENU                              GEOCACHING
                                          NAVIGATION

                                      VIRTUAL TECHNICAL                             BACKSEAT
                    NAVIGATION
                                          HANDBOOK                                ENTERTAINMENT

Source: Accenture (2017)         Copyright 2017 Accenture. All rights reserved.                   22
WAYRAY’S AR NAVI PROJECTS HOLOGRAPHIC
 IMAGERY AND NOTIFICATIONS ON WINDSHIELD
Augmented Reality
   Navigation

   Description                                                                            Benefits
     The startup projects a virtual dashboard onto a driver’s                               By delivering contextually relevant information to
     windshield displaying information such as speed,                                       drivers, they are fully informed, are helped to stay better
     arrows and other elements to support navigation.                                       focused leading to an increase in safety.

   Source: Wayray (2017)                                Copyright 2017 Accenture. All rights reserved.                                                    23
WHERE WILL AR-VR
             HAVE THE BIGGEST
             IMPACT FOR OEMS?

Copyright 2017 Accenture. All rights reserved.   24
MOST PROMISING USE CASES
                                IN AUTOMOTIVE
                                                    Cost                             Process          Added
                                                  Reduction                        Optimization   Customer Value

               Research & Development

               Manufacturing & Supply

               Support Functions / Training

               Aftersales

               Marketing & Sales

               Product

                                                  Virtual                           Augmented      Immersive
               Most promising Use Cases
                                                Prototyping                          Training     Showrooming

Source: Accenture (2017)                      Copyright 2017 Accenture. All rights reserved.                       25
WHAT IS PREVENTING OEMS
FROM UNLEASHING THE FULL
POTENTIAL OF AR-VR?

    Copyright 2017 Accenture. All rights reserved.   26
TECHNICAL MATURITY OF HW REMAINS MAIN
      CHALLENGE FOR AUTOMOTIVE OEMS

                  Hardware Maturity
                  Limited processing power and battery life, low resolution, hand-eye tracking, unaesthetic form
                                                                                                                               77%

                  User Acceptance
                  Constraints with unknown physical impacts and concerns about privacy & aesthetics
                                                                                                                         69%         IMMATURE HARDWARE
                                                                                                                                       SLOWS DOWN
                                                                                                                                     IMPLEMENTATION
                                                                                                                 54%
                  UI and Experience                                                                                                    OF USE CASES
                  UI not yet optimized for AR/VR experiences. Mobile-like forms offer poor UI

                                                                                                          46%
                  Data Management
                  Complex integration of IoT data to enable visualization & interaction

                                                                                                                                IOT PLATFORMS
                  Business Case
                  Often unclear ROI – no comparable projects
                                                                              38%                                                 CAN HELP TO
                                                                                                                                 HARNESS DATA
What are the top three challenges your organization is facing in the implementation of
immersive technologies, n = 25

    Source: Accenture (2017)                                            Copyright 2017 Accenture. All rights reserved.                            27
WHAT DO
  OEMS
HAVE TO DO?

ESTABLISH A DEDICATED
AR-VR STRATEGY!
       Copyright 2017 Accenture. All rights reserved.   28
MAKE AR-VR AN INTEGRAL PART
                               OF YOUR ORGANIZATION
                                                                                                      Governing
                                                Organization                                          AR/VR UNIT
                                                                                                      •     Defines overall AR-VR
                                                                                                            strategy and sets priorities
                                                                                                      •     Defines technological
 Start with creating a                  AR-VR
                                         Unit                                                               standards and processes
 DEDICATED UNIT                                                                                       •     Enables business units
TO ESTABLISH THE
INFRASTRUCTURE                         Business                  Business
                                         Unit                      Unit                               Operating
 for AR-VR to flourish                                                                                BUSINESS UNITS
                                                 AR-VR Strategy
                                                                                                      •     Operates own AR-VR projects
                                             Technical Infrastructure                                 •     Shares overall AR-VR strategy
                                                                                                      •     Adheres central technological
                                       Budget /                   Budget /
                                      Operations                 Operations
                                                                                                            standards and processes

       BENEFITS
                                 Synergies                Knowledge                  Business Units       AR / VR Adoption Strategic Initiatives
                                 leveraged                  shared                      enabled               facilitated       prioritized

 Source: Accenture (2017)                       Copyright 2017 Accenture. All rights reserved.                                              29
CONSIDER WHERE AR-VR CAN BRING MOST
       VALUE IN YOUR ORGANIZATION
                                                   2. SELECT RELEVANT
                                                        USE CASES
                                                                                               Flawless
                                                                                                HW, SW
                                                                                                and user
                                                                                              interaction

                                             Generate
                                                                                  Cover
                                               user
                                                                                   user
                                            advantage
                                                                                  needs
                     Financial
                     potential

                                                                                                                  Measure
                                                                                                                  impact
Qualitative                       1. PERFORM A                                                     3. PROTOTYPE
 factors                         VALUE ANALYSIS    IDENTIFY KEY                                        & TEST
                                                    INITIATIVES                                                        Collect
                                                    AND THEN…                                                           user
                                                                                                                      feedback

Source: Accenture (2017)                          Copyright 2017 Accenture. All rights reserved.                                 30
AR-VR WILL BE DIFFERENTIATING – BUT TOO
    COMPLEX FOR ONE COMPANY ALONE
                                                                                                                                                                Illustrative

                                                                                                                                             DEVELOPMENT
            CONCEPT                               MODELLING                                    ENHANCEMENT
                                                                                                                                              & UX/UI DESIGN

            Use cases                               Texturing                                                                                App Development
                                                                                              Gesture Recognition
            Storyboard                             Rendering                                                                                 API Development
                                                                                               Voice Recognition
            Concept art                            Animations                                                                                 UI / UX Design

Customer-                   Sensitive                                                                             Highly specific                          Outsource app
                                        No competitive advantage                                                                                              and design
specific                       Data                                                                          capabilities required
        Inhouse or                                                                                                                         Outsource or
                                        from doing in-house

                                                                       Outsource
          Partner                                                                                                                            Partner
                                                         Continuous know-how development needed                                      Partner for
      Gain first mover advantage
                                                                                                                                     backend integration

Source: Accenture (2017)                                    Copyright 2017 Accenture. All rights reserved.                                                            31
WITH RIGHT APPROACH, OEMS CAN EXPLOIT
FULL VALUE OF IMMERSIVE TECHNOLOGIES

                    BEFORE MAINSTREAM ADOPTION,
            OEMS NEED TO DEFINE A DEDICATED AR-VR STRATEGY

                           1                            2                                            3

                           ORGANISATION               IMPLEMENTATION                               COLLABORATION

                  • Make AR a priority          • Consider where AR-VR                          • Partner up to leverage
                  • Build an governing AR-        can provide most value                          the full potential of AR-VR
                    VR unit to establish the    • Identify most valuable                        • Outsource non-
                    infrastructure                use cases                                       conceptual activities

Source: Accenture (2017)                       Copyright 2017 Accenture. All rights reserved.                                   32
DISCUSSION
    Please get in touch with the initiators of this study to discuss:

                 Ricarda Wagner                                                                              Tobias Lucas
                 Referent Digitale Transformation, BVDW                                                      Manager, Accenture Digital
                 Phone: +49 30 206218619                                                                     Phone: +49 15117156296
                 E-mail: wagner@bvdw.org                                                                     E-mail: tobias.lucas@accenture.com

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