AUTOMOTIVE MULTIMEDIA AND COMMUNICATIONS

Detailed system and semiconductor demand analysis for in-vehicle infotainment, telematics and vehicle-device connectivity features.

November 23, 2014 16:46 rlanctot

It’s the fourth quarter of the year and time, again, to consider the possibility of an acquisition of TomTom by Apple. This annual Q4 speculation was missing, for the first time, last year, but much has changed in the past 12 months.

Apple’s strong interest in mapping is manifest in the roster of map-related acquisitions over the years including: Placebase, C3 Technologies, Locationary, Hopstop.com, Embark, and Broadmap. The most significant change since 2013, though, has been the announcement of Apple CarPlay for the integration of iPhones in cars.

Last week’s L.A. Auto Show revealed that CarPlay, in spite of its March debut at the Geneva Auto Show, is still not ready for the market. As noted in an Automotive News blog, the best auto makers can hope for is spring 2015 availability – and likely requiring some sort of dealer update for the high profile vehicles, such as Volvo’s XC90, for which it was originally intended. (http://tinyurl.com/lr3xegl - Apple’s CarPlay Goes Missing in L.A. and in the Showroom)

TomTom has had its own struggles in the automotive market with troubled hardware-centric programs in Europe, most notably Fiat’s Blue&Me Mobile which never made it to the U.S. Perhaps taking a lesson from its mixed experience as a Tier 1 supplier, TomTom’s latest quarterly report shows the company shifting its emphasis toward selling maps, software, traffic and cloud services – not hardware.

The company touted automotive orders of EUR170M, but then had to backtrack a bit during the Q&A session with financial analysts noting that the revenue consisted of map data and updates, software and services to be recognized over an extended period of time. In other words, impressive though the figure was it did not suggest that TomTom was out of the turnaround woods.

Apple, on the other hand, has demonstrated nearly unmatched skill in delivering market-beating hardware solutions along with productive and proven cloud services, navigation and streaming audio applications. But automotive integration has so far eluded Apple.

TomTom’s maps have put Apple into the navigation business and Apple’s probe data has contributed greatly to the enhancement of TomTom’s already strong traffic information services. (Note: Neither TomTom nor Apple will confirm that TomTom has the benefit of Apple handset probe data.)

By working together, Apple has helped TomTom compete with its nemesis, HERE, in traffic services – but TomTom remains at a disadvantage in terms of map quality. As evidence, BMW North America replaced TomTom’s U.S. maps in favor of HERE within the past year. Audi AG shifted its European traffic service business from INRIX to TomTom.

Both HERE and TomTom claim 80% market share, but HERE is likely referring to map data share for embedded in-car systems while TomTom is referring to traffic information. A closer cooperation – ie. ownership based – between Apple and TomTom will enable coordinated improvement of map data for mobile navigation and advertising.

Collaboration between TomTom and Apple will allow Apple to gain a leg up on autonomous driving developments (where TomTom claims partnerships with Volkswagen and Bosch) while TomTom will gain access to indoor navigation technology from Apple. Both companies, in other words, will be able to fill the gaps in their location product offerings.

The argument against an acquisition is that Apple is getting the milk (maps) without owning the cow. But TomTom’s ongoing revenue decline threatens investments in research and map data quality along with its work in traffic and the extension of its product line into wearables.

There are more details to the rationale, but let’s ring in the holidays with a restoration of the annual Apple buying TomTom rumor. With more than $100B in cash held overseas, the acquisition of TomTom makes huge sense. The only barrier is likely to be TomTom greed.


November 21, 2014 16:36 rlanctot

Volvo’s vision of vehicle safety remains something of a lonely voice in the industry. The company is the only car maker pledging as a goal that “no one is killed or injured in a Volvo by 2020.”

That lonely voice cried out at the L.A. Auto Show this week as the company restated its claim to industry leadership in vehicle safety. The good news for Volvo is that there’s never been a better time to pitch safety to U.S. consumers with record vehicle recalls and a flattening rate of decline in annual U.S. highway fatalities.

Safety sells cars, according to multiple Strategy Analytics consumer surveys of car buyers around the world. Safety is consistently a higher purchasing priority than a wide range of other factors, including infotainment and performance.

Volvo expects to sell about 60,000 cars in the U.S. market this year, down from 100,000 units in 2007, its best year. China has become a more important market to the company, volume-wise, but the goal is to return to the 100,000-unit level. The company clearly expects safety to define and differentiate the brand as well as restore the company to six-figure sales volumes here.

What’s new for Volvo is industry leadership in connected safety – bringing together the enhanced sensing technologies intended to avoid vehicle and pedestrian collisions with inter-vehicle communications to enable autonomous operation. Volvo isn’t waiting for standards-setting activities or mandates, it is forging ahead with its vision of vehicle connectivity with a focus on safety.

The company can already point to impressive progress. The company announced at the L.A. Auto show that, since 2000, it has reduced the risk of being injured in a Volvo by 50%, according to the company’s analysis of its own accident database. The company has maintained its own Traffic Accident Research team for more than 40 years.

In fact, Volvo’s model of analyzing accident results in the interest of finding life-saving and injury-preventing solutions may well serve as a model for the industry. In the U.S., the National Highway Traffic Safety Administration has refused to release brand-specific accident data. But some of the most significant advances in safety, such as BMW's cooperation with OnStar to define accident severity protocols for emergency response, have resulted from the analysis of accident outcomes and causes.

Perhaps the most significant developments at Volvo are the company’s efforts to bring together vehicle connectivity and safety. Typically, the work of the safety department of the typical car company takes place in isolation from the team working on what is considered telematics – involving the integration of a telecommunications control unit.

The telematics teams are generally regarding as adding cost to the vehicle (the TCU and related hardware and software) in the hopes of generating subscription revenue. Of course, the TCU is also capable of summoning assistance OnStar-like in the event of an airbag-triggering accident.

Until recently, safety development activities have been focused on tapping camera-, Lidar- and radar-based sensors for collision avoidance applications and assisting driving. Connectivity for safety engineers has been almost exclusively focused on 802.11p dedicated short range communication (DSRC) technology for vehicle-to-vehicle communications.

Volvo is breaking down the wall between the safety and telematics development teams by exploring inter-vehicle communications using the existing embedded wireless device. The Volvo vision, still only in proof of concept phase, will enable Volvo vehicles to transmit safety messages to other Volvo drivers over the wireless network.

Similarly, Volvo is testing 100 cars driving autonomously in the Gothenburg, Sweden, area and using embedded wireless telecommunications connections to share updated roadway condition and map data. For most car companies, the developments taking place in the telematics department and the developments happening in safety have remained segregated. Volvo’s effort to merge these efforts is a ground-breaking development for the industry.

It is also important to note that Volvo has stayed true to the integration of automatic crash notification with the embedded telematics system. At a time when a growing number of auto makers, such as Audi, Chrysler and Tesla, have opted not to include ACN technology, Volvo has brought this capability to 20 world markets.

But Volvo is pushing the safety envelope in other ways existing vehicles on the road today. In fact, in Europe, Volvo vehicles are earning insurance discounts for their safety credentials, an outcome which has yet to cross the Atlantic to U.S. drivers in a significant way.

Volvo’s auto-braking, collision avoidance leadership has been reflected in:

  • Earlier this year, the benefits of the City Safety (low-speed, automatic braking, collision avoidance) technology were documented in an IIHS (Insurance Institute for Highway Safety) report, which stated a collision frequency reduction of up to 22%.
  • A similar study by the Swedish insurance company Volvia shows that Volvos equipped with automatic braking are involved in 22% fewer rear end accidents compared to cars without auto brake.
  • The final report from the EuroFOT research projects concludes that a car with adaptive cruise control and collision warning cuts the risk of colliding with the vehicle in front on a motorway by up to 42%.
  • In the latest report from the Insurance Institute for Highway Safety (IIHS), the Volvo S60 earns the best rating in a new small offset frontal crash test in 40 mph (64 km/h).
  • Last year, no less than five Volvo models - the C30, S60, S80, XC60 and XC90 - earned an IIHS Top Safety Pick.

Volvo’s ongoing work is focused on:

  • Autonomous Driving Support uses data from a camera and radar sensors to make sure that the car automatically follows the vehicle in front in a slow-moving queue.
  • Intersection Support alerts and automatically brakes for crossing traffic when necessary.
  • Animal Detection is designed to detect and automatically brake for large animals, such as elks and large stags.

The all-new Volvo V40 features pedestrian detection with full auto brake - as well as the improved City Safety, which now operates at speeds up to 50 km/h. Among the new features are world-first Pedestrian Airbag Technology, Lane Keeping Aid with haptic auto steering, Active High Beam and a Cross Traffic Alert radar system at the rear.

Some have questioned whether Volvo can continue to lead with so many other car companies adopted lane keeping, blind spot detection, automatic emergency braking and adaptive cruise control technologies. It is clear that, indeed, Volvo has and is preserving its leadership and extending it into pedestrian protection and connected safety to enable automated driving.

Maybe the industry will hear Volvo’s voice crying out in the L.A. desert and join in the vision zero effort – especially during the United Nations Decade of Action for Road Safety. We all want to reduce highway fatalities – which already exceed 1M annually. And let’s not forget that safety sells.


November 16, 2014 11:24 rlanctot

In the era of de-contenting cars we expect to see side-mounted rearview mirrors and door handles go away along with keyfobs, standard transmissions and internal combustion engines. Okay maybe losing the internal combustion engine will take a little more time, but then so will losing the steering wheel, which is where Google has goofed up again.

There are some things about the automotive industry that Google just doesn’t get and one of those is the fact that some of us, in fact most of us, are perfectly happy driving our cars. Some of us even thrive on the driving experience – love it. For Google? Driving is a distraction – a distraction from Google.

So when Google shifted gears earlier this year and re-stated its autonomous driving objective as a car without gas or brake pedals and no steering wheel, the industry took notice. But almost simultaneously the industry shook its collective head and said: “No, Google, we’re not going there with you. You’ve gone too far.”

The reaction consisted of two parts. The first part is pervasive skepticism that a pedal-less, steering wheel-less car is practical, possible or attractive to anyone or for any application. It is hard to overstate the case here. When Google stated its intention of bringing a steering wheel-less car to the market the irresistible juggernaut of Google’s autonomous car program collapsed like a novelty fart bag – pfffft!

The second part is the fact that the driving experience is in the midst of a major revolution and the steering wheel is very much a part of that. Driving is about to become safer, easier and more exciting thanks to leading automotive innovators.

A growing roster of companies is looking to the steering wheel for a wide range of applications from driver monitoring to human machine interfacing. Companies like Neusoft are adding biometric content to steering wheels to monitor the health of drivers, while Seeing Machines is working with Takata to add its driver monitoring tech to steering wheels for everything from commercial vehicle applications to self-driving cars from companies such as General Motors.

But maybe the most compelling vision is coming from Neonode in Stockholm, Sweden, which is using low-cost, LED-based “multi-sensing” interfaces to HMI-enable steering wheels. Neonode is best known for bringing capacitive-touch-like functionality to non-touch displays such as the Sensus system from Volvo. But the company is working to touch enable a much broader range of surfaces – including surfaces throughout the vehicle cabin and for keyless access to the car – enabling a wider range of gesture recognition applications.

Neonode’s vision is not only changing the concept of keyless entry – in the future to include raising or lowering windows or maybe starting the car with gestures – but also the process of interfacing with all manner of in-vehicle systems. In fact, a Neonode-enhanced steering wheel combined with a head-up display will obviate the need for hardware controllers (bye-bye BMW iDrive and Audi MMI) and greatly mitigate the need to glance away from the road.

In fact, the more you think about it, it just makes senses – which happens to be the company’s marketing slogan. Putting interfaces and touch-enabled displays on steering wheels resolves a multitude of challenges including driver distraction and lefty/right issues. And this is aside from the fact that systems for entering and recognizing kanji - used in the biggest and fastest growing automotive market in the world - are best mounted on the steering wheel not only to resolve the lefty-righty issue but to keep eyes on the road.

So, to recap, implementation of Neonode’s multi-sensing system products throughout a car will allow for the replacement of the capacitive touch display with a touch enabled non-touch display, deletion of the hardware controller, significant alteration (if not deletion) of the door handle, replacement of the keyfob (with a key card?) and enhancement of the steering wheel for a variety of new purposes – all intended to enhance the driver’s focus on the road.

Are we ready for Neonode’s vision of turning displays – or any other surface – into interfaces? It makes a lot more sense than removing the steering wheel. If you are attending the CES show, you’ll want to check out what they have on offer. See you there.


November 8, 2014 12:00 rlanctot

Day after day goes by with no resolution to the current auto recall crisis gripping the U.S. The number of fatalities attributed to GM’s ignition switch recall continues to rise even as the company acknowledges the fact that approximately 1M cars remain on the road with open recalls.

The situation has only grown worse with the emergence of the Takata airbag recall with the daily recounting on evening news broadcasts of a handful of drivers having their throats slashed by splintering airbag components.

With each passing day the auto industry is frittering away hard won customer respect, credibility and good will. Can we, as an industry, afford to allow this to continue?

The opportunity for car makers, dealers and the National Highway Traffic Safety Administration (NHTSA) is to find a creative solution to the crisis that will resolve the issue of tracking down recalled cars once and for all. There’s a pretty simple solution and it involves taking the responsibility for managing the customer communication process out of the hands of NHTSA.

If you want to know whether your car is subject to a recall you can visit NHTSA’s safercar.gov Website and enter your vehicle’s vehicle identification number (VIN). Many car makers provide their own VIN lookup resources as well.

But the NHTSA Website is creating a logjam rather than a flood. And with 1 of every 5 cars on the road in the U.S. subject to recall, it is time to open up the sluice gates.

In fact, it is not clear to me why NHTSA is seeking to manage or control the VIN lookup process. Imagine the huge boost to consumer interest in aftermarket vehicle data if the VIN lookup database were made available to selected commercial entities – like the Audiovox’s, Zubie’s and Moj.io’s of the world and their OBDII plug in devices.

Actually, my Audiovox CarConnection recently notified me of a potential recall on my car. It was a potential recall that neither BMW nor my dealer had notified me of. It turned out that the recall in question did not apply to my car, but another recall did – again, this recall was not communicated to me by either the dealer or BMW.

The point is twofold: First, the information is more valuable in private hands and Second, the existing information is incomplete. And, even though the NHTSA site offers a useful tool as a clearinghouse for customer complaints it is clear, by now, that NHTSA has a poor record of follow-up on these complaints.

The NHTSA VIN lookup actually has all available recall information going back more than a decade – or at least it is supposed to. I know, because I found an item on the list covering a $300 repair I made on my son’s car. (I am still working on arranging the refund through a local dealer. The dealer has found the recall but he cannot find the detailed information required to fulfill my reimbursement.)

But NHTSA is acting as a gatekeeper. The Website uses security tools to prevent scraping the detailed historical data. But why? Why not license the data to selected and approved third parties? And if the data were in the hands of a third party, that third party will be more likely to aggressively pursue the car makers for more complete information on behalf of consumers.

Third party service providers will have the appropriate incentives to commercialize the information and get it in front of customers. Third parties might even act as go-betweens for consumers seeking reimbursements for repairs they have already paid for but that were, as in my case, subject to an existing recall.

In the absence of such an approach, NHTSA remains part of the problem. CEO Michael Jackson of Autonation complained (in Automotive News: http://tinyurl.com/o927qj3 - “Poorly handled recalls are a 'black eye' for the industry, Jackson says”) that each brand he sells has a different procedure for handling the Takata airbag recall. But he concludes that a stronger NHTSA is necessary.

This is where Mr. Jackson is wrong. NHTSA needs to be deleted from the recall process entirely with recall and safety testing responsibility privatized – put in the hands of professionals with appropriate commercial motivations.

But we can start, at least, by getting the VIN lookup recall database out from behind the firewall. That data belongs to the owners of the effected cars. There should be nothing, including NHTSA, standing between consumers and valuable, life-saving information about their cars.

Open up the VIN database to appropriate partners – ie. NOT direct mail fraudsters – and let consumers take charge of solving the problem. In the absence of free, open access to this data, GM has been reduced to offering $25 gift cards to vehicle owners who have not yet brought their cars in: http://tinyurl.com/ky2fgfl - “GM Offers Gift Cards to Owners of Recalled Cars” – GM Authority.

In fact, why aren’t state-level DMV operations integrating with the VIN recall database? Every new or renewed registration ought to represent an opportunity to identify cars with open recalls. Am I stupid or something? This seems to be a pretty obvious step, especially when the recalls in question represent potentially life-threatening failures.

The recall crisis is indeed an opportunity. It is an opportunity for someone or some organization to step forward or step up with a rational reasonable solution to a legitimate crisis. Every day that the car makers and NHTSA allow the problem to fester is another ounce of lost industry credibility and consumer confidence. It will take millions of dollars in advertising to win back that good will. Can we, as an industry, afford to wait to solve this problem?


November 7, 2014 01:39 rlanctot

The Republican takeover of the U.S. Senate in this week’s mid-term elections throws into doubt the prospect of the Obama administration making any progress on protecting the use of the 5.9GHz band for vehicle-to-vehicle communications, as requested by the ITS community and the Department of Transportation.  Republicans have strongly indicated their opposition to all things Obama, and with control of both houses of Congress in their hands V2V communications can be expected to take a back seat.

In letters to Republican and Democratic congressmen sent shortly before the election, Chairman of the Federal Communications Commission, Tom Wheeler, indicated his intention to pursue the required testing of unlicensed use of the 5.9GHz band and diplomatically danced around the issue of enabling both uses – V2V and Wi-Fi – of the spectrum in question – a scenario opposed by the DOT.

“Starting with Chairman Genachowski, the Commission has prioritized the 5GHz rulemaking and focused significant resources on this proceeding in order to make this band available for shared, unlicensed use to the maximum extent possible.  Our March 31, 2014, Order revised our Part 15 rules to permit expanded unlicensed use of the 5GHz band, and we designated the very issues that you raise for further review and consideration.

“The Institute of Electrical and Electronics Engineers’ (IEEE) specialized “Tiger Team” is actively reviewing two leading proposals submitted by the Wi-Fi industry to address interference issues within the upper 5GHz band.  Commission staff has encouraged and monitored the group’s progress.  At the same time, the Commission continues to work collaboratively with other federal stakeholders, including the National Telecommunications and Information Administration, the Department of Transportation, and the National Highway Traffic Safety Administration, to encourage the development of viable solutions to protect incumbent users from harmful interference, while maximizing the potential shared use of this spectrum.  We are hopeful that these efforts will lead to testing and analysis that will inform our decision-making process.

“The shared use of the 5GHz band is a highly complex undertaking, as evinced (sic) by the seven Petitions for Reconsideration of our initial Order, which we are also currently considering.  Nevertheless, we intend to continue to move as expeditiously as possible to achieve our goal of further expanding Wi-Fi use and spurring innovation and economic development.”

Ambiguous those these comments may seem, they are less than a ringing endorsement of the DOT’s preference for protected use of the spectrum.  The entire V2V proposition with the implications for infrastructure investments and mandated automotive hardware run counter to the core philosophy of the Republican Party.

To top things off, the National Highway Traffic Safety Administration (NHTSA) still lacks a permanent director and is fighting its way through heavy criticism and second guessing over the recent Takata and GM recalls.  NHTSA is in no position to pursue a V2V mandate against the headwinds of a lame duck President and a hostile Congress.

The mid-term elections brought unhappy tidings for the Democrats and President Obama.  It is time for the ITS community to take a soul-searching look at these same results and cook up a new approach to vehicle connectivity more suitable to the current political landscape. 


November 4, 2014 23:48 rlanctot

The terrestrial radio industry globally has plausible deniability on its side. Broadcasters are losing listeners slowly enough that they can continue to claim credible and dominant reach among key demographic segments throughout the world.

But the inexorable advance of listening alternatives is impossible to ignore.

The majority of radio listening in the U.S. and, increasingly, elsewhere in the world occurs in the car. Once the sole province of the in-dash car stereo, the automotive audio environment has become a free fire zone for satellite radio, digital terrestrial radio, good old fashioned analog radio, streaming audio, Internet radio and pre-recorded content.

Still, terrestrial radio dominates, commanding billions of dollars in advertising revenue based on a predominance in hours of listening and reach. Radio wins for being already in the dashboard and easy to use.

But radio is increasingly irrelevant among young people (pick your study, there are many). And as those young listeners age they are moving like a plague of locusts across the listening landscape toward IP-based alternatives.

In the U.S., recent financial reports from SiriusXM and Pandora, two of the strongest contenders for the ears of vehicle occupants, find both organizations adding listeners and listening hours. SiriusXM reported a total of 1.5M new net subscribers, climbing to a new record of 26.7M. Pandora reported 76.5M active monthly users, up from 72.7M, with a 13% increase in active daily users of the service up from 22M to 25M.

While the numbers were impressive for both SiriusXM and Pandora they reflected declining rates of growth for both companies. The reality is that terrestrial radio remains strong and can be expected to remain strong for the foreseeable future even as alternative sources of audio content continue to slowly erode the listening population.

What is missing is a clean break or shift in listening behavior. This simply is not going to happen. But the pressure is on and the insurgents, SiriusXM and Pandora (and their equivalents elsewhere in the world) have more cards to play.

As public companies, SiriusXM and Pandora must drive growth. SiriusXM hinted at the leverage it foresees coming from its connected car initiatives as well as its attempts to convince used car buyers to take advantage of the service with 14,000 dealers participating in the company’s certified pre-owned program.

SiriusXM therefore has a variety of means to stimulate growth from both new and used cars and from creatively bundling its existing services. The company could also opt to give away its data services (news, weather, traffic, gas pricing) for free in new and pre-owned cars (so equipped) in order to make it easier for customers to add channels or channel bundles in an ad hoc manner.

SiriusXM probably collects no more than $150M from its subscription-based data services for traffic and weather and the rest. The upside potential of having those customers connected for free to the data services and able to add other audio content on demand is hard to ignore. Of course, if the data services are delivered from a separate box from the audio services, it may offer no advantage to provision these standalone devices. (SiriusXM is also offering up its satellites to support the public key infrastructure associated with the Department of Transportation’s V2V initiative.)

With its acquisition of Agero’s former ATX division in Irving, TX, and that organization’s relationships with half a dozen car makers for connected services, SiriusXM is in position to enhance its satellite-delivered content with IP connectivity. An IP connection could deliver valuable location or context data that might allow SiriusXM to alter its content delivery or to add a contextual advertising play.

For Pandora, the upside comes from regional expansion as well as increased active users and increased hourly usage by existing users. Pandora’s powerful brand recognition in the U.S. has allowed the company to begin to displace SiriusXM as an advertised enhancement to new cars.

So far, Honda Motor America is the only auto maker that has seen fit to emphasize the integration of Pandora among its app services, but car makers including Toyota and General Motors have featured in-vehicle displays with Pandora icons in their television commercials. Car makers recognize the marketing influence of the well-known and easy to use streaming app.

In fact, both SiriusXM and Pandora have ease-of-use working in their favor. In addition, SiriusXM emphasizes premium content including popular talkers and live sports. Pandora leverages its more personalized listening experience.

Both SiriusXM and Pandora are vulnerable to the location relevance and curation of live terrestrial radio. SiriusXM will continue to see subscriber gains thanks to its aggressive renewal campaigns and creative pricing. Pandora is the greater threat, though, since it is riding the youthful wave of smartphone enthusiasm.

Pandora, and its streaming brethren, also benefit from the IP delivery model. Broadcasters can sit back and laugh at today’s in-vehicle smartphone integration solutions with lousy voice recognition and confusing menus, but car makers are looking for IP-based platforms that can enable global delivery of content via connected mobile devices or embedded telecom modules.

In fact, the European Commission’s efforts to refocus the wireless industry on improving regional coverage is a direct threat to broadcast radio listening in cars. Free though it may be, radio listening is hard to leverage as a competitive advantage for a car maker.

Whether they connect through the AUX IN, Bluetooth, a USB or simply listen directly, young people are opting to listen to their own stored content or to apps like Pandora via smartphones. Pandora is the critical gateway app for the automotive industry as it is available as a standalone app from nearly every car maker on multiple programs and it is the go-to app for demonstrating a connected smartphone in the new car showroom.

The downside risk for Pandora is a potential loss of interest or enthusiasm from young people experimenting with a range of service options including Rhapsody, Slacker, TuneIn Radio, Amazon Cloud, Itunes Radio, iHeartRadio, Rdio, Beats Music, and Spotify. But as first mover with the broadest user base and name recognition, Pandora has solid momentum.

Combatting Pandora and SiriusXM will require embracing hybrid radio solutions such as NextRadio and other emerging solutions that stitch together broadcast over the air content with IP delivered material.  The crossover between terrestrial and IP will create is creating a 1+1=3 scenario that is stimulating additional listening and expanding the market for both content delivery propositions.

For now, and until the broadcast industry can bring the wireless carriers on board, the omnipresence of Pandora and SiriusXM means these two organizations will take center stage in the U.S. in the battle for the ears of drivers. As an outcome of that struggle, terrestrial radio will see a steady, though nearly imperceptible, decline in listening. And for the time being, the deniability of that decline will be preserved - until and unless the hybrid radio experience is embraced.


November 4, 2014 23:48 rlanctot

The terrestrial radio industry globally has plausible deniability on its side. Broadcasters are losing listeners slowly enough that they can continue to claim credible and dominant reach among key demographic segments throughout the world.

But the inexorable advance of listening alternatives is impossible to ignore.

The majority of radio listening in the U.S. and, increasingly, elsewhere in the world occurs in the car. Once the sole province of the in-dash car stereo, the automotive audio environment has become a free fire zone for satellite radio, digital terrestrial radio, good old fashioned analog radio, streaming audio, Internet radio and pre-recorded content.

Still, terrestrial radio dominates, commanding billions of dollars in advertising revenue based on a predominance in hours of listening and reach. Radio wins for being already in the dashboard and easy to use.

But radio is increasingly irrelevant among young people (pick your study, there are many). And as those young listeners age they are moving like a plague of locusts across the listening landscape toward IP-based alternatives.

In the U.S., recent financial reports from SiriusXM and Pandora, two of the strongest contenders for the ears of vehicle occupants, find both organizations adding listeners and listening hours. SiriusXM reported a total of 1.5M new net subscribers, climbing to a new record of 26.7M. Pandora reported 76.5M active monthly users, up from 72.7M, with a 13% increase in active daily users of the service up from 22M to 25M.

While the numbers were impressive for both SiriusXM and Pandora they reflected declining rates of growth for both companies. The reality is that terrestrial radio remains strong and can be expected to remain strong for the foreseeable future even as alternative sources of audio content continue to slowly erode the listening population.

What is missing is a clean break or shift in listening behavior. This simply is not going to happen. But the pressure is on and the insurgents, SiriusXM and Pandora (and their equivalents elsewhere in the world) have more cards to play.

As public companies, SiriusXM and Pandora must drive growth. SiriusXM hinted at the leverage it foresees coming from its connected car initiatives as well as its attempts to convince used car buyers to take advantage of the service with 14,000 dealers participating in the company’s certified pre-owned program.

SiriusXM therefore has a variety of means to stimulate growth from both new and used cars and from creatively bundling its existing services. The company could also opt to give away its data services (news, weather, traffic, gas pricing) for free in new and pre-owned cars (so equipped) in order to make it easier for customers to add channels or channel bundles in an ad hoc manner.

SiriusXM probably collects no more than $150M from its subscription-based data services for traffic and weather and the rest. The upside potential of having those customers connected for free to the data services and able to add other audio content on demand is hard to ignore. Of course, if the data services are delivered from a separate box from the audio services, it may offer no advantage to provision these standalone devices. (SiriusXM is also offering up its satellites to support the public key infrastructure associated with the Department of Transportation’s V2V initiative.)

With its acquisition of Agero’s former ATX division in Irving, TX, and that organization’s relationships with half a dozen car makers for connected services, SiriusXM is in position to enhance its satellite-delivered content with IP connectivity. An IP connection could deliver valuable location or context data that might allow SiriusXM to alter its content delivery or to add a contextual advertising play.

For Pandora, the upside comes from regional expansion as well as increased active users and increased hourly usage by existing users. Pandora’s powerful brand recognition in the U.S. has allowed the company to begin to displace SiriusXM as an advertised enhancement to new cars.

So far, Honda Motor America is the only auto maker that has seen fit to emphasize the integration of Pandora among its app services, but car makers including Toyota and General Motors have featured in-vehicle displays with Pandora icons in their television commercials. Car makers recognize the marketing influence of the well-known and easy to use streaming app.

In fact, both SiriusXM and Pandora have ease-of-use working in their favor. In addition, SiriusXM emphasizes premium content including popular talkers and live sports. Pandora leverages its more personalized listening experience.

Both SiriusXM and Pandora are vulnerable to the location relevance and curation of live terrestrial radio. SiriusXM will continue to see subscriber gains thanks to its aggressive renewal campaigns and creative pricing. Pandora is the greater threat, though, since it is riding the youthful wave of smartphone enthusiasm.

Pandora, and its streaming brethren, also benefit from the IP delivery model. Broadcasters can sit back and laugh at today’s in-vehicle smartphone integration solutions with lousy voice recognition and confusing menus, but car makers are looking for IP-based platforms that can enable global delivery of content via connected mobile devices or embedded telecom modules.

In fact, the European Commission’s efforts to refocus the wireless industry on improving regional coverage is a direct threat to broadcast radio listening in cars. Free though it may be, radio listening is hard to leverage as a competitive advantage for a car maker.

Whether they connect through the AUX IN, Bluetooth, a USB or simply listen directly, young people are opting to listen to their own stored content or to apps like Pandora via smartphones. Pandora is the critical gateway app for the automotive industry as it is available as a standalone app from nearly every car maker on multiple programs and it is the go-to app for demonstrating a connected smartphone in the new car showroom.

The downside risk for Pandora is a potential loss of interest or enthusiasm from young people experimenting with a range of service options including Rhapsody, Slacker, TuneIn Radio, Amazon Cloud, Itunes Radio, iHeartRadio, Rdio, Beats Music, and Spotify. But as first mover with the broadest user base and name recognition, Pandora has solid momentum.

Combatting Pandora and SiriusXM will require embracing hybrid radio solutions such as NextRadio and other emerging solutions that stitch together broadcast over the air content with IP delivered material.  The crossover between terrestrial and IP will create is creating a 1+1=3 scenario that is stimulating additional listening and expanding the market for both content delivery propositions.

For now, and until the broadcast industry can bring the wireless carriers on board, the omnipresence of Pandora and SiriusXM means these two organizations will take center stage in the U.S. in the battle for the ears of drivers. As an outcome of that struggle, terrestrial radio will see a steady, though nearly imperceptible, decline in listening. And for the time being, the deniability of that decline will be preserved - until and unless the hybrid radio experience is embraced.


November 3, 2014 09:49 rlanctot

Automotive News reports today that Volkswagen Group and Mercedes-Benz are calling on fellow automakers to establish separate platforms for data on vehicle use to avoid handing over sensitive customer information to Google.

The report (http://tinyurl.com/lmstxuo - "Mercedes, VW to put brakes on Google's in-car data inroads") echoes similar sentiments expressed by VW CEO Martin Winterkorn at the CeBIT event earlier this year when he warned of the car becoming a “Datenkrake” or data octopus.

In his latest comments, Winterkorn says: "We seek connection to Google's data systems but we still want to be the masters of our own cars. Potential conflict arises around making data available."

What Volkswagen and Mercedes are concerned about is the inclination of rivals, such as General Motors, to share vehicle and customer data with Google. The reason for the concern is that Google is seeking to shake down the industry by charging steep licensing fees for use of its connectivity, content and application assets if auto makers won’t share data. The extortion boils down to: “Share your data with us and the licensing fee goes away.”

I’ve got news for the auto makers and Google: the data cat is out of the bag. Nearly every non-electric car in the world has a data port for emissions testing which is also used for diagnostics. EVs have no emissions, hence no data port. The availability of that data port, or OBDII, means anyone potentially has access to the vehicle data as long as they can tap into that port.

So-called right-to-repair laws in the U.S. require auto makers to allow access to that port and to the vehicle diagnostic codes. Similar laws exist or are being pursued elsewhere in the world.

But access to vehicle data is getting more interesting with the proliferation of wireless connections to cars via embedded modems (OnStar, BMW Assist, Mercedes mbrace, etc.) or connected smartphones (Ford SYNC, Toyota Entune, etc.). And, most recently, the emergence of aftermarket OBDII devices has introduced the prospect of direct consumer and third-party access to vehicle data.

Access to or availability of data does not necessarily connote ownership. GM OnStar executives often say at industry events: “Our customers own their data.” But as I have said and written many times, owning the data and having access to the data are two different things.

I had my BMW serviced this week. Every time I visit my dealer the technician places my keyfob into a reader that downloads data from the vehicle. In the past I have asked to see the output from this device, which translates to five pages of information. I have also previously obtained a copy of the document.

When I requested a copy of the document at the end of my service visit this week the technician said he could not provide it as it was confidential company information. I told the technician that the vehicle was mine and, therefore, the data was mine and that I’d like a copy of the printout after which ensued the classic standoff. He could show me the report but he could not give me the report.

So, here is where we stand. The car companies have substantial amounts of information about their cars and their customers and about how their customers use their cars. The car companies share some of that information with consumers and some of that information with the government. But they really don’t want to share any data with any entity if they can possibly avoid it.

VW’s Winterkorn complained of the car becoming a “datenkrake” as part of an effort to suggest that VW was going to protect the consumer’s information against evil and intrusive government representatives or marketers. The reality is that VW and every other car company is already sharing customer and vehicle information with marketing partners of their choosing and are only pretending to hide behind a shield of customer privacy to protect their own interests.

It is time for the car makers to come clean. Vehicle data, which rightly belongs to the consumer, should be made available to the consumer via Web portals and/or smartphone applications.

If Zubie and Audiovox and Moj.io and Automatic and CarMD and Automile and Carvoyant and Helpten and Eliocity and High Mobility and Metromile and Baseline Telematics and State Farm and Verizon can tap into my vehicle data port and deliver diagnostic insights to a Web portal, then car makers ought to do the same directly. In fact, both Mercedes and VW offer dealer-installed OBDII devices in Europe for the very purpose.

The liberation of vehicle data will actually be empowering for dealers, consumers and OEMs. VW and Mercedes are right to be concerned about Google gaining access to their data because Google has more experience with taking advantage of access to customer information.

Google turns ownership of customer information into ownership of the customer. Google’s Chinese doppleganger, Alibaba, understands this as well. Both see the massive monetary rewards to be had from guiding vehicle ownership, purchasing and servicing decisions. Car companies are too twisted in knots over their conflicted dealer relationships to capitalize on their inside track in the customer relationship.

The first step in fixing things will be greater transparency. Car makers need to share more vehicle data with their customers (and NOT just monthly vehicle health reports!). Consumers want to see drive-by-drive data. Consumers want real-time notifications of problems. And consumers want the information delivered in an easy-to-access manner.

Next time I visit my BMW dealer I am going to be asking for my vehicle data printout. But maybe BMW will take the hint and make that information available online directly so I don’t have to harass my dealer. How about it, BMW? After all, it’s my data too.


October 31, 2014 08:02 rlanctot

Experian Automotive put out a news item in time for Halloween noting the emergence of a class of cars it has dubbed “zombies” for the fact that some 14.7M of these vehicles on U.S. roads sport the name plates of defunct brands. According to the Experian report, 32.1% of zombie cars are Pontiacs, with three of the top five “dead” models on the road.

(Forbes report: http://tinyurl.com/opux8dm - Driving The Undead: Millions Of Zombie Cars And Trucks On U.S. Roads)

It is an interesting bit of analysis and it reminds us of GM’s decision to let its Hummer and Saturn brands die rather than see them fall into the hands of potential competitors. Saturn is the second most numerous zombie brand, according to Experian, at 16.1% of the total. Other brands among the “walking dead” are Mercury, Suzuki, Saab, and Isuzu.

Strategy Analytics is more concerned about zombie cars of a different sort. A growing number of cars from living brands are driving the highways of the world with inactive modems.

GM is the clear leader in cars on the road with inactive modems, but Mercedes, BMW, Lexus, Hyundai and a growing roster of cars from other makes are plying highways globally with inert telecom modules.

In fact, the European Commission is facilitating this march of the “driving dead” making way for the acceptance of a so-called “dormant SIM” to fulfill the impending eCall mandate. The dormant SIM will only activate in the event of a crash, but will otherwise lie silently inactive inside the vehicle.

Car makers are increasingly taking steps to revivify these undead devices. GM has made various offers in the past in partnership with companies such as State Farm to bring inert modules back to life with attractive service discounts. OnStar long ago perfected the art of remotely activating its devices for diagnostic purposes – a capability that might yet serve the company during the ongoing recall crisis.

GM’s decision last year to begin offering five years of free remote door unlock and remote start service with new OnStar activations was the first step in ensuring live connections to more GM cars and customers. (Dealers are already receiving large volumes of service leads as a result of this move.) That decision followed BMW’s decision earlier the same year to offer 10 years of free vehicle connectivity.

Of course, sometimes changes in wireless networks inadvertently unplug cars from those valuable connections.  OnStar and half a dozen OEM partners lost vehicle connections in the wireless network switchover from analog to digital.  AT&T's anticipated shutdown of its 2G network by the end of 2016 may have a similar impact.  The mere thought of cars with embedded 2G modems losing their connections may be scary, but alternative points of connection exist.

Both GM and BMW recognize the wasted  opportunity at stake in leaving zombie cars on the road. After all, what’s the point of putting a telecom device in a car if it’s not activated?

The prospect of hundreds of millions of wasted development dollars and lost aftersales revenue has probably frightened these OEMs into wising up and turning on those connections. Here’s hoping the rest of the new arrivals in the telematics market – Honda, Volvo and Volkswagen, etc. – take note and choose not to add to the population of telematics zombies. Happy Halloween.

 


October 29, 2014 09:03 rlanctot

Every industry needs a report card and every research organization wants to be that performance reference. The automotive industry has many report cards – with J.D. Power being the most notable. But the most onerous one is supplied by Consumer Reports.

I used to think that automotive engineers that had to work on steering or braking systems or interiors or powertrains had it tough. I used to think that those jobs must be incredibly boring compared to working on infotainment and connectivity systems.

And then Consumer Reports’ Annual Automotive Reliability Study comes out and I understand why those engineers are so happy. (Latest CR Report: http://tinyurl.com/kr5tmxj - Consumer Reports 2014 Annual Auto Reliability Survey Finds Infotainment Systems are a Growing First-Year Reliability Plague) They don’t have to put up with CR raining on their parade every year. More importantly, they don’t have to put up with a study that punishes innovation or newness of any kind.

Consumer Reports represents the tyranny of mediocrity. The car companies that are awarded top honors in the CR studies traditionally have been the most conservative participants in the car connectivity space and, so, not surprisingly, Toyota and Lexus win top honors yet again.

Smartphone connectivity systems have become the bugbear of the automotive industry. These systems attempt to transcend the mysteries of mobile operating systems, Bluetooth compatibility and multiple APIs to render applications into in-dash displays. It’s a high-wire act at best that challenges everyone from product managers, to dealers to consumers.

It is no surprise, therefore, that the companies taking the greatest risks in the space attract the greatest number of customer complaints which translate to low reliability ratings.

With all due respect to Nuance and its Tweddle Connect team that is supplying Toyota EnTune and Lexus EnForm, this offering is more than five years old and was limited in scope from its introduction in the market. That limited-scope strategy was well suited to Toyota’s clientele which has shown little interest in flashy technology. The Toyota customer wants a reliable and affordable vehicle above all. (Did I say boring? Hey, if boring sells, who cares?)

The CR study also punishes the new. GM’s new pickup line was dinged essentially as a result of a few launch jitters. Infiniti’s new In Touch system was singled out negatively as well.

But I always hate (love) to see the CR report when it arrives, because it invariably dings any car company that has taken any chances with its approach to infotainment. For the past two years it is Ford that has taken most of the hard knocks for SYNC and MyFord Touch.

Yet, it took bold risk taking at Ford to open the door to new thinking around smartphone integration. Without Ford there would be no Toyota EnTune or Chevrolet MyLink or all the rest of the smartphone connectivity solutions including Apple’s CarPlay and Google’s Android Auto.

I understand that this is what CR does. This is why we pay the subscription. This is why we read the headlines and click through to the evaluations.

But it is the same message every time. If a car company is taking risks and has a few unexpected glitches it is dinged downward on the list. If the car company has left its current product line in place and made few changes, there’s a good chance it will move higher on the list due to fewer complaints.

We love our report cards, so we will look forward to the next CR evaluation. But we will take those grades with a grain of salt. For CR rewards mediocrity and simplicity at the expense of risk taking and innovation.