Last week’s Los Angeles Auto Show highlighted the rising influence of Apple’s iPad and the contention for in-vehicle display space. While Apple’s iPod sounded the death knell of the automotive CD drive and the iPhone introduced the concept of the unlimited data plan and Internet radio to the car, the iPad is spreading the gospel of the tablet PC as thin client suitable to automotive head unit configuration, rearseat entertainment platform or all-purpose remote control. In a normally slow-moving industry the iPad’s influence has been immediate and unavoidable.

At the auto show in Los Angeles, Audi announced its iPad application......Please register or log-in to read the complete report

http://www.strategyanalytics.com/default.aspx?mod=navigationheader&a0=218

Nuance’s Automotive Summit, which took place in Detroit last week, highlighted the leadership position Nuance and one of its most prominent customers, Ford Motor Company, now command in the area of automotive interfaces. While battles may continue to be fought over voice, touch, haptic, and other in-vehicle interfaces, these two companies are positioned at the vortex of the debate leading the charge to develop and deliver safe vehicle interfaces and redefining the automotive branding process. The assumption of this leadership mantle occurs at a time when car makers and their suppliers have been running for cover under heavy fire from regulatory powers in Washington, DC. And the Feds have taken on the added support of lobbying groups and some research organizations. The Federal government’s regulatory arm has stepped into the roadway seeking – like a speed-gun wielding traffic officer – to impede the industry’s headlong advance toward connectivity and smartphone integration in cars. Car makers and the supplier community, by and large, have taken one of two courses. Most have remained silent on the issue of the day – driver distraction – hoping it will either go away or that some white knight, such as the Alliance for Automobile Manufacturers or some other group will calm the waters for them. Others, such as General Motors’ OnStar division, Volkswagen, and QNX have chosen to hit the accelerator. In recent weeks, OnStar has announced its plans to enable Facebook connectivity in the car. Volkswagen and QNX have posted YouTube videos showing early executions of terminal mode smartphone connectivity. These videos show all forms of smartphone images displayed in-dash with no context – ie. no discrimination between what will and won’t be accessible when the vehicle is in motion. In contrast, Ford has been reaching out to regulatory authorities on multiple fronts. The very same week OnStar was announcing Facebook connectivity, Ford representatives – together with Nuance executives – were meeting on Capitol Hill in Washington with legislators explaining the state of the art in voice-based in-vehicle interfaces. Prior to this outreach effort, which is ongoing for both legislators and regulators within the Department of Transportation’s National Highway Traffic Safety Administration, Ford also responded to complaints from the DOT’s now-famous director, Ray LaHood, and altered some of its advertising imaging and messaging. This was LaHood’s first missile fired across the bow of Ford’s Sync interface. The advertising messages are critical. Both Ford and OnStar are running some of the most highly visible television ad campaigns in the U.S. showing off their in-vehicle systems – at a time when both firms are fighting their way out of the steep sales decline of 2009. It is absolutely essential that both companies communicate effectively with so much unwanted attention being focused on these systems and with important sales and market share on the line. OnStar bears the added burden of embedded telematics industry leadership. No other auto maker has taken the embedded telematics approach as far as OnStar which now, after 15 years, has nearly six million subscribers. But with diminished vehicle sales and a virtually unchanged renewal rate, OnStar is facing a potential erosion of its subscriber base. In spite of all it has done to offer compelling solutions to consumers, the company now feels pressure to do more to boost its subscription renewal rates. The company is also swimming against a strong demographic current as GM’s historical customer base has aged. The company is clearly looking to OnStar to not only maintain its previous status as a profitable division by maintaining and adding to its existing subscriber base, but also as a potential source of demographic stimulus to reach out to younger car buyers. GM is not alone in reaching out to younger buyers. Almost every car maker is in a perennial campaign to tap into the next generation of car buyers. And with smartphone purchasing demographics corresponding with this target market, the smartphone connectivity proposition has become essential. (GM and OnStar are somewhat limited by the current vehicle offering which lacks for a robust line-up of small cars targeted toward a younger demographic.) The advertising targets can hardly be missed in the existing television spots which show young people interacting with OnStar systems to obtain location or vehicle information. (A minor pet peeve of this analyst is that it seems that not all these young people, even when they are in the front seat, are seatbelted in the ads – but company executives insist they are all safely secured.) The OnStar television campaign dovetails nicely with GM’s parallel social networking marketing initiatives on Facebook, Twitter and other Web-based communication channels. The smartphone application for controlling vehicle functions and accessing vehicle data on the Chevrolet Volt is another manifestation of these efforts. What is lost in this campaign, though, is the rock solid safety and security message that brought OnStar to this industry leadership position in the first place. Ford has also been youth-oriented in its embrace of connectivity technology. Ford’s ads emphasize the safe use of technology in cars using voice interfacing technology. Watching these ads as a participant in the industry is mesmerizing given the degree of focus on the human machine interface in the car. (While this analyst would prefer the driver not touch the display while the vehicle is in motion, Ford has made clear its adherence to AAM guidelines and the limitations of this functionality in a moving vehicle.) What OnStar and Ford both realize is the need to reach out to younger car buyers. The key motivator here is the need to provide for smartphone connectivity, both for safety and functionality. Younger smartphone, and car, buyers are primary targets for location-aware applications ranging from traffic and navigation to social networking, according to Strategy Analytics research. The drive to connect smartphones is behind the enthusiasm for Nokia’s Terminal Mode initiative along with Apple’s iPod Out, Delphi’s D-Connect, Ford’s AppLink and similar solutions. But only Ford has stepped to the forefront with a vision and implementation of a walled garden-type approach to application deployment. There is a recognition in the industry of the appeal of both smartphone connectivity and application deployment. Ford talks about the beamed in, brought in and built-in strategies for delivering content, applications and services, but the underlying philosophy is control. The power of the Ford solution lies in five value propositions: Distraction mitigation: The voice-based interface minimizes eyes-off-the road time. Demographic targeting: The smartphone interface appeals to social networking young people. Future proofing: The Microsoft-based platform allows for application development and deployment thereby enhancing the value of the solution over the life of the vehicle. Subscription anxiety: The connectivity solution allows the consumer to defer the subscription decision and places the burden of data transport on the consumer’s existing wireless subscription. Branded HMI statement: Ford IS Sync. Ford IS MyFord Touch. The interface has become the brand. A new era in the automotive industry has arrived. At last week’s Automotive Summit, Nuance emphasized all of these points. Whether the solution being shown was the company’s touchpad character recognition, hybrid on-board/off-board speech recognition, enhanced echo cancellation/noise reduction, or focused search all were targeted at reducing distraction while providing a branding pallet for car makers and their suppliers. Presenters at the event, including Nuance executives and partners, pointed to research demonstrating the efficacy of voice and touch interfaces for specific types of tasks. Presenters raised questions regarding interfaces such as BMW’s i-Drive and touch screens generally, favoring voice and console-mounted touchpads (ie. the Audi A8). The consensus opinion appeared to be that touchscreens will survive, thanks in part to Ford’s success in proving the value of the solution. On the other hand, i-Drive-like interfaces will likely continue to come under fire as what one executive described as a “linear keyboard.” Now more than ever, though, rigorous research is being applied to weigh critical HMI decisions and eyes off the road time is more than ever a deciding factor. Conclusions: The next step in the process of realizing the potential of smartphone integration is enabling application downloads. Several solutions have been proposed including: Direct handset display: Nokia Terminal Mode approach. Walled garden: Ford application deployment approach. Application validation: Delphi et. al. provide application validation. Single application: Handset application controlling access to all apps. App store validation: Apple, Blackberry et. al. provide application validation. Carrier validation: See above. What is likely to emerge is a hybrid of on-board/off-board application control shared between the vehicle and the mobile device within the context of an OEM’s walled garden. When available, server resources will assist with application functionality such as search or streaming data or content. But regardless of the source of data or service, the entire solution on-board and off-board will be encompassed by the OEM’s walled garden. The vehicle and data security associated with OEM control will increasingly be non-negotiable. Challenges to this ecosystem are already emerging as application developer candidates for the Ford platform are expressing frustration with the process of putting the Ford software developer kit to work. Ford is seen as slow to respond to developer needs, a problem that is not expected to be resolved soon. OEMs will never be able to move at developer speeds especially where vehicle safety, security and integrity are at stake. So, new voice-based interfaces and Bluetooth wireless connections have enabled a new branding proposition in the industry coinciding with growing demand for safe mobile phone connections, a youth-oriented demographic outreach (particularly in compact car segments), and the need to future proof cars to keep up with consumer electronics market advances. More than ever cars are defined by their human machine connections. Ford and Nuance have much for which to be thankful and many of those thanks ought to be directed to Ray LaHood in the Department of Transportation. Much as most industry executives are want to complain and criticize the DOT for its single-minded anti-distracted driving campaign (when drunk drivers are actually responsible for more damage), the effort has focused consumers on their risky behaviors, opened the door to creative solutions, and stimulated demand following the industry’s worst ever downturn. Additional insight: http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://tinyurl.com/34hidb5 - Smartphone Market Evolution and the Automotive Opportunity Implications - Mark Fitzgerald - Automotive Multimedia and Communications Service http://tinyurl.com/2qx88eo - Automotive Connectivity: Beyond Bluetooth Solutions - Mark Fitzgerald - Automotive Multimedia and Communications Service 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

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

IntelliDrive, the USDOT program intended to create intelligent highways, stands at the crossroads of major funding and deployment decisions but may be overlooking a solution capable of realizing the smart roadways dream in the twinkling of an eye – relative to current timelines. To do so, though, may mean setting aside, for now 5.9GHz DSRC technology in favor of a technology most recently associated with bad driving behavior. Smartphones and the cellular network hold the key to the deployment of wireless systems and services capable of revolutionizing automotive safety and achieving the dream of safe connected highway systems. This goal can be achieved through opt-in solutions that provide for the sharing of device data and could serve as a transitional technology between existing systems and the DSRC technologies not likely to be deployed for another 5-10 years. Alternatively, the government could step in with its regulatory and legislative powers and mandate the provisioning of cellular data transmissions for connected vehicle communications. (Such a scheme was described to me by an ITS America member at the recent Distracted Driving event in Washington, DC. The executive asked to remain anonymous because his proposal may actually be at odds with the short-term interests of his employer.) So cellular technology, which is already part of the IntelliDrive vision along with DSRC and Wi-Fi, can be used as a transitional alternative to DSRC on a voluntary or involuntary basis. (DSRC is universally preferred for safety applications because of its low lacency.) On the involuntary side, concept is to require smartphones to share their location data and to be used for the reception of targeted emergency or road sign messages. The proposition involves a monthly charge to the subscriber of approximately 10 cents – not unlike the current eight-cent charge for mandated 911 calling on mobile phones – to cover the cost of the first 500Kb of monthly data use on the phone for ITS purposes. (It is worth noting as an aside that Wi-Fi technology has already been pioneered – notably by Dash Navigation – as a V2V technology for communicating highway and traffic conditions. With Wi-Fi technology proliferating on smartphones it will not be long before this same capability emerges in the handset space.) Confronted with this opportunity opponents are quick to note the privacy and liability concerns associated with cellular (and Wi-Fi) technology and the need for, at the very least, an opt in mechanism. The bottom line is that these concerns are not insurmountable and a mandated system is feasible. Opening up a data channel on all phones for location data and automatic crash notifications (transmit) and in-vehicle messaging (receive) will open the door to wide adoption of telematics technology and achieve the goal of connecting vehicles to the infrastructure, in-vehicle messaging and to emergency services. The business models to support the service rationale are not unlike those for RDS-TMC, 911 and 511 services, which means this solution is designed to be low cost but still requires some third party support from private companies. The barriers to be overcome are numerous and include – inter-carrier cooperation, the creation of a data clearinghouse for processing and filtering data, and the creation of a broadcast mechanism most likely via multiple private entities. Achieving comprehensive deployment on mobile phones will also require federal legislative and regulatory action. Because the mobile phone-based system will pay for itself while also taking advantage of ubiquitous handset technology and the cellular network it has massive advantages over the proposed DSRC-based system. The 5.9GHz DSRC technology will require BOTH auto maker support for an added module and antenna AND a huge deployment of transmitters and receivers along roadsides and the corresponding data processing infrastructure. DSRC is inevitable, but why must the driving public wait for a solution that will save lives. If the mandated approach is too onerous, then it is more or less left to private enterprise to implement their own prove networks along the lines of Waze and the CloudMade communities which are multiplying around the world. These emerging networks have the capability to bring these services to market almost immediately. More importantly the proliferation of OBDII connections (admittedly using wireless communication protocols claimed by Hughes Telematics) means smartphones are also capable of communicating vehicle sensor and camera data, further enhancing the value of the proposed systems. The proliferation of low-cost sensor and camera systems means there is a wealth of available inputs such a system can put to work to enhance safety, reduce congestion and hazardous driving conditions, and improve the overall driving experience. In fact, the proliferation of smartphones and inexpensive cameras and sensors are rapidly combining to mitigate the demand for the IntelliDrive DSRC vision. Consumers and industry representatives may discover after the implementation of a smartphone based network sharing vehicle and sensor data and communicating traffic conditions, the incremental enhancement of DSRC deployment is unnecessary. The concept also suggests that those car makers with embedded systems should be able to gain an advantage from having more direct and complete control of the user experience. And those car makers with existing probe networks will gain the first-mover advantage of having a larger volume of inputs to process for the benefit of their subscribers. Facilitating the implementation of this vision will be the rapid development and deployment of handset connectivity technology. From terminal mode to Delphi’s D-Connect and Apple’s iPod out, the technology is rapidly falling into place – alongside OBDII communications and sensor proliferation to facilitate the communication of traffic and other urgent messages to primary and secondary displays in the car. In fact, the mobile phone industry is facing the prospect of a handset FM receiver mandate that will create yet another pathway for communicating information into the vehicle either via the on-board radio or via the mobile phone. The handset FM mandate is intended mainly for the transmission of emergency alerts, but will also enable regular FM transmissions. Conclusion: The concept of using mobile phones and cellular technology to supplant or serve as a transitional solution to the proposed DSRC network for V2X communications is radical and lacks an advocate as a mandate but is already emerging as a voluntary solution in the form of discreet smartphone applications and related user communities. The mandate path is likely to die since the very companies that most recognize its value – those with currently deployed embedded telematics systems  - have the most to lose from its implementation. Other market participants such as content and applications providers and even telecommunications carriers may also be opposed to a mandated proposition as it threatens existing business models and relationships. But all parties are beginning to recognize the mobile phone as the key to solving multiple safety challenges in the vehicle. Whether anticipating hazardous intersections (Global Mobile Alert) or sharing probe data (Waze, TrafficTalk) the smartphone has established its credentials as a safety device. The phone also benefits from the support of a rich developer community rapidly moving smartphone technology into realms not previously foreseen. 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

When IBM had the personal computer industry in a headlock, the company was able to freeze customers’ plans to purchase competing PCs by releasing fear, uncertainty and doubt (FUD) in the marketplace. It achieved this goal by announcing its own plans for new products 6-12 months in advance. Sirius XM used its earnings call earlier this month for the same purpose, announcing plans for Satellite Radio 2.0 for Q4 2011. The difference, of course, is that Sirius XM does not control the market for broadcast radio content. In fact, the company is facing competitive pressures from both terrestrial and Internet-based sources. Further diminishing the Satellite Radio 2.0 gambit, is the declining portion of Sirius XM’s revenue and unit volume coming from retail, aftermarket devices. (According to estimates from the Consumer Electronics Association, satellite radio sales to dealers fell to $64M in 2009, with declines forecasted through 2013.) Sirius XM executives stated in the Q2 earnings call plans for the launch of the XM 5 satellite in October and the launch of Sirius 6 in Q4 2011. Also due to arrive in Q4 2011 is the newly touted Satellite Radio 2.0. Sirius XM execs said that SR 2.0 will offer consumers greater capacity and more functionality – both enhancements are intended to stimulate average revenue per user (ARPU). These same execs noted that no additional satellite launches will occur for several years, setting the stage for improved cashflow and profitability. In addition to the satellite and service launches late next year, the Federal Communications Commission (FCC) limitations on Sirius XM subscriptions will end in August 2011. All of these indicators are positive for Sirius XM except for the fact that competition has intensified. With the FCC limitations removed, Sirius XM will have a much broader scope of subscription options given the 150+ range of stations to choose from. SR 2.0 promises even more ARPU upside with added channel content and, as Sirius XM execs clearly indicated in their earnings call, a wider use of data for telematics and other applications. It is interesting to hear Sirius XM getting excited about telematics as a potential ARPU contributor, and it is an indication that the company is moving in the right direction and recognizes the shortcomings of the existing service. It is also, no doubt, a response to competitive pressures from HD Radio and Internet radio. The question is whether or not this awakening at Sirius XM is coming too late to matter. HD Radio technology is proliferating as more OEMs adopt the technology and more radio stations join the burgeoning ranks of participating broadcasters. HD Radio is appealing since it operates over the same FM frequencies, though requiring some additional hardware, and it is free. At the same time, more and more OEMs are lining up music service solutions such as Pandora along with Internet radio - via smartphone connectivity in the short-term and embedded solutions in the long run. The success of Pandora is a testament to that company’s ability to deliver a solution that is able to integrate seamlessly with automotive systems. Competitor Slacker’s content-caching music service is not less compelling, but OEMs have not found integration to be nearly as simple. Still, the tide that is lifting Pandora's boat will likely benefit other music services and Internet radio providers, such as ClearChannel's IHeartRadio. The timing and manner of Sirius XM's announcement of Satellite Radio 2.0 suggests that Sirius XM is attempting to prevent OEM defections to HD Radio, music service solutions or Internet radio. OEMs are in the process of making decisions today that will impact vehicle platforms four and five years hence. Sirius XM executives refused to explain exactly what SR 2.0 will be. But given the short launch window, it will no doubt arrive in the retail aftermarket first. The company is currently briefing OEMs regarding its confidential plans. Sirius XM has already lost momentum in the automotive market. Car makers (and aftermarket system makers) have shifted toward offering satellite radio as an option rather than as a standard feature. And both Sirius XM and its OEM customers are using subscription conversion data to determine which cars should and should not be offered with the service. This means that even though Sirius XM has been able to show subscriber gains in its past two quarters, rapid growth is a thing of the past and pales by comparison to the subscriber numbers of a Pandora or Slacker. On the earnings call Sirius XM execs said that availability of satellite radio technology in cars was at approximately 60% of car models with a paid subscription conversion rate of 47%. The company currently claims more than 19.5M subscribers and anticipates somewhat more than 20M by the end of the year. OEMs say that if it weren’t for their multi-year agreements with Sirius XM they might have walked away from the relationship a long time ago. (Several OEMs are also shareholders in Sirius XM.) This sour sentiment does not bode well for Sirius XM moving away from the subsidy model it maintains in the automotive market. This subsidy model also means that the cost of acquiring new subscribers – given the decline of retail satellite radio sales – will continue to rise as the balance between retail and OEM sales continues to shift toward subsidized OEM subs. Further clouding the otherwise rosy long-term outlook for Sirius XM is the mandated switchover to XM. OEMs currently offering Sirius satellite radio service have been told they will have to switch to XM by 2016. The honeymoon for Sirius XM is clearly over. The question now is whether SR 2.0 can save the store. Satellite Radio 2.0 There are three areas where SR 2.0 could help Sirius XM hold onto its existing subscribers while attracting new subscribers. Here are Strategy Analytics’ thoughts on what SR 2.0 will look like: Audio – Sirius XM faces its biggest audio challenge from Internet radio and music services generally and Pandora in particular. All of these services are paid and Internet radio has suffered a blow from the onset of tiered data plans limiting the use of such services. Nevertheless, OEMs have embraced Internet radio because of the powerful consumer demand and awareness – several times the user base of satellite radio and widely and easily accessed on multiple platforms without any additional hardware. The only solution Sirius XM can offer is more or better-targeted audio channels. Ironically, the more channels Sirius XM adds the more difficult it is to use. Expect Sirius XM to update its content search and save capabilities to better replicate an Internet radio experience. Sirius XM can also be expected to enhance its iPhone and iPod integration with song-tagging not unlike HD Radio’s capabilities. Expect Sirius XM to add additional capabilities, along the lines of what iBiquity Digital has been showing in HD Radio demos for the past 2-3 years. Enhancements are likely to include more artist, track, album information; album art; song duration; maybe even reviews or other metadata from suppliers such as Gracenote or Rovi. Traffic – For some reason Sirius’ traffic data services are not comparable to offerings from direct competitors such as ClearChannel’s RDS-TMC. Side-by-side comparisons conducted by this analyst of both XM NavTraffic and the Sirius traffic service have found them to be lacking in comparison to both PND and embedded solutions. The only good news for Sirius is that RDS-TMC is only offered standard by half a dozen car makers. Still, with the proliferation of HD Radio technology, Sirius will soon be up against TPEG traffic data content, putting it further behind the eight ball. Sirius must bring its traffic data services up to a competitive grade. Strangely, the company does not even use the same flow and incident sourcing between its data (Traffic.com) and broadcast traffic services (Westwood One). Expect Sirius XM to do something about the shortcomings in its traffic reporting. OEMs are definitely making comparisons between HD Radio and satellite radio traffic services and making critical long-term decisions. Expect major traffic data improvements in SR 2.0 including the implementation of a standard traffic database system – such as Gewi’s TIC 3 – and/or TPEG traffic information services. Only time will tell if the changes will be enough or will occur soon enough to preserve strong OEM relationships. Even more ominous for Sirius XM is the fact that more and more OEMs are building the cost of traffic into the cost of their vehicles. The $3.99/month traffic subscription for Sirius XM traffic data will not survive this process of commoditization - especially if the data quality is not competitive. Data – Sirius XM’s Travel Link service, offered by Ford, is an impressive voice-driven offering of content such as gas pricing, ski conditions, news, weather, and sports. Expect Sirius XM to bring this offering up to speed with a greater variety of content delivered with improved graphics. The competition here comes mainly in the form of smartphone solutions, so the challenge to compete is steep. Can Sirius XM breathe life into its retail aftermarket position with SR 2.0? Can the company preserve its standing with OEMs, which are more concerned with reducing costs and complexity? For now, Sirius XM is on a path to continue to build its subscriber base, enhance its service and reduce its operating expenses. But the future of the company hinges on whether car makers will continue to tune in beyond 2016. Further insight: http://tinyurl.com/2bz9zq6 - Google, Nokia and New Entrant Positioning in Automotive Infotainment - Lanctot – Automotive Multimedia and Communications Service 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

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 recent Strategy Analytics report Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority Jul-10 provides an assessment of the automotive digital radio market outlook for Europe, and identifies some key issues that need to be addressed if automotive opportunities are to be realised. Digital radio is set to become a yet another feature within automotive multimedia and infotainment `mix'.  This will increasingly introduce product complexity for automotive companies as they plan for embedded infotainment systems and vehicle-device interfaced product solutions.  Despite the challenges of planning for the ‘mix’, there will be major opportunities to leverage and differentiate automotive multimedia solutions from device based products, and a device based multimedia experience. Top of the list of differentiating features that should be a key focus in automotive planning are HMI and safety of use, screens and displays, and cockpit attractiveness, quality of sound, and integration with other automotive centric features, such as air conditioning, heating and ventilation. Smartphones and portable devices, such as iPods, are also changing the multimedia competitive landscape, in terms of consumer expectations of the user interface and the user experience.  As the gap continues to widen between a consumer’s multimedia experience on a device versus his/her experience in the vehicle, there is a increasing need for automotive companies to get to grips with HMI issues and plan products for entry level, mainstream and high end vehicles. Some automotive companies can be applauded for their focus on the massive HMI challenge in an increasingly dynamic multimedia market, for example,- MyFord Touch Provides Mixed Bag of Changes to Speech Interface Jul-10  But many other automotive companies will be left in poor competitive positions unless they embrace the HMI planning complexities more fully. Strategy Analytics will be presenting a keynote paper at the IQPC international conference Automotive Cockpit HMI (20 - 22 September, 2010, Steigenberger Graf Zeppelin, Stuttgart), and invites you to meet with our automotive analyst. The Strategy Analytics paper “Future HMI Trends and Challenges: The Automotive Cockpit of the Future” will cover:

• Assessing the latest technology challenges and trends
• Consumer expectations in different market segments
• Outlook on the development of HMI design

Jo 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.

Lately industry observers have been predicting the arrival of the automotive app store along the lines of the Apple model. The predictions seem to suggest that this is a simple and obvious proposition with a single business model and development path. In fact, it is a complex and evolving proposition with no single solution or magic bullet. Ford Motor Company and Mercedes-Benz have already learned how challenging this proposition really is. Both organizations have successfully developed – in-house – their own applications – an expensive, labor intensive, and time consuming proposition. But application development is only part of the challenge. Here is the complete list: 1.         Platform selection – Which handsets will be supported? Which carriers will be partners? Which operating systems (versions!) will be adopted? 2.         App store selection – Which app-store(s) will be supported or used? Carrier? Handset maker? Third-party? Own branded? 3.         Pricing model – Free? Free for limited time? Free with premium add-ons? Free with paid premium version? Subscription (monthly, annual, lifetime)? Pay per use? Sponsored or ad-supported? 4.         Application acquisition – Download? Activate on-board app? Access cloud-based service? Access device-based app? Dealer install? 5.         Handling of upates – Automatic wireless? Customer self-service with USB drive or direct connection of handset? Dealer? Recently announcing the sale of its second million cars equipped with Sync, Ford appears to be having the most success, early on, in the automotive app business. Ford appears to prefer to distribute its Sync application directly from its www.syncmyride.com Website. This makes sense since some of the applications, such as 911 Assist, require a dealer installation. The Website also provides detailed phone and media device compatibility information along with software upgrade information, application demos and FAQs. Most of the Sync services are available for free for the first three years, and some require a data plan. The data plan requirement reflects an industry-wide inclination to leave data charges to the customer. The provision of free applications to Ford customers reflects a market decision to leverage Sync to sell more Fords – a game plan torn straight out of Apple’s playbook. Based on Strategy Analytics analysis of the Apple business model, the app store is positioned either as a loss-leader or breakeven proposition. The primary purpose of the Apple app store is to sell more iPhones, iPods, iTouches and, now, iPads. Similarly, Sync is intended to sell Fords and, judging from the fact that 2M Fords have been sold with Sync the strategy appears to have traction with consumers. The Sync proposition also has traction with dealers and fits well with the existing Sirius Travel Link services both of which are enabled by Nuance speech recognition. Both offer an effective customer demo. At Mercedes-Benz, the mobile application is called mbrace, which is also the name of the company’s new telematics service, which replaces Tele Aid. While Ford’s Bluetooth-enabled application works with most Bluetooth-enabled phones, mbrace is compatible with a narrow list of iPhones (OS 2.2.1 or later) and Blackberries (4.5 or later) including GPS models for customers that want to access location-aware applications. The mbrace application can be obtained from Apple’s iTunes store or Blackberry App World and the only carriers that are supported today are AT&T and Verizon Wireless. The mbrace service is $240/year or $480/year (@$20/month) for mbrace Plus which includes concierge and other location-aware services. Of course, Mercedes could always vary this pricing depending on its marketing objectives. Mercedes has not yet positioned mbrace as a service offering designed to sell more cars. The immediate purpose of mbrace was to replace the existing telematics service provider and create a mobile phone integration platform. And since Mercedes is also focused on providing premium telematics services first, as opposed to simple infotainment tasks, the company does recommend that the customer have an unlimited data plan. This is not a big deal considering most smartphone customers are required to purchase data plans. Like Ford, Mercedes is interested in rolling out additional applications from third parties on a regular basis. Ford has gotten a head start on this effort with the release of its software developer kit. For now, Mercedes has been content to continue to do most of its development in house. The latest application from Mercedes, also for the iPhone, is intended solely for the Smart vehicle line and includes a full suite of infotainment applications. There is no announced plan to bring this application, which works with a separately purchased cradle, to Mercedes-branded vehicles. The real challenge for car makers is that the mobile market is a moving target. Market leadership between handset makers, operating system suppliers and carriers is a dynamic environment ruled by supplier innovation and consumer preferences. Ford’s choice of a combined Bluetooth and USB interface to enable Sync has made it easier to keep pace with the changing array of available phones. But testing for compatibility remains a substantial undertaking. (The current Ford Sync compatibility chart is nine pages long.) Apple’s influence on this market has been to add a couple of layers of complexity or, to be charitable, opportunity. By opening up its app store to third-party developers, Apple signaled a key turning point in the app store model. Developers are now able to choose the platforms they want to develop for based on criteria such as size of addressable market, amount of revenue share, variety of available revenue models, and ease of doing business. With its rapid rate of customer acquisition and the flexibility of its application revenue models, Apple has raced ahead of competing app stores in attracting application developers and applications. (Apple has even gone so far as to provide a tool for developers to target pricing tiers to specific date triggers: http://bit.ly/a4ETQw.) Strategy Analytics has estimates of revenue shares (available to clients) with the caveat that these percentages vary and change. Ford’s decision to offer Sync for free for an extended period of time along with additional free applications reflects the desire to build an attractive addressable market. While handset makers such as Nokia (with its Ovi store) and carriers can target massive user populations, car makers are more challenged in rapidly building a sufficiently large user community. Ford has a significant jump on competitors with its 2M unit addressable market. App stores are coming to the automotive market, but the path will be a crooked and expensive one. There is no single model that will work for every player. Ford and Mercedes are pursuing similar paths with completely different approaches. Every car maker will have to find its own way. Two things are clear: The investment in an automotive application store is a multimillion dollar proposition involving significant and ongoing costs in development, support and marketing. The potential upside, though, is the opportunity to redefine a brand and increase sales and market share. Ford’s apparent success to date is a demonstration that at least one version of the Apple model can work in the automotive market. Further Insights: Wireless Media Strategies: How Apple Changed the Market for Mobile Applications – David MacQueen – http://bit.ly/9KSuVL Automotive Bluetooth: Profile Strategy Key to Infotainment Success – Mark Fitzgerald – http://bit.ly/9qEXbU CES 2010: The Arrival of Converged Automotive Multimedia Products – John Canali – http://bit.ly/9gp4yo

SYNC sells. Ford’s SYNC connectivity and infotainment system, built on the Microsoft Windows Embedded Automotive software platform, has reached the 2 million unit sales mark 10 months after Ford delivered its 1-millionth SYNC-equipped vehicle in 2009, the first SYNC systems were delivered in fall 2007. SYNC’s evolution is paralleling the consumer’s evolution in a connected world. Ford’s latest version of SYNC that debuted at CES 2010 presented a solution dubbed MyFord Touch, which truly shows the convergence of consumer electronics and the automobile. As consumers interact with the web and media devices with more regularity each year, Ford seeks to help the consumers replicate this behavior in the car. Examples include:

• Consumers have apps stores for their smartphone; Ford opened a market for car apps.
• Consumers have come to value internet radio, twitter, and social networking sites; Ford has worked with Pandora, Twitter, and Stitcher to make automotive applications.
• Consumers have become accustomed to being able to record and rewind live TV, Ford had come up with a solution where Sirius XM can be recorded and played back.
• Consumers are used to 5 way controls popular on iPods and numerous other consumer devices; Ford has employed similar technologies in its HMI.
• Consumers often look up driving directions while in front of a computer, SYNC users can now send MapQuest directions to their cars and the SYNC system will navigate the driver to their destination.
• Consumers like shopping at iTunes, users can now tag songs for purchase through HD Radio and the SYNC system.

SYNC adds value to vehicles. Ford data analysis indicates that SYNC-equipped models of the 2008 Focus are worth more than those without SYNC. After one year in service, the SYNC-equipped models sell for a $240 premium on average. This premium over a non-SYNC-equipped vehicle indicates consumer demand for SYNC is real. Ford has delivered the message to consumers that SYNC is a desirable product that makes the in-vehicle experience better and is worth a premium price. The upgrades to SYNC for the 2010 model year including the addition of MyFord Touch, Pandora, Twitter and Stitcher apps, iTunes tagging, mobile Wi-Fi hotspot capability, MapQuest directions and other features and applications indicate that Ford intends to protect its lead in the connected infotainment market despite competition from most every other vehicle OEM developing or offering competing solutions. http://media.ford.com/article_display.cfm?article_id=32262