The measure of a creative and powerful marketing organization is often best taken when the chips are down. For Hughes Telematics that measure might have been taken two years ago when Chrysler and Hughes agreed to part company with Chrysler in the throes of a Chapter 11 filing.

 

The loss of Chrysler meant that Mercedes-Benz (Mbrace) might be left as Hughes’s lone OEM customer in North America. The loss of Chrysler also looked like the final straw that might bring down Hughes’ once-grand vision of a cross-OEM hybrid telematics system integrating cellular and satellite connectivity. That vision included a hardware module, call centers, service partners and an integrated three-screen solution enabling Web and smartphone access to vehicle information along with remote control.

 

Today, all of those pieces – except the satellite connectivity – are still in play, but Hughes has repositioned itself to address a wider scope of potential verticals (including healthcare and insurance) while still addressing automotive OEM and aftermarket opportunities.  Hughes is approaching the market with a less grandiose and more flexible offering – in-Drive.  

 

in-Drive to the Rescue

 

In-Drive allows Hughes to pursue fleet, insurance or aftermarket vehicle tracking and recovery solutions as a white label provider of software systems capable of supporting wired or wireless modules or even smartphone-based solutions.  The introduction of in-Drive, heralded at the 2010 CES show and even more advanced at the 2011 show in January, showed Hughes bouncing back with a new vision.  

 

Paramount to that new vision is an emphasis on the insurance side of telematics.  Thanks to intellectual property acquired from NetworkCar, Hughes has the most flexible and extendable platform available in the insurance telematics market.  Also thanks, in part, to that technology positioning, the company is engaged with unidentified insurers to bring a next-gen telematics solution to the market.  (Hughes declines to identify any potential partners or the nature of any systems that may be in development.)

 

The importance of the insurance telematics angle ought not to be underestimated by car makers.  Progressive’s launch of its Snapshot usage-based insurance product (http://bit.ly/fu1JCa - Usage-Based Insurance Brings New Competitors to Telematics Market) has the potential to fundamentally change the relationship between insurance companies and their customers.

 

Progressive’s Snapshot product tracks vehicle miles driven, amount of time driven and time of day and calculates speed, though it does not correlate speed to posted speed limits.  The online reporting tool shows these figures along with a calculation of the number of “hard braking” incidents. 

 

The Snapshot reporting tool also displays a graph characterizing the driving behavior as to whether the driver is maximizing MPG correlated to the time of day of that driving activity.  In this way Progressive is opening the door to a new relationship with the customer.  To Hughes’ credit, the company described its own solutions around eco-routing and eco-driving three or more years ago.

 

Hughes Enabling Next-Gen UBI Solutions

 

Hughes’ insurance offering, like Snapshot, might be an OBDII plug in, or it can be implemented in a variety of ways including wireless connectivity.  Hughes is not wed to a particular platform and is capable of deploying its solution on any platform.  More important is the back-end analytical tools Hughes brings to the proposition allowing for everything from traditional safety and security to vehicle diagnostics, emissions, concierge services or family monitoring.

 

The system/service bundles offered by Hughes via in-Drive (http://bit.ly/hOgPcV) include:

 

Automotive Data Services

Telematics

Family Co-Pilot

 

Hughes’ newfound flexibility means the company is free to pursue opportunities in the fleet market as well as in the consumer market.  In fact, thanks to its wireless patents, Hughes could launch its own OnStar-like aftermarket telematics mirror with CAN connectivity for capturing vehicle data if it so chose.  In other words, Hughes could out-OnStar OnStar.

 

Working through insurance partners, Hughes is in position to help its partners redefine that customer relationship.  An insurance telematics device is perfectly capable of providing vehicle tracking and recovery – like LoJack – roadside assistance, navigation and POI assistance, or any of a variety of concierge and vehicle diagnostics capabilities.

 

The vehicle diagnostics capabilities offered by Hughes include vehicle emissions monitoring for inspection purposes as well as the checking of error codes.  In the event of a breakdown, a Hughes-based insurance telematics solution could provide names of nearby approved service or repair providers.

 

The same kind of functionality is true for emergency circumstances.  A Hughes module, provided by an insurance company and equipped with appropriate sensors and CAN connectivity, could alert emergency responders – again, in an OnStar-like fashion.

 

To paint an even rosier picture of Hughes’ renaissance, prospects are good for the signing of a second OEM telematics relationship later in 2011.  Between its improving OEM outlook and robust aftermarket prospects, Hughes is tracing an improving trajectory.

 

Implications:

 

Hughes Telematics’ emergence in the insurance market changes the prospects for this application segment.  Until now, insurance telematics solutions did not stray far from the basic collection and analysis of driving time and time of day – with some exceptions (http://bit.ly/9XRntG - #Allianz Changing the #PAYD #Insurance Game - blog).  The range of solutions available from Hughes for collecting and analyzing vehicle information opens the automotive market to new opportunities for insurers.

 

The fleet industry is already looking at behavior modification-type solutions tied to vehicle tracking.  (http://bit.ly/e94Opj - Behavior Modification Comes to Fleet Telematics from the Cloud)  Progressive has already taken the step of integrating ecological driving elements in its UBI solution.  A wide range of possibilities are available to auto insurers, but there are obstacles.

 

Devices, like Progressive’s, that connect with the vehicle CAN bus via the OBDII port are problematic.  Some cars are known to respond unpredictably to such plug ins and gleaning the necessary data can be a challenge.  The value proposition difference between such a device and one that is not connected to the vehicle is significant.  

 

It is still early days for UBI-based underwriting.  But Hughes participation in this market has the potential to change the market significantly.

 

Progressive Update:

 

This analyst is currently participating in a trial of Progressive’s Snapshot UBI service.  Progressive said it could not provide an OBDII Snapshot plug in for my 2009 BMW 5 Series, but it could provide one for my 2004 Toyota Sienna.  The initial reporting appears below:

 

 

 

 

 

Three weeks after the dramatic announcement from Nokia of its partnership with Microsoft and a shift to Windows Phone 7 as the preferred OS platform for its mobile phone business, kinder gentler thoughts in the marketplace regarding the prospects for the partnership are beginning to prevail. Having regrouped to put its own spin on recent events the head of Nokia’s automotive team recently pointed out the advantages of the Microsoft partnership in support of Terminal Mode and ongoing activity within the Qt developer community in support of both MeeGo and Symbian.

 

While it is true MeeGo has been significantly de-emphasized and Symbian will be phased out – after 150M more Symbian phones are shipped – Nokia Navteq remains an active player in the automotive marketplace focusing on opportunities for mobile phone connectivity and navigation. Post-partnership the combined organizations, while separate, represent a force to be reckoned with. The powerful search platform of Bing along with Navteq’s maps and Ovi’s marketplace represent a triple threat in a market where mobile advertising and mobile commerce are rapidly emerging around the world in cars and on devices.

 

The challenges facing the Microsoft-Nokia Navteq partnership are significant. The Windows Phone 7 platform is just four months into a slow start in the market and Microsoft has not defined a clear synergistic connection between Windows Phone 7 and Windows Embedded for Automotive 7. Microsoft can point to several successful mobile phone connectivity partnerships in the automotive market – such as Fiat, Kia and Ford – but most of these are built around different versions of Windows Auto or Windows CE.

 

Microsoft can also point to head unit partnerships with Mitsubishi Electric, Clarion and Alpine in support of Mercedes and Nissan. In fact, Alpine and Clarion have already endorsed and adopted terminal mode for enabling smart phone connectivity to access maps, music and for enabling map-based safety applications. While no one in the industry expects Apple to endorse and deploy terminal mode connectivity, makers of Android-based handsets and RIM may find it prudent to make terminal mode technology available.

 

Helping to make terminal mode connectivity more attractive, Nokia Navteq is stepping up its Ovi Marketplace game adding search now powered by Bing along with Navteq’s mapping, graphics, turn-by-turn navigation, geo-coding and reverse geo-coding to facilitate local commerce opportunities around the world. Created in conjunction with the CE4A industry consortium, terminal mode has been demonstrated by Volkswagen engineers – reflecting the company’s strong ties to German car makers. Nokia is looking to build on its Japan market inroads with a (now cancelled) Terminal Mode Summit in Tokyo late in March where the official Terminal Mode trademark will be launched (http://www.terminalmode.org/en/Events/registration) along with release 1.1 and a future release roadmap.

 

Almost lost in the Microsoft Nokia Navteq announcement was the impact on the Qt developer community and the de-emphasis of MeeGo. Qt and MeeGo continue to go hand and hand in the open source developer world and MeeGo continues to boast support from Intel and the now-fairly-large GenIVI Alliance (which will be gathering in Dublin in May). As car makers look to deploy application stores to support embedded solutions expect the GenIVI Alliance to strongly advocate for MeeGo as the ideal OS platform choice.

 

MeeGo stacks up as a strong alternative to Android or iOS for in-vehicle app stores. While Windows Embedded for Automotive and QNX are candidates, MeeGo’s candidacy is made stronger for being a cross-carmaker open development platform. And Qt is something of a wild card for MeeGo as a source of developer support.

 

Support for MeeGo has been years in the making. The Microsoft-Nokia announcement was not greeted warmly by Intel executives and received with some dismay by GenIVI members. Intel eventually announced its intentions to forge ahead undaunted in multiple device markets – including automotive. A week after the announcement, the MeeGo element of the announcement has been relegated to a sidelight with no impact on MeeGo’s or GenIVI’s longterm objectives.

 

In the end, Microsoft and Nokia Navteq are in position to have a significant influence over automotive infotainment systems, mobile device integration and in vehicle content/service/application delivery and mobile commerce. Now it is up to the two organizations to prove out the on-paper value proposition in the marketplace.

 

Additional Insight:

 

http://bit.ly/dLXz1v - Terminal Mode at Forefront of Connectivity, Competition Closing in - Insight - Roger C. Lanctot - Automotive Multimedia & Communications Service

Next week American Honda Motors will introduce its 2011 Odyssey at the Los Angeles Auto Show. The car comes equipped with what the company calls FM Traffic. This seemingly innocuous announcement marks a shift in the industry with wide ranging implications for both automotive radio and on-board traffic information.

Auto makers are confronting major decisions regarding content delivery to the car and the configuration of the center stack. The battle lines for content delivery divide over the question of embedding a telecommunications module or connecting the driver’s smartphone. Smartphone connectivity shifts the data plan burden onto the driver, while embedding allows wider latitude for vehicle data collection by the OEM.

The radio is the beating heart of the center stack and here a struggle is unfolding between and among traditional AM/FM technology, HD Radio, satellite radio and Internet radio. The battlelines are drawn over content delivery, personalization, localization, monetization and flexibility. Honda’s FM Traffic is based on RDS-TMC, a free (to the consumer) traffic data service delivered over the FM sideband. RDS-TMC represents the state of the art in North America for delivering accurate and timely information on traffic conditions. The Honda solution is unique in that it is supplied by the Broadcast Traffic Consortium (BTC), a nationwide group of broadcasters allied with Navteq.

The industry will have to wait until next week to see how Honda has implemented incident and flow messages, but it is likely that Honda and its supplier, Alpine, have added value to the traffic reporting proposition (http://automobiles.honda.com/traffic/). Alpine will also be bringing the BTC RDS-TMC solution to its aftermarket products. Honda is only the second North American OEM to deploy RDS-TMC from BTC, following Mercedes-Benz. More are expected.

The dominant RDS-TMC supplier in North America is Clear Channel, which is partnered with Inrix. The Clear Channel solution is offered by BMW, Volvo, Mazda and a few other OEMs. Honda’s decision is significant given that the company also offers Sirius XM’s NavTraffic service, which requires a monthly subscription. But Honda’s choice reflects several hard truths for the industry:

Truth #1 – The value of traffic data is declining. Once valued at $1/user/month, traffic data has declined in value to 25 cents/user/month or less at the supplier level. For the consumer, traffic information is perceived as free – especially since so much of it is readily available over radio and television broadcast sources as well as from Depts. of Transportation via the Internet. RDS-TMC traffic information is also free (to the consumer) and, therefore, fits this model and mindset.

Truth #2 – RDS-TMC traffic data is better than good enough. Anyone who has used RDS-TMC-equipped navigation systems in a heavy traffic corridor can attest to its accuracy and reliability. Satellite radio traffic information, by comparison, is not competitive – based on this analyst’s experiences. (Some European RDS-TMC data, Germany in particular, is the exception to this.)

Truth #3 – Traffic information services continue to evolve and improve and service providers must evolve along with them. While HD Radio deployment of TPEG traffic data services will be the next step, it will be followed quickly by solutions based on smartphone integration and, ultimately, embedded traffic data platforms that provide for Internet connectivity. All of this is bad news for Sirius XM. The company is already wrestling two alligators – a transition of existing Sirius users to XM service by 2016 (see http://bit.ly/bIWHJ6) and the introduction of Satellite Radio 2.0 in Q4 2011 (see http://bit.ly/bqiU7F).

While managing these two processes, the company is also justifying its existence on a quarterly basis before its investors as a public company.   Traffic data services are key to Sirius XM because they represent the most successful telematics service the company has been able to deliver. Unfortunately, because of the capacity limitations (traffic data for all cities must be delivered down a single connection leading to data being left out due to capacity limitations or delayed due to the carousel-like data transmission) and one-way nature of the satellite pipe, Sirius XM traffic is poor.  

In fact, Sirius XM traffic, based as it is on Navteq’s Traffic.com, has given Navteq’s data service a bad reputation – through no fault of Navteq’s. (This is not to be confused with the city-by-city audio traffic broadcasts provided by Metro Traffic.) Honda’s selection of BTC RDS-TMC is a shot in the arm for Navteq’s traffic team which is looking to bounce back from its reliance on Sirius XM.  The subscriber volume for satellite traffic has been poor as a result of the poor data. Some OEMs do not even offer satellite traffic for their satellite radio systems. This points to a wider problem for satellite radio. The company has yet to find a successful model for branching out beyond talk and music.  

Both Sirius TV (Chrysler) and TravelLink (Ford) are seen in the industry as failed services due to low subscriber volumes. Of course, the business models were also flawed. Sirius TV only offered three channels of rearseat entertainment, a fatal limitation, and most of the TravelLink services – for parking or inexpensive gas – are available on smartphone apps.  Now Sirius XM is setting the stage for Satellite Radio 2.0. In a report to LibertyMedia shareholders last month, CEO Mel Karmazin tipped his hand a bit by referencing the possibility of transmitting local movie times and/or red-light camera info to drivers via satellite radio. He also mentioned enhanced time-shifting technology, presumably from storing or buffering some satellite content.  Other reports regarding Satellite Radio 2.0 suggest more sophisticated search functions for finding particular artists or songs that may be playing at any given time across the voluminous satellite radio dial. Some industry sources say SR 2.0 is expected to have 25% more capacity. It’s not clear whether any of these SR 2.0 possibilities are true, possible or even compelling to future subscribers. 

But Karmazin has a compelling story for investors. He told them last month that OEM penetration of satellite radio as a percentage of new cars was 60% and that the number of satellite radio factory-enabled vehicles in operation in North America was approximately 30M and on a path to hit 80M by 2015. For this reason, the company is continuing to promote certified preowned vehicle programs for satellite radio re-activation – which is seen as a key to future growth.  Karmazin further notes that Sirius XM has some of the lowest subscriber churn in the media landscape (1.8%), has one of the largest subscriber bases (19.5M, second only to Comcast), and now captures 15% of overall radio revenue ($2.8B) vs. $15B for terrestrial radio, and ~$1B for Internet radio/music services. He also notes that satellite radio’s subscriber revenue is $2.8B vs. ~$300M for Internet radio which translates to per subscriber revenue (annual 2009 est.) of $136 vs. $1.25/user for Internet radio and $10-$20/listener for terrestrial radio. 

Conclusions  It’s worth noting that Karmazin made no reference to either HD Radio or to Sirius XM’s stated transition to XM by 2016. While the present looks promising for Sirius XM in the form of rising vehicle sales and the launch of new certified pre-owned vehicle programs, the long-term outlook is less rosy.  The wider deployment of competing and free traffic services should put the last nail in the coffin of Sirius XM’s telematics ambitions. Embedded telematics services and smartphone connectivity, combined with FM- and HD Radio-based solutions, will obviate the need for any Sirius XM data services.  A new front end to Sirius XM’s audio content will provide a short-term lift in allowing for easier access to specific types of music. And premium sports and personality content remain a demand wild card and, combined with nationwide reception, preserve the satellite value proposition.   But car makers are still not likely to integrate satellite radio into the core of their center stack platforms, meaning satellite radio will remain an add-on, particularly given ongoing system upgrades. In a matter of years, cars will be shifting to Internet connected solutions allowing for personalization and location awareness, two propositions with which satellite radio cannot compete. Additional insights: http://bit.ly/dniNxa - Navigation Heuristic Evaluation: Telmap5 – Schreiner – Automotive Consumer Insights http://bit.ly/95NCoW - Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority – Blight – Automotive Multimedia and Communications Service http://bit.ly/dtRE5C - Automotive Telematics Services: Shifts in Pricing and Monetization Expected – Canali – Automotive Multimedia and Communications Service http://bit.ly/bwdwcW - Connected Vehicle and Vehicle Device Connectivity System Database by Feature, Region, and Price 2010 – Canali – Automotive Multimedia and Communications Service http://bit.ly/d0aLhq - Connected Vehicle Telematics: Car Maker Profiles – Canali – Aumotive Multimedia and Communications Service http://bit.ly/deumcd -# Traffic Data Quality Will Determine #Telematics Winners - Lanctot - blog - Strategy Analytics

Mercedes-Benz recently launched its annual Winter Event, shortly after concluding its multiple-year legal confrontation with ATX, according to industry sources. The Winter Event includes an offer of 36 months of free mbrace telematics service for buyers of Mercedes-Benz vehicles who use Mercedes Benz Financial services and runs through January 4, 2011. Neither Mercedes nor ATX chose to comment on the report. The official statement: "ATX and Mercedes Benz jointly filed a statement (on Oct. 27) with the court that the lawsuit has been resolved. The companies have put together a process to allow for continued service to those Mercedes-Benz owners who wish to continue to receive services through their Tele Aid devices (at the consumer's discretion). We consider it a privilege to provide connected vehicle services to over 200,000 consumers with Tele Aid devices." ATX is the existing service provider for the Tele-Aid telematics service. Hughes Telematics is the new telematics service provider for the (renamed) mbrace service which includes a smartphone app platform. Both ATX and Hughes have been competing for new and existing telematics customers and will continue to do so. Details of the current situation were previously reported here: http://bit.ly/aCiL6T.  It is likely that ATX, currently in the process of adding new OEM accounts such as Toyota, is seeking to project a more non-confrontational image in the industry. The resolution frees up Mercedes to project a more consistent marketing message including, at some point in the near future, advertising that will incorporate mbrace. To date, OnStar has been the only auto maker describing telematics services in mass media messages. Interest and demand can be expected to grow in North America as more car makers launch embedded and smartphone-based telematics systems. Europe is also seeing the first stirrings of eCall compliant deployments. Additional Insights: http://bit.ly/aWhNuC - Automotive Sensor Demand Forecast 2008 to 2017: Global Economic Rebound Sparks Growth - Mark Fitzgerald - Automotive Electronics Service http://bit.ly/9QCIVw - Automotive Sensor Demand Forecast 2008 to 2017: Global Economic Rebound Sparks Growth - Datatables - Mark Fitzgerald - Automotive Electronics Service http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c1nvTq - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights

Microsoft intends to clear the air at Convergence in Detroit this week with the launch of Windows Embedded Automotive 7.0, the merged automotive operating system that takes the place of MS Auto and Windows Automotive – in all their versions. An earlier version of the OS, Windows Embedded Automotive, will be featured in the information hub in Nissan’s Leaf electric vehicle, according to Microsoft, and will be joined in the spotlight by Silverlight for Windows Embedded, Microsoft’s alternative to Flash. Also highlighted at Convergence by Microsoft will be Fiat’s plans to bring the Fiat 500 to the U.S. along with its Blue&Me 2.0 (not it's official name) interface with support for the iPod. Ford and Kia will likely be making announcements related to their Microsoft implementations and Microsoft noted its participation in 12 different device platforms over the next 12 months from a number of different car makers reflecting the company’s continuing commitment to the automotive business. The announcements and enhanced presence at Convergence concludes multiple reorganizations at Microsoft which saw the departures of senior executives on the automotive team and a consolidation of all embedded activities under a Server and Tools group. Existing OEM and Tier One partners with Microsoft solutions include Ford, Fiat, Chrysler, Kia, Mercedes, Honda, Nissan, Alpine, Mitsubishi, and Clarion. Microsoft will use Convergence to demonstrate various Silverlight development tools for handling prototyping and to accelerate testing within the development and approval process while allowing OEMs to create executable specifications for suppliers. Tools will also be shown for a thread priority-based tuning system that allows for handling and logging errors during development. Microsoft will also highlight advances in its Tellme embedded speech product, currently being deployed by Kia in the Uvo. The new recognizer can handle eight languages with speaker independence while providing for the tuning of recognition for individual users. Also new for the embedded Tellme is an SMS reply function capable of performing fuzzy logic matches to a set of predetermined responses. Separate from the Convergence activities, Microsoft is pursuing automotive opportunities for its Bing search engine as well as for Tellme as a server-based voice recognizer. Both the Ford and Fiat Microsoft solutions provide for application downloads and updates, though Microsoft has not created its own automotive app store model. The Nissan Leaf information hub is the most significant of the announcements at Convergence. The hub will handle navigation, charging, radio and HVAC functionality in the car. The hub implementation suggests the potential for a wider Microsoft engagement with both Nissan and Clarion. As Nissan moves closer to realizing its connected vehicle vision outside of Japan, the company can be expected to move beyond its current reliance on VxWorks. Conclusion: Microsoft remains a credible alternative to QNX and the various versions of Linux distributions in the automotive industry. The MeeGo operating system created from the merged elements of Nokia’s Maemo and Intel’s Moblin platforms and adopted by the Genivi Alliance is not expected to be available in even a beta version until April 2011. Some Genivi members say an automotive version of the OS may be out before the end of the year. Google and its Android operating system continue to flirt with the automotive industry – playing hard to get. Google is interested in the automotive industry for the emerging search-related opportunities and for the potential to sell traffic and cloud-based location-aware applications, but the company still refuses to certify or support Android for embedded use. In spite of Android’s orphaned status in automotive, Continental and Parrot continue to carry the flag, secure in the knowledge that Android can still claim the largest and fastest growing developer community – key to unlocking app store opportunities. Microsoft’s step by step, implementation by implementation, customer-focused approach has left some customers and potential customers scratching their heads about the company’s long-term commitment to automotive. The headquarters reorganizations continue to raise questions, and yet Microsoft forges on, enhancing and refining its solutions and adding to its portfolio. Just the past year has seen Silverlight and Bing added to the mix along with Tellme. After years of wavering it appears that Microsoft has finally taken its vows and accepted its automotive market responsibilities. By now, the company has learned that the automotive contest is not always won by the swiftest, but by the supplier with the most staying power – and it looks like MS is in for the long haul. Further insight: Smartphone Market Evolution and the Automotive Opportunity Implications – Mark Fitzgerald – Automotive Multimedia and Communications Service - http://tinyurl.com/34hldb5 Automotive Connectivity: Beyond Bluetooth Solutions – Mark Fitzgerald – Automotive Multimedia and Communications Service - http://tinyurl.com/2gx88eo

At a time when radio struggles with its role as the red-headed stepchild of the broadcast industry it was refreshing to discover a group of enthusiastic radio marketing executives discussing what the organizers of the event described as the arrival of the fourth golden age of radio. The discussion was occurring at the RAIN (Radio and Internet Newsletter) Summit in connection with the Radio Advertising Bureau event in Washington, DC., this week. Kurt Hanson, CEO of AccuRadio.com and Publisher of RAIN, defined the vision of the fourth golden age of radio as that period following the first (1935-55), second (1960-75 = Top 10, emergence of FM), and third (1976-99, listener fatigue, consolidation). Hanson pointed to Internet radio as a transformative force creating new value for radio advertising and content. For these executives, the hand-wringing regarding the impact (read: threat) of Internet radio is past, replaced by an intensifying embrace of a technology that is transforming the industry. Broadcasters left the event with the newfound conviction that Internet radio was a valuable tool for enhancing their influence and reinforcing their ties to listeners – and the mobile phone and the automobile are increasingly important venues via which to pursue that opportunity. For these broadcasters, the so-called fourth golden age of radio is characterized by the emergence of Internet radio and five aspects defined by the event organizer as: 1.                   Personalization and control manifested in pause, fast forward and thumbs up/thumbs down functionality; 2.                   Variety in the form of thousands of available stations targeted at all forms of regional and genre/sub-genre-based interest; 3.                   Lower spot load – ie. fewer ads – but better targeting of ads – and the corollary of more detailed and accurate metrics; 4.                   Ubiquity – Internet radio is accessible via televisions, mobile phones, standalone radios and, soon, automobiles; 5.                   Global/National reach vs. local – after all, listeners can be anywhere. Internet radio use currently stands at a 3.8% share of radio listening, according to data from Ando Media referenced at the event, representing the equivalent share of radio listening captured by FM radio in 1971. Arbitron data shows the percentage of online radio listening (% who have listened to online radio in the past week) as steady at 17% between 2009 and 2010 (equivalent to 43M listeners). Pandora, the most successful online music provider to date, showed an increase in # of listeners per average quarter hour (AQH) from 257K in January to 366K in July. At the same time the total AQH for the top 20 online radio sources was 780K and the total online radio listening figure was 1.3M. The numbers indicate that Pandora has a 28% share of all online radio listening, according to Hanson, and an overall radio listening market share of 1% - equivalent to 1% of listening in every market in the U.S. The trend, according to Pandora’s own data, continues upward with the number of hours of listening on Pandora growing from 200M in January to 275M in July. And the majority of the increase is coming from mobile users, who now account for more than half of those listening hours. Pandora’s overwhelming brand recognition in the space was reflected both in the listener data and in research presented by Coleman Insights which found Pandora, Slacker and iHeartRadio as the only brands with any significant unaided recognition. The larger message from the Coleman study was that Pandora may have strong recognition but does not yet have a dominant image in the minds of consumers – ie. the market is still fairly fragmented and an open opportunity. The implications for the automotive and mobile device markets come through loud and clear here and in Strategy Analytics’ own data where interest in and usage of Internet radio on mobile devices is on the rise. Not surprisingly, auto makers are seeking to capitalize including front runners BMW, Ford and Mercedes-Benz. Only a year ago, Internet radio in the car was greeted with skepticism and derision for a variety of reasons including: 1.                   Cost – As unlimited data plans begin to disappear, the perception is that Internet radio will become prohibitively expensive to mobile users; 2.                   Network capacity – Cell towers have limited ability to support an unlimited number of data users, which is what Internet radio users are; 3.                   User experience – Capacity and signal issues have created a listening environment carried by drop outs and lost signals. All of these objections have either been resolved or will soon be resolved: 1.                   Cost – Do the math. Taking AT&T’s tiered plan as an example, the $30 for 2.4GB likely represents MUCH more than enough time and bandwidth for all but the most out-of-control mobile listener. Cost is NOT an issue. 2.                   Network capacity – Carriers are adding smaller cells and Wi-Fi access points in major metro areas to alleviate the capacity issues. AT&T complaints have almost (I say “almost.”) completely stopped. 3.                   User experience – There will always be challenges in delivering music consistently, but the creators of these solutions are providing for caching and buffering at the receiving end while broadcasters are filtering content to lower-bandwidth alternatives at the broadcast end. The dominant mode of delivery for Internet radio in the car will be the smartphone in the short term. And with a growing population of smartphones in the marketplace, the opportunity is large and growing. But the concept of an embedded telematics infotainment system with access to Internet radio is no longer anathema in the industry. In fact, the Mercedes-Benz MyComand concept of such an embedded solution shown a year ago at Telematics Munich now looks not only doable but downright prescient. Some bumps in the road remain.  Music service-type Internet radio, such as Pandora and Slacker, will have a user experience advantage over true Internet radio platforms such as RadioTime and vTuner. Because of their personalized nature, Pandora and Slacker will have the advantage of leveraging buffering and caching to preserve the listening experience where cell connections are lost. (Slacker, of course, is primarily a caching-based service and, by definition, won’t lose connection mid-song.) Nevertheless, with carrier network improvements and the transition to LTE technology, the radio aggregators such as RadioTime and vTuner may gain the upperhand by facilitating access to a wider range of content with more creative means to manage and discover new music. RadioTime, for example, has deployed a song search feature able to locate a song being played on any of its participating radio stations. These aggregators also have the advantage of making podcasts and other non-radio content available while also integrating terrestrial sources such as analog AM/FM and HD Radio sources using location data. Competing Radio Platforms It is no coincidence that Sirius XM is making its content available via the Internet. Sirius XM clearly recognizes the competitive threat posed by Internet radio. To respond to the content searching and sorting functions of some Internet radio services and the ability to store or buffer some music, however temporarily, Sirius XM can be expected to bring content management enhancements to its Satellite Radio 2.0 platform due late in 2011. (Sirius XM has raised its subscriber guidance, forecasting 20.1M U.S. subscribers by the end of 2011.) Sirius XM already offers smartphone app functionality already widely deployed by Internet and terrestrial broadcasters. (In fact, much of the talk at RAB revolved around leveraging these apps for advertising and promotional engagement with the listener.) But with the enhancements in satellite radio requiring further hardware investments by OEMs, Sirius XM will have to continue to subsidize its OEM customers. HD Radio will continue to see widening deployment via automotive OEMs, especially since the required hardware investment is substantially less than for satellite radio. According to a recent Twice magazine report HD Radio is built into 5% of new cars sold in the U.S. reflecting deployment by 15 brands on 86 vehicle lines and as standard equipment on 36 car models. There are 2,085 converted stations and 1,226 multicast channels. More than  3M HD systems of all types have been shipped, according to iBiquity Digital, and efforts are underway to see HD Radio technology integrated in handsets. Conclusions The two challenges for OEMs will be to monetize the Internet radio opportunity and to solve the user interface challenge of accessing multiple radio sources safely in a vehicle. From a monetization standpoint, the goal will be to enable users to purchase songs and to enable access to premium content. In addition, the integration of Internet radio into embedded systems will make a powerful and positive contribution to the perceived value of telematics infotainment systems. Smartphone integration continues to advance and a variety of approaches will be tried, no single one of which is likely to dominate. As an example, BMW’s Mini Connect integration reproduces the smartphone display in the instrument cluster, while the solution in the 1 Series lets the driver use the smartphone’s interface. The latter approach is used by Mercedes in its Smart integration product. The bottom line is that Internet radio in the car is much closer to a reality than it appeared just 12 months ago, and it will likely contribute positively to convincing consumers to pay for telematics systems. http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c1nvTq - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights http://bit.ly/aGJHDj - Smartphone Market Evolution and the Automotive Opportunity Implications -Fitzgerald - Automotive Multimedia & Communications http://bit.ly/bD5RzL - Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority - Blight - Automotive Multimedia & Communications

Mid-week thunderstorms in Detroit appeared to be Mother Nature’s comment on momentous industry events, but it was Harman International that stole OnStar’s thunder with its announced acquisition of Aha Mobile. While OnStar celebrated its 15^th anniversary by announcing plans to offer voice-enabled access to text messages and Facebook, Harman’s Aha Mobile acquisition introduces the prospect of the first cloud-based telematics solution. The timing of the two announcements was extraordinary in juxtaposing two very different visions of the future of telematics. It showed OnStar still struggling to create a solution capable of stimulating organic consumer demand, while Harman is showing the way toward a platform capable of responding to and moving with changing consumer requirements. The Harman announcement also defined a third path – different than both the dominant OnStar embedded and Ford Sync connected solutions. It is a path likely to rapidly attract adherents and converts – especially given Harman’s command of the high-end infotainment market. The greatest challenge facing the telematics industry is the inability to get consumers to pay for additional subscription services. This shortcoming is manifest in the free months and years of service that are offered to prospective telematics subscribers and the corresponding retention rates of, at most, 50%. The free service is a lie, of course, since the system cost is already baked into the price of the vehicle. But the proposition is described to the customer as a giveaway, which has multiple negative connotations. As a giveaway, the telematics service is immediately perceived as either not having any value OR as something the customer will not normally request and be willing to pay for. This is a very shaky foundation for any industry. In fact, giving away anything is usually the first step toward that product or service being discontinued – with the possible exception of navigation. A good example of this phenomenon is satellite radio vs. Internet radio. Satellite radio continues to be subsidized by the service provider with a free subscription period for the consumer. The high cost of the service and hardware is masked by the supplier’s subsidies, but the cost remains and it is because of this cost that satellite radio is increasingly a consumer-selectable option or is no longer offered on a growing proportion of cars. In contrast, the millions of users of Internet radio services have demonstrated that they will go out of their way and pay handsomely for the privilege of accessing this service. Car makers and carriers could not kill consumer demand for Internet radio even if they wanted to. The fact that satellite radio is subsidized and offered “free” to the consumer is a long-term predictor of failure. The automotive telematics industry faces this same prospect every day. Rare is the Mercedes, BMW, GM or Toyota customer that crosses the dealer threshold requesting telematics services. In fact, dealers are hesitant to mention these services because of the occasional customer that might want the system removed from the car! (Don’t believe everything you read about OnStar’s claimed influence over GM vehicle purchases. Those messages are coming from OnStar, not GM.) It is in this context that OnStar announced the prospective capability for drivers using the Gen 9 system to receive audio Facebook updates and to receive and send text messages. The group also announced what it described as a platform offering the “potential for open development.” The focus on Facebook showed OnStar reaching out for an application that will offer users daily relevance – something missing from run of the mill safety and security applications. But this laser focus on a single application misses the greater goal of enabling GM customers to safely access any application they may desire. OnStar scores big points for identifying the most popular application within its target demographic, but what it misses is the ethos of that customer base which is freedom and personalization. This is where Harman scores with its Aha Mobile acquisition. While OnStar is testing and recruiting university students to cook up creative application concepts, Aha Mobile has already created a cloud-based location aware platform purpose-built for automotive environments, that is voice-enabled, traffic-data enhanced and ready for integration into automotive solutions. More important, the Aha Mobile strategy is to rapidly deploy application programming interfaces to enable the latest applications regardless of what they may be. In other words, it isn’t all about Facebook. Aha Mobile’s success is built on a portfolio of content and applications delivered in a manner suitable and responsive to the user. There are other Aha Mobile-like platforms, such as Aloqa, representing the latest wave of cloud-based aggregation solutions. But Harman’s acquisition, coming on the heels of 18 months worth of divestitures of divisions, facilities and personnel, reflects its importance in the context of a telematics market seeking that elusive objective: organic consumer demand. It will be interesting to see which Harman client is able to push to the front of the line to deploy the Aha Mobile solution: BMW, Mercedes, Chrysler, Toyota, PSA, Volkswagen, Audi or Hyundai. Might OnStar be interested in deploying Aha Mobile? What about Ford? With the acquisition of this tiny start-up Harman may breathe life into a telematics industry in desperate need of a marketing lift. Additional insights: http://bit.ly/bUoJKc - Consumer Implications for Smartphone-Vehicle Connectivity - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c0OLhT - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights http://bit.ly/aLtrF7 - Google, Nokia and New Entrant Positioning in Automotive Infotainment - Lanctot - Automotive Multimedia & Communications http://bit.ly/d0aLhq - Connected Vehicle Telematics: Car Maker Profiles - John Canali - Automotive Multimedia & Communications Service

The gold standard for telematics success is daily relevance. One of the greatest challenges for companies introducing telematics systems and solutions is to bring daily relevance to their offerings. Human beings are creatures of habit, which means that driving directions are normally not required daily, gas pricing and parking choices are predetermined, and weather and news are available for free over the radio. Movie times, skiing conditions and restaurant reviews are nice to haves. But they are available from other sources – most notably mobile phones – and are an occasional not a daily information requirement. And we all hope we never have to use either automatic crash notification or roadside assistance. Traffic data, on the other hand, is something that is relevant five days a week to a substantial portion of the working public. Companies that get traffic data right have a huge competitive advantage not only in providing traffic data, but also for providing a wide range of data feeds and services. In fact, the very infrastructure required for delivering traffic data – storage and processing facilities and servers and, in some cases, broadcasting capability - is a suitable platform for providing other telematics services. For this reason, traffic data providers Inrix, ITIS Holdings, TomTom and Navteq also serve as content and service aggregators. (It is also one of the reasons for TeleCommunications Systems’ acquisition of Networks in Motion and why TeleNav has a content and services platform.) The opportunity to provide additional telematics services is the brass ring for which traffic data providers are reaching. It is for this reason these companies are seeking to bundle traffic data offerings with traffic-influenced routing, developing mobile apps for smartphones and connected navigation systems, and other initiatives focused on moving up the value chain – ultimately leading to sponsored content, reviews and location-aware advertising and promotion. The daily relevance of traffic data is a powerful elixir for delivering additional location-aware added-value services, including advertising. This is why Google, TeleNav, TCS, Nokia Navteq, RIM and TomTom are moving quickly to introduce or enhance their probe-based (handset GPS) traffic flow solutions to develop their telematics business. The winner(s) to emerge from this marketing scrum will be the company or companies with the highest quality traffic data. Traffic data quality, in turn, is determined by a handful of critical factors including data sources, integration, and delivery. (The quality and nature of the user interface is important as well, but is the responsibility of the device or service designer/manufacturer.) The determining factors within each of these areas are essential to understand: Sources: There are a handful of key sources of traffic data and they include commercial fleet (ie. taxi cabs, trucks, etc. and other types of probes such as GPS handsets, PNDs, etc.), regional departments of transport, embedded and roadside sensors, and incident or journalistic data. A handful of companies – principally TomTom, ITIS Holdings and AirSage - are translating cell tower signaling data for flow data analysis. This technology is currently deployed by both TomTom and ITIS in parts of Europe. ITIS licenses its technology to partners in Australia, Ireland, Russia, South Africa and Singapore. A North American solution has yet to be delivered. TomTom delivers its cellular flow data in HD Traffic for its connected devices in Europe, which still stands as one of the best, if not THE best, live traffic solution in the world. (It is worth noting that HD Traffic received low scores in BMW's QKZ evaluation.) Traffic flow data from these sources is valuable for many use cases and applications including showing traffic on a map and traffic-influenced routing. Journalistic data complements the flow data by providing context about the cause, location and scope of the traffic problem. This is particularly useful to receive as a traffic incident alert before leaving on a journey or to provide context when actually stuck in a traffic jam, as the driver generally can’t safely read a description about an incident while driving.Incident data come from public sources such as emergency responders, department of transportation traffic cameras, or public or private spotters that may be on the ground or observing traffic conditions from some form of aircraft. Much of incident data is public information – some of it freely available to the public - and most is freely available to commercial traffic information providers. There are some private sources, however, including radio and TV stations with their own spotters, cameras or sensors and these include companies such as ITIS Holdings, SmartRoute, Traffic.com and ClearChannel. ClearChannel and ITIS Holdings have emerged as the dominant suppliers of incident data in the U.S. and U.K., respectively. The two companies have the widest market coverage and the broadest roster of clients. Of course, operating a traffic incident collection and reporter network on a national basis (much less internationally) can be extremely expensive and unprofitable, and companies such as Westwood One and Traffic.com operate under the pressure of that expense. Not surprisingly, ClearChannel and ITIS are also distinguished in applying the so-called QKZ traffic quality assessment standards to their solutions. QKZ, which is the name of the index used to evaluate traffic data, is the standard applied by BMW in evaluating different traffic solutions. BMW recently selected MILE Traffic and Travel (ITIS, Infoblu, Mediamobil consortium) to provide a pan-European traffic solution. BMW is already partnered with ClearChannel in the U.S. for their RDS-TMC solution. It is important to note those elements of the traffic data picture that are global in nature vs. local and to make a distinction between flow data and incident data. There are thousands of local sources of incident data and there are local aggregators of that data, but incident data is fundamentally a regional phenomenon. Flow data, in contrast, is ruled by systems that can be applied globally. There are five providers of flow data currently operating across borders and these are ITIS, Inrix, Nokia Navteq, TomTom and TrafficCast. ITIS is unique in using a licensing model. TomTom has yet to find a customer in the automotive or mobile device market for its flow data. TrafficCast has a handful of customers. And Inrix and Navteq currently compete for contracts in North America and Europe. Car makers are most interested in identifying global solutions, while navigation device makers and mobile application developers are content with regional solutions.  Companies such as Waze, Aha Mobile and TrafficTalk are attempting to open up a new channel of user-reported incident data. But the industry is still seeking to determine how to evaluate the quality of these ad hoc sources and integrate their inputs. Integration: The process of data integration produces a picture of traffic flow including not only real-time traffic flow or speeds but also a predictive model based on both historical and real-time data sources. This information is critical for determining accurate travel and arrival times as well as routing or re-routing.The five leading flow data companies distinguish themselves by their processes for integrating and manipulating traffic data, vetting sources and interpreting the different inputs. A virtual duopoly exists between Inrix and Navteq in the U.S. The European market is rapidly evolving from regional traffic providers to pan-European aggregators. TomTom has developed its proprietary HD traffic in a handful of countries, but is only deployed with its own smartphone and connected PND solutions. Navteq has a solution in place with Garmin, but has limited European coverage. Inrix and MILE Traffic and Travel appear to be emerging as powerful challengers in Europe. Delivery: The last link in the chain is delivery and this is the area experiencing the greatest degree of technological change. The most widespread platform for communicating traffic information is radio, but there are multiple radio-based platforms for traffic information delivery. Analog radio is the most dominant and familiar source of traffic data reports and the most widely available traffic data broadcast network in this medium is RDS-TMC. RDS-TMC is widely criticized for the limited amount of information it is capable of broadcasting in a metropolitan area and perceived delays (latency) in delivering the latest information to the embedded or portable navigation system in the car. Emerging digital radio technology enables a richer stream of traffic-related content and maintains the critical local elements. Digital radio is also a superior platform for delivering other forms of content. RDS-TMC is being replaced by TPEG technology. TPEG allows for a wider range of content, a larger volume of information and can be distributed over HD, DAB or cellular networks as it is XML-based. TPEG also encompasses arterial road coverage. Handset-based solutions are promising, though hampered by the smaller screens and challenging in-vehicle user experience associated with mobile phones. While technologies such as Nokia’s Terminal Mode offer the prospect of delivering handset traffic images to in-vehicle displays these solutions will take a few years to reach the market. Many OEMs, however, are in product development now with solutions that use handsets (or are fully integrating embedded GSM/GPRS modules in the vehicle) for sending traffic data and other telematics information to/from the vehicle. Product development is moving briskly in the handset/smartphone space and innovative solutions such as TrafficTalk and Visteon's TrafficCamJam are in the offing. But the companies creating these applications will likely require expensive voice interfaces. Public authorities will likely not accept handset-based applications in cars that require a touch screen interface while the vehicle is in motion. Part of the power of these smartphone-based applications, though, lies in the fact that they are location-aware and sharing location data even as they are reporting traffic conditions. As a result, these devices remain a wildcard in the evolution of traffic data. Sirius XM’s traffic data service in North America, based as it is on a single national stream of broadcast data to a vehicle’s navigation system, is fatally flawed. Based on this correspondent’s own experience with the Sirius feed in Mercedes and the ClearChannel feed in BMW, the lag introduced by the sequential transmission of multiple-market’s worth of traffic information down a single pipeline is the source of Sirius’ downfall. It is no coincidence that BMW offers Sirius' audio content but eschews its traffic offering. And some industry observers believe OEMs are dropping Sirius/XM traffic data services from their roadmaps for MY13 and beyond in favor of connected services over GPRS/GSM. In Sirius XM’s most recent earnings call two weeks ago the company touted its planned introduction in Q4 2011 of Satellite Radio 2.0. Presumably the company will have a fix for the timely delivery of traffic data. Conclusion: The biggest pipeline to the car of all is the embedded telecommunications module. With new embedded solutions set to launch from multiple car makers in multiple geographies over the next 2-3 years, drivers can expect to see vast improvements in traffic information quality. This is at least one reason for optimism regarding the future uptake of telematics services overall. With the emergence of both digital radio technologies worldwide and the proliferation of embedded telematics systems, the expectation is that the companies that will dominate traffic will be those with the highest quality data. What distinguishes these companies today are their processes for validating data quality. If the data is sound the daily relevance will follow as will subscribers. Further insight: http://tinyurl.com/2bz9zq6 - Google, Nokia and New Entrant Positioning in Automotive Infotainment - Lanctot – Automotive Multimedia and Communications Servicehttp://bit.ly/dniNxa - Navigation Heuristic Evaluation: Telmap5 – Schreiner – Automotive Consumer Insightshttp://bit.ly/95NCoW - Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority – Blight – Automotive Multimedia and Communications Servicehttp://bit.ly/dtRE5C - Automotive Telematics Services: Shifts in Pricing and Monetization Expected – Canali – Automotive Multimedia and Communications Servicehttp://bit.ly/bwdwcW - Connected Vehicle and Vehicle Device Connectivity System Database by Feature, Region, and Price 2010 – Canali – Automotive Multimedia and Communications Servicehttp://bit.ly/d0aLhq - Connected Vehicle Telematics: Car Maker Profiles – Canali – Aumotive Multimedia and Communications Service

Driving has never been safer, with vehicle crash-related fatalities at an all time low in most areas of the developed world. But public authorities are pushing for zero fatalities and these efforts are helping to bring enhanced safety technologies to the market through a combination of embedded and off-board solutions. Still, not everyone agrees on how to make cars safer. The latest high-profile debate revolves around distracted driving and mobile phone use. Some argue that hands-free interfaces help drivers by allowing them to keep their hands on the steering wheel and their eyes on the road while interacting with their mobile phone. Others believe that no mobile devices should be in the car at all since they represent a driver distraction. Acknowledging the role of distraction (a suddenly loaded noun with many potent and potential meanings) in accidents, a purist might argue for an in-vehicle experience bereft of distracting displays. In this context, a shift to head-up display technology might make more sense than in-dash displays, MMI/i-Drive-type interfaces and touch screens. Even voice interfaces might take a backseat in this scenario. Companies such as General Motors and Microvision are among those leading the way down the head-up path. In an environment where regulators want drivers’ eyes on the road it is the only logical way to go. But the industry and consumers may not be ready for this leap. And with so much industry focus on in-car mobile phone use as part of the U.S. Dept. of Transportation’s Distracted Driving Initiative, the head-up display conversation is likely to be deferred, ignored, or simply drowned out. (It is important to note that head-up displays are no longer available from Buick or Cadillac, as recent dealer visits have confirmed. BMW is now the leader in head-up display technology in North America. The technology remains expensive and, generally, a special order item.) The USDOT’s Distracted Driving Initiative will see its second summit conference this year in Washington, DC, September 21^st. The goal of the event is to raise awareness of distracted driving resulting from in-car mobile phone use generally and texting in particular and to seek solutions to the problem in a public forum. Ford Motor Company stands in the eye of this storm with its high profile Sync hands-free system and the MyFord Touch upgrade arriving later this year. Ford is carrying the flag for hands-on-the-wheel/eyes-on-the-road driving in a struggle with Dept. of Transportation director Ray LaHood, the National Safety Council, the American Automobile Association and Oprah Winfrey, all of whom oppose the use of mobile devices in cars under any circumstances. (Ophrah may have changed her tune recently to allow for hands-free interfaces.) The debate raises fundamental questions regarding safety systems and automotive interfaces. Distracted Driving campaigners implicate the two-second glance to an iPod, iPhone or other mobile device as the culprit in more than a million roadway accidents (http://bit.ly/6uP3wu). All parties agree that there is a problem, but disagree on its nature and magnitude. There is also definite disagreement on the solution. And if a two-second glance is the culprit, what about all of those OTHER two-second glances in the car? Ford’s eyes-on-road-hands-on-wheel message could not be clearer and the company has backed up its position with its own research along with the results of both independent and industry-sponsored studies. Ford’s Sync and the unfortunately named MyFord Touch (which is intended mainly for voice, not touch, interfacing – in spite of the touch screen) represent the solution to a long-standing problem. Driver Distraction has been an issue confronting automobile designers from the very earliest days of the industry. The emergence of car radios in the 1930’s, for example, led to the introduction of push button channel selection to ease the distraction of locating stations with a dial. Multiple international standards-setting bodies and industry associations have long ago specified the appropriate viewing angle (30 degrees) of dashboard displays to minimize eyes-off-the-road time.  Designers regularly do battle over the question of touch screen or no touch screen, debating the finer points of changing focal lengths and distraction. Audi delved deeply into this issue before launching its touchpad interface. Yet all of the i-Drive and MMI-type interfaces still require a glance at a display in the car. Strangely, no one in the industry seems to be taking this distraction debate to its logical conclusion. If a two-second glance to an in-vehicle display is a source of potentially fatal crashes, the industry needs to be taking an entirely different direction. If displays of all kinds are the problem, then let’s do away with on-board displays completely. At the very least the industry should commence an initiative to explore a shift to head-up displays. But, wait, before we undo more than a century of HMI refinement let’s go back to the beginning. Highway fatalities are at an all-time low throughout the developed world and are especially low when indexed against the extraordinary increase in miles driven. During this time of declining road fatalities smartphone penetration has grown at an equally extraordinary pace. Smartphones, therefore, are not an obvious source of highway fatalities, but anecdotal evidence suggests these devices are not blameless. Ford is an interesting organization to find at the nexus of the debate. Not only has the company led the way in bringing voice interfaces into the car for safe operation of mobile devices, it has also pioneered the safe implementation of those interfaces. Examples of safe voice implementation by Ford: #1 Software development kit (SDK) enforces Sync constraints such as no keyboard entry or video while moving and list length limitations. This “policy management” layer is also being implemented within Apple’s iPod out, Delphi’s D-Connect, and Nokia’s Terminal Mode (http://bit.ly/b22buN), among other solutions. #2 When a vehicle is in motion, Ford locks out features and functions such as pairing a Bluetooth phone, editing or adding contact info, POI reviews, detailed sports scores or movie times, manual destination entry, all demo modes, keying in or editing messages, Internet access, external keyboard, editing settings, setting up short-cut buttons. #3 Ford limits list lengths (contacts/recent calls/POIs), the number of canned text responses and Sirius Travel Link information when the vehicle is moving. Ford’s recommendations for mitigating distracted driving include: #1 Passage of Jay Rockefellers’ anti-texting Senate Bill (http://bit.ly/aLMKL4) providing incentives for states to pass anti-texting legislation; #2 Primary enforcement of existing mobile phone bans; #3 Limiting mobile phone use for holders of graduated driver’s licenses – ie. teens; Ford also offers its MyKey technology for parents to limit vehicle speed, stereo volume etc. for teen drivers. #4 Education/public awareness campaigns – ie. Ford’s Driving Skills for Life (http://bit.ly/8TcMpn); #5 Elevate Alliance of Automobile Manufacturers’ “Driver Focused Telematics Guidelines” to regulatory status (http://bit.ly/ddCpRd); #6 Increase funding for research – handheld vs. voice; relative risks of distractions including cognitive; and review real-world driver compensation behaviors. The embedded, policy management side of Ford’s smartphone-based effort has been Volvo’s IDIS workload management solution. Not surprisingly, Ford is working on similar on-board solutions that take into account driving conditions and vehicle status based on messages on the vehicle CAN network including stability control and windshield wiper engagement, speed, and traffic. There is a small irony in Ford’s sale of Volvo given Volvo’s leadership in vehicle safety. The timing was rendered especially poignant given the National Highway Traffic Safety Administration’s shift in the middle of last year toward a focus on preventing rather than simply surviving accidents (http://bit.ly/9L6MFi). Volvo has been a leader in bringing technologies to market that anticipate and attempt to avoid accidents. IDIS (for Intelligent Driver Information System) is intended to shut down distracting in-vehicle functions – such as mobile phone access or even warning lights - in the presence of hazardous driving conditions – intersections, overtaking etc. IDIS takes into account such driving circumstances as acceleration, speed reduction, turn signal indicators, steering wheel angle, reverse gear engagement and infotainment controls. Its primary output is to delay/manage incoming calls and vehicle alerts. The next step for IDIS will be the integration of map data along the lines of map-based advanced driver assist system designs from Navteq (with partners Magneti Marelli and STMicroelectronics) and Intermap (Visteon). The integration of map data with vehicle safety systems will allow for curve over-speed warnings or pro-active braking when approaching sharp turns. One can expect more solutions to block mobile phone access – as in the case of Global Mobile Alert – in the proximity of hazardous intersections, school zones or rail crossings. Strategy Analytics research shows that consumers want safer cars. Recent Strategy Analytics surveys reveal high consumer interest in night vision, pre-crash safety, adaptive front lights, blindspot detection, adaptive cruise control, driver attention monitors, lane departure warning, parking assistance, V2V communication and automatic speed limiters. The challenge of course, is getting consumers to pay for these technologies. This reluctance to pay creates the conditions for Federal mandates. And Federal mandates are likely to change the public’s perception of safety from an exploding airbag to a pre-emptive braking experience. Auto makers are already responding to this shift. Infiniti, Toyota, Mercedes-Benz, Opel and Volvo are all actively touting active vehicle safety systems with the best and most advanced of these taking driving context into account. These systems are also increasingly taking distraction, inattention and even driver fatigue into account. Conclusion: In an ideal world, there would be no distracting displays inside the car to divert the driver’s attention from the eyes forward concentration on the driving task. In this ideal world, head-up displays would be widely deployed and traffic fatalities would be continuing their downward trajectory. We do not live in an ideal world. Therefore, everything else in the world of automotive HMI is a compromise. In the context of that compromise, vehicle systems that take into account driving circumstances and device connectivity are preferred to those that do not. This means that systems and devices – Apple’s iPod out, Nokia’s Terminal Mode, Delphi’s D-Connect – that provide a contextual policy management layer will be in demand. More importantly, with NHTSA shifting its focus to crash avoidance, perhaps the entire automotive industry will begin to rethink what safety is and what safety means. And when it comes to distracted driving, there will hopefully be a federal and industry embrace rather than a rejection of technological solutions such as hands-free interfaces. Additional Insights:http://bit.ly/94Mn1V - Delphi Emerges at SAE with Answer to Nokia Terminal Mode - Lanctot - blog - Strategy Analyticshttp://bit.ly/b5W8ZS - Nokia and RIM Push Into Automotive as ‘Apps’ Competition Mounts - Joanne Blight – AMCS http://bit.ly/b5XEJM - Advanced Driver Assistance Systems: Supply And Fitment Database - Kevin Mak - Automotive Multimedia and Communications Service http://bit.ly/cVcENg- Consumers Interested in Advanced Safety Features, but not at Current Price - Chris Schreiner - Automotive Consumer Insights http://bit.ly/b9oVAt - CTIA 2010: Distraction Mitigating Apps on Display - Chris Schreiner - Automotive Multimedia and Communications Service http://bit.ly/9BYNeR - Smartphones Bringing Safety Systems to Cars - Roger Lanctot - blog - Autmotive Multimedia and Communications Service

The latest salvo from the Genivi Alliance – a SWOT analysis of competing automotive operating systems – appears to cloud rather than clarify the existing automotive OS market environment. The future prospects for current and emerging players are described with little supporting evidence or insight. The report also concludes – from OEM and supplier interviews – that the Alliance’s assumptions regarding cost savings are valid without providing a detailed financial analysis of where cost savings may be achieved – ie. head count, lines of code, etc. Not surprisingly, the self-serving report concludes that Genivi will rule the market in the long term with deployments beginning in the 2013-2015 timeframe (http://tinyurl.com/29aly2t). The report initially sets out to provide a thumbnail view of current OS market leaders Microsoft, QNX, MicroItron, Linux and Android. Going without mention are Mentor Graphics, Ubuntu, OpenSynergy, Meego or even VxWorks (currently used by Peugeot-Citroen, Nissan and Volkswagen). Also missing entirely are Genivi members MontaVista and Wind River. Ostensibly, the goal of the report is to benchmark and/or handicap these various infotainment software architectures and their influence on in-vehicle infotainment systems; and to validate the cost savings claimed for Genivi’s code-sharing/recycling model. Missing is a detailed description of the actual software architectures themselves – ie. what makes one “better” than another. What is available in the report summary seems misleading such as a reference to Microsoft Auto booting slowly, which is also a shortcoming of Android, but which is also easily overcome. Also missing is a discussion of current market forces, strategic supplier relationships, recent mergers and acquisitions or potential mergers or acquisitions. The absence of these latter aspects means that Intel’s acquisition of Wind River goes without mention as does the merger of Intel’s Moblin platform with Nokia’s Maemo OS to create Meego – rumored to have been selected by Genivi as its infotainment platform of choice. (Press and Nokia reports have quoted senior Genivi representatives stating that Meego has been chosen for this purpose - http://tinyurl.com/2d46xls. No affirmation of this selection has come from any Genivi member other than BMW.) MontaVista’s acquisition by Cavium Networks and QNX’s purchase by RIM gets no attention in the report. Neither does TomTom’s decision to adopt the Webkit OS, a platform found in other segments of the mobile market such as Palm’s Web OS. (The report fails to note Bosch’s adoption of Linux or Visteon’s embrace of Genivi, Microsoft, QNX AND Ubuntu – hedging its bets.) These oversights are more significant than they seem as they suggest a lack of awareness of the symbiosis between mobile device operating systems and automotive hardware and software architectures. Additionally, the report repeatedly refers to “risk-averse” Japanese OEMs and tier one’s being hesitant to adopt open, Linux-based platforms – including anything from Genivi to Android.  This assertion is patently absurd given Clarion’s longstanding support of Linux. The report also paints a grim picture of QNX’s market outlook, suggesting the company’s app support is “difficult to configure” and that the company can be expected to withdraw from the IVI market entirely within a short period of time. This will no doubt be news to executives at QNX’s Ottawa headquarters where headcount committed to automotive projects is on the rise as are design wins. And the acquisition of QNX by RIM opens doors to automotive-related IP (ie. traffic apps) while adding access to a massive and growing installed base (ie. probes). Unlike all of the alternatives currently in the market, QNX currently offers a range of flexible, scalable solutions future proofed to support Adobe Flash, HTML5, Flash Air and Flash 10.1 and all mobile OS's. QNX is customer friendly with support unmatched by Linux-based competitors or Microsoft. By way of contrast, OEMs implementing Microsoft are finding they must enlist the aid of third-party developers (bSquare, Elektrobit, etc.) to customize Microsoft Auto to their requirements. Microsoft has left application development entirely to its customers and their partners. It is worth noting as well that QNX’s flexibility is an advantage vis-à-vis Microsoft. Where QNX supports nearly every potential application or implementation known to automotive engineers without favor, Microsoft is likely to push its Bing search engine, Silverlight graphics and other in-house offerings. The report notes that the next generation Microsoft IVI platform, Motegi (Windows Automotive Embedded 7), will launch with Japanese OEMs, though it provides no time frame. Microsoft indeed has at least two partners in Japan – Alpine and Mitsubishi – which suggests that either Honda or Mercedes may be implementing Motegi. The report neglects to mention QNX’s recent gains in Japan, including Panasonic and Denso, showing a deeper penetration of QNX into Toyota. In fact, QNX has benefitted handsomely and rapidly from its separation from Harman – immediately attracting attention from potential Japanese and Chinese customers. Where QNX is weakest is in developer support. This is precisely where Android shines. The report summary correctly identifies existing developers working on automotive Linux implementations – ie. Parrot, Continental and Roewe – and identifies the inclination of many designers in the industry to connect with Android but to keep it out of the central stack. The report also notes Google’s disinclination to support or endorse Android for automotive implementations, but leaves the door open to an embedded future for Android. (GM is thought to be considering an open platform such as Meego or Android for a future OnStar or infotainment launch.) But this points up a fundamental gap in the report, which is the wider context of the OS debate. Android and Genivi do not line up directly with QNX, Microsoft or Linux (pick your distribution). Genivi has always been positioned as a code sharing platform for infotainment systems - as such it has never been presented as a replacement for Microsoft or QNX. Android, similarly, is being pursued as an alternative for ultra-low-cost (entry level) platforms - typically those emanating from India and China - as well as a means for implementing revenue sharing models based on mobile applications in the car. The new Genivi report marks the first time the Alliance's platform is proposed as a replacement for QNX or Microsoft or any other OS, indicating a change in strategy for the group. This is where the group may be overreaching. Presenting Genivi as a one-for-one substitute for existing real-time operating system solutions is a different proposition from offering a code-sharing/recycling platform intended to reduce development costs. Obtaining industry buy-in to this vision will take 5-10 years, by which time the market may well have moved on to the next big thing. And as an industry coalition-driven solution, Genivi arrives untested in the marketplace. The report further attempts to validate Genivi’s vision for cost-reduced platform development, saying interviewees estimated IVI deployment cost savings of up to 50%. At the same time, though, the report acknowledges that initial implementations may cost even more than incumbent solutions. Justifying or validating proposed Genivi cost savings will continue to be a tall order for the Alliance. Conclusions: The Genivi Alliance’s IVI software architecture report provides valuable insights but is rife with glaring omissions, unsupported conclusions and errant assumptions. The report oversimplifies the automotive OS ecosystem and competitive environment and underestimates the influence of some incumbent players, such as QNX, and the emerging role of content and service aggregators including TeleNav, Inrix, Airbiquity, WirelessCar, TCS, ITIS Holdings, Navteq and Hughes Telematics. A few of these content and service providers were interviewed for the report. But not a single telecommunications carrier or handset maker – outside of Nokia - was interviewed. Even more obvious than these omissions, however, was the exclusion of both Audi and the e.solutions joint venture with Elektrobit - the single most prominent, influential and competing IVI platform in the industry. The oversight is obvious and unfortunate. The forces that are determining the future of the automotive IVI experience are almost entirely developing outside of the car, so a wider base of interviewees should have been considered. The single greatest weakness of the Genivi Alliance is its inward focus on the automotive industry as opposed to an outreach to the wider world of mobile devices and consumer electronics. It is possible for Genivi to “win” in the long run and “challenge” (in the report’s own words) Microsoft, but the Microsoft embedded solution will always have the advantage of developer support from across a broader range of industries and the design priorities that those other user communities will contribute. Genivi’s narrower focus is at once its greatest strength but, in the end, its Achilles heel. <!--[if !supportLineBreakNewLine]--> <!--[endif]--> Further insight: Smartphone Market Evolution and the Automotive Opportunity Implications – Mark Fitzgerald – Automotive Multimedia and Communications Service - http://tinyurl.com/34hldb5 Automotive Connectivity: Beyond Bluetooth Solutions – Mark Fitzgerald – Automotive Multimedia and Communications Service - http://tinyurl.com/2gx88eo