Advertising, like real estate, is all about location. But lately, advertising in a connected and increasingly mobile world is about location and context and when you put these two together you get relevance. Many companies are trying to capitalize on the emergence of relevance as an index of commercial activity but none more uniquely and effectively than the appropriately named Where. 

A year after launching its “relevancy engine,” Where has 250 mobile application publisher clients with a reach of 50M unique users producing 2B ad requests and 140G of contextual data per month. Depending on how you look at what Where has done, the company has either banished or redefined the idea of location in advertising. In the words of marketing chief Dan Gilmartin the popular DMA (designated market area) of old now stands for Doesn’t Matter Anymore. 

The relevance of advertising in the automotive industry has emerged as more consumers connect smartphones into their cars introducing the world of mobile advertising to the dashboard – a venue previously “owned” by the on-board radio. A growing number of service providers are offering OEMs ad-supported server-based wireless content delivery platforms. And the lead application on many of these platforms – such as Toyota’s Entune or GM’s new MyLink – is Internet radio.

Third Generation Mobile Advertising

Like so many aspects of the connected world, advertising has gone hyper local and contextual. Where first generation mobile advertising might have been broadly targeted to a region, and second generation wireless ads might have sent you a coupon for a Big Mac as you drove by a McDonald’s, third generation mobile advertising will take into account the time of day (lunch time?) as well as, maybe, the user’s past searches or clickthroughs which might indicate a preference for vegetarian.

Location is still important, but now context is the critical determining factor for mobile advertising campaigns and just about everything else in an always connected world. Nowhere is this fact made more clear on a daily basis than in the realm of terrestrial broadcast radio advertising – a nearly $20B business that has resisted the inroads of satellite radio, digital radio and, now, Internet radio. But terrestrial radio’s ability to hold off the competitive threat from Internet radio will be a test and that’s because of relevancy.

To better understand the role of location it is worthwhile looking at the market impact of satellite radio. Sirius XM has been able to build a subscription-based $2.8B revenue stream around premium and curated broadcast content. While some of the stations on Sirius XM allow for some limited advertising messages these ads are generally not location specific since all of the stations are broadcast across the entire U.S. and Canada.

The broadcast approach to advertising Sirius XM-style is “broad” in its most loosely defined sense – very first generation. Ads for male enhancement products (Prolixis) or the AshleyMadison dating service are typical. These ads have zero location relevance and, as a result, have the quality of audio spam.

Relevance Rules

Traditional terrestrial broadcast radio, on the other hand, may have its own sprinkling of national advertising spots, but they are leavened with spots for local service providers with familiar names. That familiarity somehow makes those ads easier to accept and less like audio spam.

The strength of those local advertising bonds has helped the terrestrial broadcast radio industry hold its own against other sources of content, including music playing devices. Today, only 3% of total listening hours are attributable to Internet radio, according to Arbitron (which does not measure satellite radio listening), with the balance devoted to terrestrial broadcast sources.

Internet radio in the car – whether as an embedded solution or delivered over a connected mobile phone – represents the arrival of third generation advertising opportunities in the dashboard. The power of Internet radio advertising lies in its infrequency – about half the hourly ad load of terrestrial broadcasts – and in its relevance. And to help seal the deal for a prospective advertiser, Internet radio offers the prospect of superior metrics for evaluating the efficacy of a mobile advertising campaign.

Predictive Advertising Model

Where’s relevancy engine enables the rifle-shot approach to advertising that advertisers seek. Like a weather or traffic forecaster, Where’s algorithms can predict consumer receptivity to advertising messages based on a variety of inputs including everything from time of day to weather to location or any of a range of behaviors reflected in online activity.

Among the inputs Where’s relevancy engine ingests are such things as page views, click to calls, click to map, click to directions as well as “likes,” “saves,” “favorites,” and ratings. Different types of indicators get different weights, but all contribute to delivering a message that is likely to be more welcomed by the consumer since it is more relevant.

It will take research to bear this out, but my personal theory is that the more appropriate or relevant an ad is the more closely a consumer will pay attention and respond. I am not interested in Prolixis or AshleyMadison, but I may need gas, a cough drop, or a Big Mac depending on my context.

Where also has a mobile phone application which has taken its relevancy concept further with the addition of what it calls Perfect Places, a social discovery service that recommends nearby sites that friends might want to visit based on matching relevant similarities in taste. The service also delivers exclusive deals from local merchants. The Where app has 4M users.

Conclusion:

The transformation coming to the automotive radio experience is driven by the $20B advertising opportunity that terrestrial broadcast radio represents. Internet radio stands a much greater chance of capturing a piece of that pie or, alternatively, making it larger. The Internet radio listening audience is unique and attractive to advertisers and the underlying technology allows for more accurate targeting and measurement of campaigns.

How providers translate Internet radio into revenue opportunities remains to be seen. Pioneer Electronics’ Platform for Aggregation of Internet Services (PAIS) has been the most overt regarding its proposed strategy of advertising revenue share. But most other platform providers, from Airbiquity to aha mobile, have the same idea in mind. There is a reason GM and BMW have been working so hard to bring Facebook into the car. It’s all about advertising inventory.

For further insight:

http://bit.ly/gcXXyX - Next Gen Car Radio: Battle Lines Drawn over Content & Location - Insight – Roger Lanctot – Automotive Multimedia & Communications Service

TomTom’s marketing machine was in overdrive last week with announcements of a new OEM relationship (Mazda) and advances with existing partners (Toyota, Renault), enhancements to its (European) market-leading traffic solution (HD Traffic) and a traffic manifesto. But undoing all that positive spin was the note that the company still wants to charge about $50/year for its Live Services. It looks like TomTom didn’t get the latest email about automotive value propositions. As connectivity comes to more vehicles, drivers (and passengers) will get more of their content and services from the “cloud.” What this means is that car makers will increasingly have in place systems for sending, receiving, processing and managing all types of vehicle data – the “back end.” (This is not unlike what is happening at your average NASCAR or Formula One event every weekend – without the parking space availability and Internet radio.) The value of this data is manifest to the car makers for better understanding the performance of their vehicles on the road as well as better understanding how consumers use and abuse their cars. The implications for cost avoidance, warranty and recall management are in the millions of dollars of savings. There is no immediate or obvious benefit to the driver. For this reason, this kind of vehicle connectivity ought to be free. (On the other hand, OnStar and others have demonstrated that people will pay for safety and security.) As more drivers shift to smartphones (with mandatory data plans) with access to a wide range of content and services, they will be less likely to pay for any service from the car (or PND) maker that is available for free (or for which they are already paying) via their mobile phone. So how is the industry (and TomTom) going to monetize all this connectivity? Enter the back end value proposition. Auto makers and Tier Ones have gotten the message and recognize that driver and passenger eyeballs and “click-throughs” have value. A driver asking for directions to a restaurant or movie has economic value. A system that knows the location of the driver has value. Beyond this, a system that is able to provide a broader “cloud” perspective of all location-related activity – including everything from prosaic traffic information to “heat” maps of gatherings of people, weather, etc. – has other value-add implications for drivers, passengers and roadway systems and public transportation overall. But in the short-term, vehicle related information for diagnostics, safety and entertainment take priority. Continental, Harman, Visteon, Delphi and Pioneer clearly understand this. All of these companies have introduced systems or platforms that seek to leverage vehicle location information for commercial opportunities. Even Best Buy’s connected PND delivered sponsored links in its Google Search. Unfortunately, Tier Ones face an uphill struggle in trying to get a piece of this action. The telematics eco-system consists mainly of a telematics service provider (ie. ATX), a carrier (ie. Sprint or Verizon) and a system integrator (ie. TCS). Each of these operators is interested in the other’s business – with the possible exception of the call center. (No one wants the call center hot potato – too much cost.) While the call center tends to be shunned, the data back end tends to be either misunderstood or underestimated. But the back end system is rapidly becoming the backbone of the system altering the competitive landscape. The power and influence of back end systems is visible to the consumer in the growing variety of free content and services via smartphones. Google probably has the largest back end system currently influencing developments in the automotive market. With its free navigation, traffic and search and an open source operating system, Google has rattled the industry mightily over the past two years. Carriers, meanwhile, are trying to fight there way in – not content to be simply white label suppliers of bandwidth. Among the carriers sniffing around the telematics back end opportunity are Verizon, Sprint, T-Mobile, Telenor, Orange, AT&T Mobility, Vodafone and Ericsson. All of these companies recognize that their servers are as valuable as their networks. Some of these companies fancy themselves Tier One players. At least three handset makers have the potential to rise to the Google challenge: Nokia, Apple and RIM. Like Google, Nokia is offering free navigation while also seeding the market with open source development tools (Qt), operating system softare (MeeGo) and smartphone connectivity technology (Terminal Mode). But Nokia remains ambivalent about the automotive opportunity. MeeGo is not ready for market and Ovi has not been designed for automotive opportunities. RIM brings a unique value proposition combining its smartphone system experience with its newly acquired QNX automotive expertise. RIM represents the most immediate threat to Google’s potential dominance in the automotive market because of its potential to deploy navigation and traffic applications (based on handset probe data) and its ability to monitor, manage and mine its network data traffic. Apple’s strength lies in its secure systems for managing commerce for downloading applications and enabling the purchase of content. For these reasons, Apple and RIM both have the scope and scale to add value to automotive opportunities. The massive giveaway of content and services by both Google and Nokia is a setup for capturing click-through traffic and back end processing opportunities for creating metrics and analytic output. Google already has the analytic tools in place, unlike Nokia. The current landscape for back end services is highly fragmented and includes companies such as TeleNav, Airbiquity, Hitachi, TeleCommunications Systems, Hughes Telematics, WirelessCar, Oracle and IBM, along with the previously mentioned wireless carriers, RIM and Apple. (Strangely, Microsoft seems to have disqualified itself – having disbanded its automotive business unit. The original vision defined by Microsoft at multiple industry events included integrating more and more Microsoft solutions such as Bing, Tellme, and Silverlight into automotive platforms, but the complete vision – including back end services – never materialized. The one exception to this no-show for Microsoft are the company's ongoing efforts to capitalize on the Bing search engine.) The value proposition of back end service providers revolves around secure management and processing of vehicle and driver data for applications ranging from vehicle performance and safety to content and infotainment and, ultimately, commerce opportunities. Neither OEMs nor Tier Ones are equipped to manage this opportunity and traditional telematics providers lack the scale. The lack of scale is one reason Airbiquity has partnered with Hitachi to service Nissan’s connectivity needs around the world. It is likely that companies such as Hughes and TeleNav will seek partnerships with larger integrators such as IBM or Oracle for the same reason. Nokia, like RIM, already has the scope and scale and like Apple already has the commerce platform (Ovi) but, unlike Apple, has done little beyond the introduction of terminal mode to optimize its offerings for automotive. TomTom is another player in need of a partner to provide the scope and scale necessary to compete in the connected space. The larger organizations that are able to monetize the connectivity proposition will force out smaller players dependent on subscription revenue. If TomTom can enhance its navigation and infotainment platform to include safety and security telematics, it will greatly improve its value proposition and the likelihood of building a devoted subscriber base. Conclusion Google and RIM are best positioned to leverage the back end data processing opportunity presented by the automotive industry. Google faces trepidation among potential OEM customers who are suspicious of the company’s motives and objectives. Google’s failure to validate its Android OS for automotive applications is another stumbling block. Nokia has discrete elements of a solution in place but so far lacks the commitment and execution to challenge either Google or RIM. Apple is a wild card player in a market that remains fragmented with the door open to new entrants. Microsoft's Bing search engine is another contender gaining traction, but, in the end, Microsoft is more of an arms supplier to the contesting parties. Winners in the battle for the back end will be those companies able to bring security and state-of-the-art analytics and commerce management to the automotive industry. Google knows analytics. RIM knows security and network management. It remains to be seen whether Nokia or some dark horse will step forward to challenge these two dominant players, but the race is on. Additional Insight: 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

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

While major media and cable companies talk about four screen strategies the telematics industry is abuzz over the emergence of a three screen world. This was never more clear than at last week’s Telematics Update event in Novi, Mich. From OEMs to tier ones, software and service providers, the focus is on leveraging handsets, head units and the Internet to create closer and more profitable customer relationships. Companies on hand preaching the three-screen gospel included Nokia, Continental, Airbiquity, WirelessCar, RealVNC, QNX, Google, ATX, Tweddle Group Technologies and Parrot. The solutions demonstrated and debated point the way to a more connected experience in the car where the customer can access vehicle related information from outside the vehicle or on a phone or online when away from the vehicle. Even meta data provider Rovi and HMI supplier TAT offered their contributions to the three-screen vision. Nokia described and defended its terminal mode technology, a European-oriented campaign built around what some term a “screen scrape” transfer of a smartphone’s display along with a shift of device control to the vehicle HMI. Nokia intends to equip all of its smartphones with terminal mode technology by early 2011 and is working through the CE4A coalition to coordinate tier one head unit implementation of the technology throughout Europe, where Nokia’s market share is strongest. Using similar technology, RealVNC showed development tools for extending terminal mode technology into a wider range of devices and markets. While Nokia claimed to have two competing handset makers interested in the terminal mode solution, RealVNC’s more agnostic approach offers a suitable alternative. Airbiquity promoted its in-band modem technology by extending the platform to include a customized user interface, tied to the user’s mobile phone, along with app store functionality and location and user-relevant advertising messages. Airbiquity is increasingly taking on the role of a content aggregator, tying together content and applications in a single user interface. Airbiquity's Bluetooth-based approach was presented as a powerful and low-cost data-over-voice/packet alternative to packet-only solutions which require a payment for dial-up networking or SPP monthly service fees. Airbiquity estimates that OEMs deploying packet-only solutions will limit themselves to 20% of the penetratable market of which only 3-5% will have extra carrier service plan for BT DUN/SPP packet connectivity. On top of the data-over-voice solution, Airbiquity is layering its Choreo cloud service for both consumer and commercial markets. Airbiquity says Choreo allows OEMs to convert the car to an IT platform, creating a global infrastructure for content and service delivery. WirelessCar has also stepped into the content aggregator role, showing a clever vehicle-to-smartphone integration providing some basic vehicle control functionality and information access. The WirelessCar solution suggested the long-anticipated realization of a vehicle portal also accessible via smartphone for sharing vital vehicle data with the owner. OnStar has found this approach, with key vehicle status information, to be a valuable tool for driving customer traffic and service revenue via the dealer channel. To drive home its message, WirelessCar led a panel discussion with Ericsson and Cybercom, representing the wireless carrier and software integration perspectives on the implementation of a three-screen world.  Actually, WirelessCar has been pushing and demonstrating this concept for at least three years. Tweddle Group Technologies – the combination of Tweddle Group with UIEvolution’s former automotive division – is also looking to fill the content aggregator role. The company brings to the table its long history in the owner’s manual business – which itself is transitioning to electronic delivery – along with a relationship with Pandora. The Tweddle solution, which allows for the delivery of text and video content - via head unit or handset - related to vehicle systems has intriguing possibilities if integrated with CAN inputs such as alerts or other status messages. Tweddle has yet to marry these two sources of data, but the concept is certainly a powerful one. QNX has also envisioned sharing vehicle status information with the driver via on-board displays. The QNX LTE Car demo includes a “Virtual Mechanic” for providing the driver with images of vehicle systems and their status. Given Toyota’s recent disastrous recalls, the opportunity for these types of systems to catch on is strong. For its part ATX was demonstrating its new application for integration with Mercedes Benz’s TeleAid telematics service. The app provides for some basic vehicle control along with the ability to remotely send a destination to the vehicle’s navigation system. Continental’s AutolinQ concept may be a little ahead of its time in promising an on-board app store experience in an Android operating system environment. While car makers and suppliers have broadly embraced a variety of Linux distributions, Android is still running up against some industry prejudice over the issue of vulnerability to hacking and other perceived weaknesses. Industry buzz suggests that Android is being accepted and even specified in some RFQs, which is certainly a promising development for Continental. The growing Android momentum in the automotive, mobile and even consumer electronics markets suggests that Continental is on the right track. In support of its campaign, Continental announced an eco-system of solution providers contributing to the platform including Ygomi, Inrix, Navteq, Navigon and Deutsche Telekom. Continental will no doubt be flexible regarding these relationships if it means sacrificing a partner to obtain a new contract. But at least now the Continental vision has been clarified as a fully evolved proposition. Delphi executives attended the event, but did not demonstrate their own connectivity platform: D-Connect. Delphi has been vocal in its support of connectivity to Android devices, but resistance to building Android into the head unit. Since D-Connect has not been publicly announced it is hard to predict how Delphi’s final implementation will arrive in the market. Tier two Parrot showed chipsets optimized for mobile device connectivity including the latest Bluetooth protocols and Wi-Fi. Android also figures prominently in Parrot’s plans including some active programs, according to the company. Google announced additional “Send to” partners at the event – OnStar and Ford. For Google, the message for the industry is that it is a cloud-based world. Applications are no longer launched for desktop computers, they are launched on and for the Internet. Google’s recommendation is clearly that car makers facilitate cloud connections either on board or via mobile devices. OnStar, with the most powerful brand in the telematics industry, faces perhaps the greatest challenge in developing a cloud-oriented strategy. Not only must the company integrate its infotainment and telematics teams – long at odds over key applications such as Bluetooth connectivity and navigation – it must also reposition a brand identified almost entirely in relation to safety and security, not entertainment. The path is far from clear, but the promise of additional revenue from dealer service work to content consumption and, overall, a tighter relationship with the customer has car makers and their suppliers working overtime. All agree, at last, that the future lies in three screens. Leading the way are OnStar and Ford, each of which has defined its own three-screen strategy. BMW and Daimler are the next logical candidates to implement the handset-head unit-Internet approach. All of which points to common elements in future telematics solutions including: app stores (accessible via all three screens), vehicle control (across and between platforms), access to vehicle status information (all screens), content aggregation partner and back-end system provider, cloud-based content and services, and provision for multiple-handset compatibility. The emergence of these common threads are helping to clarify the future deployment of telematics systems speeding the delivery of in-vehicle connectivity. *Editor's note: Airbiquity executives suggested amending the strategy to FOUR screens. This week, Microsoft's embedded software division touted a FIVE screen strategy at the Fachkongress Elektronik in Ludwigsburg. Further insight: http://bit.ly/cMw4f1 - Solid Q4 for PNDs, but ‘Free’ Navigation is Shaking Up Monetisation - John Canali – Automotive Multimedia and Communication Service http://bit.ly/bMeg36 - Global Mobile Handset Navigation Forecast 2004-2014 - Nitesh Patel – Navigation and Location Opportunities http://bit.ly/8Yo4U6 - Nokia & Google Shake Up $3.8 B Handset Navigation Market - Nitesh Patel – Navigation and Location Opportunities http://bit.ly/6FC6W7 - Smartphone Market Developments Shaking Up Automotive Strategies - Lanctot - Automotive Multimedia and Communications

The arrival of Nokia’s Terminal Mode technology for smartphone integration and ATX Group’s downloadable application for Mercedes-Benz’s TeleAid telematics service has highlighted the intensifying battle between OEMs and third-parties over car owners and the in-vehicle experience. OEMs are being forced into the business of certifying applications for use in the car at the risk of losing control of both the customer and the user experience. And the encroachment of third-party apps is raising serious security concerns. The introduction of the ATX downloadable app is perhaps the worst case scenario for an OEM given the existing relationship with Mercedes TeleAid subscribers. The application was neither created by Mercedes nor was it certified or approved by Mercedes. The result is the first instance in the industry of a service provider competing with an OEM for the OEM’s customers. The clever application allows for the wireless transmission of destinations to Mercedes navigation systems equipped with TeleAid connections and also allows for remote door unlock among other features. The purpose of the application is to extend and maintain the existing ATX relationship with legacy TeleAid subscribers. But it is an intrusion most unwelcome at Mercedes headquarters. Most of the functions offered by the ATX app were made available in a similar app launched by Mercedes last Fall as part of its mbrace telematics service launch. The difference between the two is that mbrace, launched on November 16, 2009, is part of Mercedes’ introduction of a new telematics service relationship with Hughes Telematics. Aside from the relevance of the ATX announcement to the ongoing contretemps between Mercedes and its service provider (the two have yet to resolve their legal differences), the implications for the industry, telematics and the app store model are critical including: Management of the telematics service Ownership of the customer Control of the telematics marketing message Control of dealer marketing and incentives Certification of vehicle related applications Control of the in-vehicle user experience But these issues are inherent in the app store model itself. For Mercedes, the mbrace app, for select iPhone and Blackberry smartphones, enables a similar feature set as the ATX app and also sets up the ability for Mercedes to create its own app store. The mbrace app was groundbreaking because it was the first from an OEM to enable remote functions from a handset – demonstrated but not delivered by others – while simultaneously changing the telematics service provider and call center phone numbers – effectively transferring existing TeleAid customers (now using ATX) to the mbrace service. Mercedes even stated plans to introduce new applications periodically, the first of which are expected to arrive later this summer, propelling Mercedes to the front of the automotive app store class, where it is now joined by Ford (which seems to introduce new applications monthly). The ATX announcement, however, reveals the proverbial fly in the app store ointment. If ATX can divert Mercedes’ TeleAid customers, which OEM will be the next to see an app divert their customers? ATX’s app allows the existing TeleAid subscribers, of which there are an estimated 400,000, to maintain their relationship with ATX and provides them with functionality similar to that offered by the new mbrace service. Since customers are paying ATX in total nearly $100M for the service, this is important. To help drive the message home, ATX is offering Mercedes dealer sales personnel $100 spiffs to communicate the message to existing Mercedes owners. (The only service being offered by dealers on new vehicles is the mbrace service.) Meanwhile, Mercedes is offering a 20% commission - worth about $100 - to dealer F&I and sales executives to promote longer-term (18 month) initial mbrace subscriptions. (Customers already get six free months of the basic service and three free months of the Plus service which includes concierge support among other functions.) There is the potential for a mixed message here, although the ATX message is only for existing owners, while mbrace is targeted at both existing owners and purchasers of new Mercedes cars. (A recent visit to a Mercedes dealer revealed no visible onsite literature or POP materials for either TeleAid or embrace – ie. telematics is still not part of the core Mercedes message. To top of the lack of telematics enthusiasm at the dealership, the F&I exec said he didn’t see the need for telematic services since he owned an iPhone!) Because of the terms of its now concluded agreement with ATX, Mercedes cannot promote, sell or install the mbrace service for any Mercedes vehicles purchased between Nov. 16, 2008 and Nov. 16, 2009 until after Nov. 16, 2010. It is also for this reason that Mercedes is hampered in its marketing and promotion of mbrace, although various Mercedes Websites make clear that the only service currently endorsed by the company is mbrace. The irony in this battle for customer ownership between ATX and Mercedes is that the average Mercedes customer is likely not purchasing the vehicle for the telematics service. Little or no advertising activity is committed to conveying the telematics message. And, yet, with an estimated 400,000 subscribers paying upwards of $240 per year, the revenue stream is valuable to ATX, Hughes and Mercedes. Although unique, the ATX-Mercedes situation is analogous to the emerging automotive app store proposition. Nearly every OEM is scrambling to demonstrate or introduce an app store strategy of some kind following the perceived success of Ford’s Sync model. But no one is pondering the potential for an application to commandeer an OEM’s marketing, sales and telematics strategy as well as the user experience in the vehicle. Nokia’s Terminal Mode capability has raised similar questions of control of the user experience in the car. It is for this reason that Delphi introduced its own alternative to terminal mode which provides for a Delphi application certification process and OEM control of the HMI (http://bit.ly/94Mn1V). The broad industry perception of the Nokia solution, which reproduces the display of a mobile device into the vehicle and enables the use of on-board interfaces, is that it fundamentally alters the carefully crafted vehicle HMI. There is no doubt that no single company – Nokia, Delphi, RealVNC, Airbiquity, Continental, Parrot, etc. – will control the critical smartphone interface. But what is clear is that it has become a critical battleground Not surprisingly, Apple must be watching these developments and snickering. Apple’s iPhones have enabled a wide range of services, application and content delivery to drivers with marketing, revenue and HMI implications outside of the scope of the OEM’s plans. Customers enter dealer showrooms on a daily basis looking for cars with which their devices can connect – the classic case of the tale wagging the dog. The Mercedes-ATX situation provides a glimpse of a brave new world where car makers are simple pawns in a chess match controlled by carriers, handset makers, application developers and service providers all seeking to extract revenue from car owners. The good news is there is opportunity for those companies able to offer a secure smarthone interface that enables an OEM’s brand definition. OEMs have already taken steps to create certification procedures along with their own in-house development teams. Car makers will never have complete control over applications such as Internet radio or location-based services. But applications that tap into vehicle data and functions, such as remote door unlocking or vehicle starting, are areas that OEMs will demand control. Mercedes’ new telematics partner, Hughes, was once the ultimate embodiment of the external third party seeking to implant a revenue-generating module in consumer vehicles. The automotive industry rejected the Hughes model – particularly its hardware platform – opting instead, as in the case of Mercedes, to leverage the Hughes back-end infrastructure. What could help to make all parties play nicely together is revenue sharing. OEMs clearly want a cut from the stream of revenue flowing from off-board applications. The long-term winners will be those solution providers that provide for that OEM piece of the action and, most importantly, bullet-proof security. Hughes had the right idea: to create a platform in the vehicle for accessing revenue-generating content, services and applications. Little did Hughes know at its inception that the smartphone would replace its embedded module. OEMs know now that they must take the steps today to create the connections and define the relationships that will allow for mobile device connectivity while keeping the OEM in a secure user experience/revenue producing loop. Additional Insights: http://bit.ly/94Mn1V - Delphi Emerges at SAE with Answer to Nokia Terminal Mode - Lanctot - blog - Strategy Analytics http://bit.ly/b5W8ZS - Nokia and RIM Push Into Automotive as 'Apps' Competition Mounts - Joanne Blight - AMCS http://bit.ly/aIm4vK - Global Automotive OE Telematics Market 2008-2016 - Joanne Blight - AMCS

Reflecting Airbiquity’s rising star in the automotive telematics market, the company and partner Hitachi Automotive Systems, Ltd. have announced a partnership to provide telematics services for electric vehicles (EVs) globally. The announcement clearly positions Airbiquity – given its existing relationships with Toyota, Ford and OnStar – as the dominant telematics service provider of the future. The announcement emphasizes the global nature of the network and relationship between Hitachi Automotive and Airbiquity. The magnitude of this relationship is substantial, therefore, encompassing as it likely does, not only potentially the launch of the Leaf EV in North America but also perhaps lining up Airbiquity as a candidate to serve as the technology and infrastructure behind Renault-Nissan’s wider EV agenda including Europe, South America and Asia-Pacific. (Airbiquity had no comment on any potential relationship with Nissan or any other OEMs.) While Airbiquity is known for its so-called data over voice solution, the Leaf relationship is related to Airbiquity's Viaaq technology. Viaaq is serving as the back-end infrastructure for some Smart-grid implementations, paving the way for a next-generation role for Airbiquity in the telematics eco-system. The Airbiquity platform is well-suited to the task of supporting the needs of an electric vehicle to communicate vehicle location and battery charge. This relatively low bandwidth, data over voice, solution provides more than enough capacity both for battery-related information communication as well as safety and security and even eCall support. But the tie up with Hitachi is targeted at a broader IT infrastructure play. The only competing solution provider with an equivalent global footprint in telematics is WirelessCar, which already boasts relationships with Volvo Trucks, Volvo and BMW. In many ways, the WirelessCar solution represents a next generation answer to telematics service provision, emphasizing Internet protocol communications and voice-over-data technology. Where the global ambitions of Hitachi and Airbiquity may fall short is in extending the vehicle pipeline they currently offer to smart-grid applications and a deeper relationship with Nissan. The current point of leverge with Nissan derives from Hitachi Automotive's IT work in Japan in support of Nissan's telematics offerings in that country. The prospect of moving beyond "pipes to cars" and into the back-end systems represents a major leap for Airbiquity and puts the company in contention with IBM and other back-end integrators including Microsoft (Hohm) and Google. Unfortunately for Airbiquity, Ford has already announced its partnership with Microsoft for Smart-grid integration. OnStar has announced its intention to provide similar Smart-grid capabilities, but has not announced an IT partner. Hitachi and Airbiquity say their platform forms a central hub in the smart-grid network. They say the partnership paves the way for creating gateway infrastructures that can be linked with smart-grid systems. This will increase the footprint of both companies in the field of global connected vehicle services, and help automotive manufacturers worldwide quickly implement EV solutions, creating efficiencies and optimizing the costs of their service operations. Airbiquity has already made great progress in bringing the platform to a wider audience. The relationship with Hitachi also has implications for Ford Motor Company, for whom Hitachi/Clarion is a major manufacturing partner. Ford has implemented the Airbiquity platform as have OnStar and Toyota. All four OEMs have global ambitions for electric vehicles and telematics. Ford, for example, is expected to bring Sync to Europe soon. While several of these relationships are relatively new, it is fair to say that Airbiquity is poised to become the telematics service industry leader in the coming years. It is worth noting, however, how fleeting such leadership can be. It has been just three years since Continental acquired Motorola’s telematics business which at the time included contract manufacturing of the Ford Sync and OnStar modules. Within two years the OnStar business had shifted to LG Electronics and the Sync manufacturing relationship had shifted to Flextronics. But given its relationships with four of the largest car makers in the world, Airbiquity may have finally found  recipe for a more enduring position at the top of the industry. Further Insight: http://bit.ly/aIm4vK - Global Automotive OE Telematics Market 2008-2016 - Joanne Blight

The battle to dominate automotive connectivity has finally been taken on by Research in Motion (RIM) with the announced acquisition of Harman International's QNX Software Systems, a real-time operating system supplier focused on the automotive market. RIM had appeared to be sitting on the sidelines in recent months as fellow handset maker, Nokia, announced its terminal mode strategy and Apple grabbed multiple headlines for innovative in-vehicle connections from marketing partners. The acquisition of QNX gives RIM instant credibility as a leading automotive connectivity player and promises a spirited battle for automotive market share. The acquisition was announced this morning. The announcement says the two companies have reached an agreement for RIM to acquire QNX. The deal is subject to regulatory approval and is anticipated to close within 35-45 days. This strategic move is expected to further strengthen QNX's penetration in the automotive market and foster innovation for markets served by all parties. The move solves marketing challenges for both organizations. QNX's software is used in instrument clusters, head units and automotive Bluetooth solutions. The company had found tremendous success as part of Harman, which in recent years has come to dominate the luxury and near luxury segments of the automotive market. QNX is best known for its high-end infotainment software solutions used by Mercedes-Benz, Porsche, BMW, PSA, Hyundai and Chrysler, among other OEMs. As part of Harman, though, QNX's ability to break out into larger volume market segments was somewhat limited, and Microsoft had been winning most of the highest profile (and higher volume) automotive connectivity platforms including Fiat's Blue&Me, Ford's Sync and Kia's Uvo. At the same time, Apple was increasingly emerging as the automotive connectivity device supplier of choice for consumers and, by extension, OEMs as both the iPod and iPhone helped establish the iTunes App Store model as a compelling content, application and service delivery platform for the automotive market. It is true that some OEMs, such as Mercedes with its mbrace smartphone app, made allowances for Blackberry connectivity along with Apple's iPhone. But a growing number of OEMs, such as BMW, have been going out of their way to provide proprietary Apple connectors to enable the use of in-vehicle interfaces to access smartphone content. With few exceptions, Blackberry has been receiving no such support from OEMs and its devices remain enterprise-focused and ill-suited to automotive infotainment uses. While QNX's partnership with Alcatel-Lucent promises to target the complete spectrum of in-vehicle connectivity, a partnership with RIM opens up wider market opportunities for both QNX and RIM. The timing of the deal is ideal given that several OEMs participating in volume segments of the market have yet to launch branded, high-profile connectivity solutions. There is still time for a RIM-QNX collaboration capable of helping RIM vault into contention with both Nokia and Apple for automotive connectivity leadership. RIM also brings its unique global managed network added value to the proposition promising enhanced capabilities for in-vehicle applications that other handset suppliers are unable to match. It also presents a potential challenge to telematics service providers such as WirelessCar, Airbiquity and Telecommunications Systems. The importance of the in-vehicle connection has become increasingly important as consumers seek to use their smartphones in a growing variety of settings ranging from the home to the office and the car. QNX's existing position in the automotive market will instantly bring credibility to RIM's initiatives. It also introduces an entirely new value paradigm combining the virtues of device connectivity with the advantages of the managed network. The move is also a positive for Harman as it frees up the company to work with a wider range of software providers. Harman cannot afford to ignore the Genivi Alliance operating system, favored by its largest customer BMW. But Harman may also find it expedient to bid on Android- or Microsoft-based projects. Harman gains greater flexibility by decoupling itself from QNX. Of course, in reality the two companies will be virtually joined at the hip for the foreseeable future with a wide range of programs already underway and in the pipeline expected to extend for more than five years into the future. RIM, though, is likely the bigget winner. The company has been confronted with pressure to extend its operating system software to other industries such as netbooks, consumer electronics devices and, yes, automotive applications. The acquisition of QNX is an excellent door opener to these potential avenues of growth. QNX is in a similarly advantageous position to profit from wider market opportunities. Of course, while the move gives RIM a strong hand in contending for automotive connectivity opportunities it is likely that the merged company will continue to collaborate with Apple. QNX has a long history of supporting Apple in the automotive market including the most recent announcement of enhanced support for Apple iPods in the QNX Aviage Multimedia Suite.

With the statement: "Consumers want their devices to work together, so it is inevitable that single-vendor connected solutions will lose their interest," Pioneer's senior managing director, Akira Haeno has shoved a stake into the ground for the company's Platform for Aggregation of Internet Services (PAIS). Pioneer says this new content and services platform, set to arrive formally in mid-2010, will provide a seamless home/car/work experience for different content sources and services in conjunction with any connected device. The announcement opens doors to new market opportunities for Pioneer Electronics while also opening the company up to a new range of competitors that are already aggregating content and services. But Haeno's declaration is significant considering there are several connected devices that are otherwise closed to different content and service sources. A few that come to mind are devices from TomTom, Garmin, OnStar, and Apple. The ability to bridge all of these platforms will give Pioneer an advantage against rivals such as Airbiquity, Hughes Telematics or even UIEvolution. The PAIS platform presents open-standard interfaces for voice, navigation and maps, local search, social networking, music and radio and video and television, the company says. The interfaces enable the addition of new content and services without the added investment in proprietary solutions. Pioneer's solution is a direct challenge to the strategies of competing Tier Ones such as Visteon, Continental, and Denso among others, all of whom are offering to enable a wide range of applications. Even real-time operating system supplier QNX has had to race to deliver new application interfaces in support of its technology already deployed in 12+ vehicles. The Pioneer solution is based on Windows for Automotive and incorporates VoiceBox technology but is otherwise technology agnostic. The challenge for the content and service aggregators will be to demonstrate that their solutions are truly able to seamlessly and easily deploy new applications. Ford Motor Company and Mercedes-Benz are the first to reach the market with systems sufficiently flexible to deploy additional applications. Ford relies on smartphone connectivity, while Mercedes combines smartphone connectivity with a sophisticated back-end provided by Hughes Telematics. Ford has made a software development kit available, as has Continental for its Android-based systems. Mercedes has not released an SDK but company executives envision a day when Mercedes customers could create widgets or full applications. Competitors may see a tough choice in choosing to support or leverage the Pioneer platform, but the company is early enough to market to stake a credible claim and the solution will no doubt support Pioneer's own connected offerings.

Gewi, an 18-year-old German-based company with an off-the-shelf software solution for managing roadway information for DOTs, car makers and device manufacturers, has entered the U.S. market and introduced TIC3, the latest version of its software. The company is known for its TIC (Traveller Information Center) software platform used to collect, create, store, monitor, view, manage and distribute information such as traffic data from a wide range of sources. The company's solution is designed to be used as an out-of-box solution or as a server-based or hosted service delivery platform. The TIC platform is capable of producing outputs in any required format, including including RDS-TMC, TPEG, radio and TV traffic reports, PDA, and web. Gewi clients include Nokia, BMW, Navteq and Daimler. While the company's software is in use in more than 100 projects worldwide, it has most recently been manifesting itself in embedded and portable devices for processing traffic information. But the Gewi platform is content agnostic, so the next phase for Gewi will likely be the integration of data sources such as gasoline pricing, hotel reservations and anything else related to movement on a roadway. The flexibility of the Gewi platform is likely to put the company into competition with companies such as Airbiquity, Google and even Hughes Telematics. These potential competitors have already demonstrated the power of a flexible back end to enable their clients to deploy new content and applications. It is possible that companies might even choose to make use of Gewi's software. Whether or not OEMs turn to Gewi to process other types of non-traffic data, the company is well positioned to enable new traffic applications from companies such as TrafficLand, Aha Mobile, Waze and TrafficTalk. Whether the data source is traffic cameras or crowd-sourced traffic information, Gewi's software can help process and distribute the new data sources in an integrated manner, allowing customers to prioritize different data feeds depending on circumstances. Gewi may well find itself partnering with Tier One suppliers such as Visteon, Continental and Denso to enable the range of applications envisioned by these organizations (gas pricing, parking, movie times) as well as to enable application stores. Precisely how Gewi will fit into the changing automotive software landscape remains to be seen. The company's solutions are hardware and operating system agnostic and command a substantial market position in the critical traffic information space. The challenge for Gewi will be to see if it can build on this essential piece of the in-vehicle content portfolio to broaden its reach.

The single most important automotive product introduction at CES was MyFordTouch and the related software developer kit (SDK) and application programming interfaces. Competing OEMs and their suppliers are scrambling to respond to Ford's strategy which is only manifesting today what

has been in development for five years or more. In the end, Ford has created and demonstrated an ability to design and deploy new features and functions at an unheardof pace, unmatched in the industry.

 

Ford has finally solved the automotive industry solution development logjam and has further opened up its platform for the creation of even more new applications by third parties. This "long-tail" strategy has created a competitive environment where the OEM (or supplier) that enables or is capable of enabling the most applications will win. This does not mean that every car buyer uses every application, but it does mean that there will likely be at least a few applications that every driver will want to try - hence the long tail. It also means great aftermarket opportunities, marketing angles, and customer touch opportunities for Ford and its dealer network - "come down and get your free apps!"

The Ford announcement greatly overshadowed Kia's Uvo launch, which represented a significant advance on the original Ford Sync and is based on an updated Microsoft MS Auto platform.  Similarly, the OnStar Volt smartphone integration announcement is a mere one-off feature introduction for a single expensive vehicle due much later in 2010. Though the vehicle charge status application is necessary for the electric vehicle segment, t is not a mass market concept and it was originally shown a year ago. It does show OnStar integrating smartphone funtionality for the first time, but it is not the harbinger of an open platform from OnStar.

 

The mbrace announcement from Mercedes late last year was more important because Mercedes will be launching additional smartphone applications thanks to the Hughes Telematics back-end architecture. OnStar lacks the flexibility to deploy a wide range of applications in the same manner as Mercedes.

The influence of Ford's architectural decisions is reflected in the movement of Tier Ones to enable a wide range of applications across multiple platforms and operating systems. Some examples include QNX's ConnectedCar, Continental's AutoLinQ, Airbiquity's aqLink, Visteon's connectivity platform and Denso's BlueHarmony. Continental's choice of the Android operating system, in particular, reflects the objective of opening the automotive environment to a wider software developer community. Continental, in particular, announced plans for its own Androi-based SDK for Q1 and an application store due in the second half of 2010.

 

Even telematics service providers - Airbiquity, Cross Country/ATX, Hughes, and WirelessCar - are seeking to enable and support a much wider range of applications ranging from news, weather and sports content delivery to traffic camera display and Internet radio. And social networking applications such as Twitter, FaceBook and myspace are being enabled for embedded in-vehicle use as well.

OEMs will do well to choose hardware, software, content, operating system and service providers that are capable of rapid deployment of voice and connectivity-enabled features and functions in a safe manner via a controlled vetting process. Ford is showing the way, but there will be multiple paths to this objective.