GM’s Chevy Volt is the best thing to happen to electric vehicles since the Prius hybrid. In fact, it would be even bigger than the Prius if more than 10,000 were being made next year. The car represents revolutionary technology. It makes electric vehicles palatable to the mass consumer – at least conceptually if not based on the $41,000 price tag. The electric vehicle business was in desperate need of a car like the Volt that could take the worry out of driving electric. By adding the internal combustion engine (ICE) to drive the electric motors when the vehicle’s on-board battery is exhausted the Volt offers an acceptable range for any kind of driving requirement.

The car also features cutting edge componentry with a low-weight, low-energy stereo system from Bose, an OnStar telematics system (with five years of free service) with an iPhone app, and a multiple-screen vehicle diagnostic experience. The car looks and feels and drives like the future. But the simplicity of the Volt concept belies the complexity of the electric vehicle business and therein lies some long-term concern for the viability of any alternative fuel vehicles. A big contributor to the complexity of the EV picture has been the Regulatory Authorities.

My kingdom for a PZEV

The regulatory authorities are well-meaning bureaucrats who are trying to stimulate demand with financial incentives for specific types of cars while providing guidance to the auto maker community regarding which kinds of vehicles will be acceptable to meet fleet emission standards. These efforts have produced an alphabet soup of vehicle categories and a maze of definitions that have been further confounded by the automotive press. From the regulatory authorities we were originally given (see Strategy Analytics reports referenced below for detailed definitions and history):

·        TLEV – Transitional Low Emission Vehicle

·        LEV – Low Emission Vehicle

·        ULEV – Ultra-Low Emission Vehicle

·        SULEV – Super-Ultra Low Emission Vehicle

·        ZEV – Zero Emission Vehicle

These categories would be humorous in and of themselves but they have already been superseded by:

·        ILEV – Inherently Low-Emission Vehicle

·        PZEV – Partial Zero Emission Vehicle

·        AT-PZEV – Advanced Technology Partial Zero Emission Vehicle

·        NLEV – National Low Emission Vehicle

Again, it is tempting to chuckle, but these categories have very real and very specific definitions that can mean the difference between a $7,500 vehicle incentive and a combined $12,500 vehicle incentive. The Volt is a case in point. Because the car was introduced with an 8-year/100,000 warranty on the battery instead of a 10-year/150,000-mile warranty it did not qualify as an AT-PZEV according to the California Air Resources Board (CARB) requirements and missed out on the additional $5,000 incentive in California for which the Nissan Leaf does qualify. (This was in spite of the fact that GM reportedly tested and validated the car for the 10-year warranty and expects to boost the warranty for the current Volt or on a new version of the car by 2012.)

EVs not EZ

To make matters worse, the automotive press and industry trade associations have their own roster of EV categories – presumably reflecting their assessment of consumer perceptions. The Electric Drive Trade Association lists the following categories:

·        HEV - Hybrid Electric Vehicles

·        BEV - Battery Electric Vehicles

·        EREV - Extended Range Electric Vehicles

·        Plug-in Hybrid Vehicles

·        Fuel Cell Electric Vehicles

The Volt is sui generis! It is the only EREV, according to the EDTA. This is something that bothers industry types. This would be a minor point if it were the end of the conversation regarding the definition and categorization of the Volt, but it is not. According to some sources the Volt operates as a “plug-in series hybrid” or as a “power-split or series-parallel hybrid” depending on speed or driving mode. By the way, in California, the Volt is considered a ULEV and not a SULEV based on emissions testing.

When is a Volt not a Volt?

Few cars in the history of the automotive industry have been subjected to as much scrutiny as the Chevy Volt – suggesting some strange American instinct toward eating its own young. The Chevy Volt is unquestionably the nastiest, most clever move the automotive industry has pulled in decades. It just seems to frustrate the heck out of regulators and journalists and analysts. GM pulled a fast one out of its hat – one just wishes the company had plans to pull more than 10,000 out of its hat this year. (One might argue that Subaru of America has been a good deal more clever than GM. The company has sold a combined total of hundreds of thousands of PZEV designated Foresters, Legacies and Outbacks that are “sometimes even cleaner than some hybrid or alternative fuel vehicles,” according to the company.)

“I’ll ask my manager.”

Which is where the Chevy dealers come into this story. Having recently attended a Chevy Volt launch event I visited my local Chevrolet dealer. There was a single Volt on the showroom floor, as promised by the Website. (There are four or five Chevy Volt dealers in the area. Not all Chevrolet dealers qualified to sell Volts.) The car in the showroom had a “Do not touch” sign on it with a message that the car was already sold. Of course, that meant that the car was also locked so that the dealer was not able to give test drives, could not demonstrate the clever on-board and OnStar systems, and could not allow a customer the experience of simply sitting in the car. A salesperson indicated that he did not know when they would get any more vehicles and he was not sure what other dealers in the area had any Volts. I returned home and entered my name on the dealer’s waiting list and was called almost immediately. The salesperson on the phone said four cars were due to be shipped in January and one, a white one, was not spoken for. To reserve this incoming Volt, the salesperson said, I would have to put $5,000 down. I asked about the widely reported $350 lease on the car – an attractive option considering the limited life of the battery. The salesperson said there was no lease available and then he suddenly added that to get the Volt that was coming in January I would have to pay $5,000 over MSRP. There is little that will kill enthusiasm for a new car faster than a dealer charging $5,000 over MSRP. It wasn’t bad enough that I could not drive the car, could not sit in it, could not see it do its sexy technology stuff right there in the showroom.

Whether you want a ULEV, an EREV or a serial-parallel hybrid, you will still need to be prepared to do battle with a dealer who will use your enthusiasm against you. Who knew changing the automotive industry would be so difficult. (For the record, GM and Chevrolet representatives say they have specifically asked dealers NOT to charge above MSRP for the cars and there definitely IS a $350 lease offer on the Volt.)

Further insights: http://bit.ly/gtyxic - EV/HEV Technologies Supply & Fitment Database - Kevin Mak - Automotive Electronics Service http://bit.ly/devMOq - Hybrid Technologies Legislation/Support - Kevin Mak - Automotive Electronics Service http://bit.ly/eC7kFy - Impact of Volt, Leaf Transcends Modest Sales Expectations - Roger C. Lanctot - Insight – Automotive Multimedia & Communications Service

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

Technorati Tags: Ford,Safety,Hands-Free,Voice Recognition,Nuance Ford Motor Company’s Dr. Louis Tijerina, senior technical specialist, research and advanced engineering, is worthy of special mention following Nuance’s Automotive Summit last week for his concluding presentation. In his comments he pointed out the overwhelming conclusions from the dozens of studies that have been conducted regarding distracted driving correlated to mobile phone use:

1. Manual interfaces are significantly superior to voice interfaces for task duration for a wide range of functions across a large number of different studies and tests including naturalistic, simulator and even data from GM’s OnStar division. But voice interfaces outperform manual interfaces when correlated to lane keeping, speed maintenance, car following, eye glances, object and event detection and “subjective assessments.”
2. Talking/listening in hands-free or handheld modes on a mobile phone are both significantly, statistically safer relative to a wide range of other distracting activities, including consuming food or drink, based on a recently released Virginia Tech naturalistic study of 13,000 vehicles over a 90-day period using DriveCam video monitors.
3. A study of Sync use co-authored by Dr. Tijerina found Sync voice interfaces statistically superior to manual interfaces for everything but digit dialing and answering incoming calls. Voice had the advantage for eyes-off-road time, standard deviation of lane position, percent of trials with a lane exceedance, maximum speed difference and pedestrian detection task reaction time.

Source:  Ford Motor Company, Oct-10

Dr. Tijerina proceeded to carefully deconstruct the sources of misinterpretation and flawed methodologies that have been exploited by regulators and lobbyists involved in the distracted driving debate. In spite of his extraordinary presentation and lengthy responses to audience questions, there is no doubt the distracted driving discussion will continue unabated. It is also certain that car makers and their suppliers will make further advances toward safer user interfaces.

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

The battle is on to capture the most and the most accurate traffic incident data on a global scale. Several strategies are being deployed to collect this information including traditional journalistic traffic reporting and a growing variety of technology-based solutions including GPS-based probe solutions or GPS Floating Vehicle Data (GFVD) from smartphone and connected PND makers and carriers to cellular network-based probes (CFVD), video cameras, mobile phone camera probes and crowdsourcing. GPS-based probe data networks are particularly popular with companies ranging from TomTom and Nokia to Inrix, Google and RIM. The significance of the emergence of probe data is the fact that any organization with connected devices, applications or vehicles on the road is a candidate for delivering probe data. The industry is facing a proliferation of probe data sources encompassing everyone from Waze, Skobbler and Navigon to OnStar, TeleNav and TeleCommunications Systems. The CFVD crowd includes TomTom, AirSage, iTIS Holdings, Cellint, Intellione, TrafficCast and a few others. The inaccuracy of probe data, GPS or otherwise, is stimulating interest in license plate scanners, tolling networks and Bluetooth roadside scanners from companies such as Bluetoad. In fact, TrafficCast has already deployed or received approval to deploy Bluetoad scanners in 20 states. The Bluetoad technology with its range of up to 200 feet picks up signals from passing Bluetooth devices which have become nearly ubiquitous in mobile devices. The beauty of Bluetooth scanners is that they can precisely identify both the roadway and speed, making them ideally suited to creating flow data. The downside, of course, as with all sensor-based sources, is the high cost of deployment – usually borne largely by local DOTs who gain access to the data – and the not infrequent failures to which they are prone. Of course, all of these solutions are only really able to act as proxies for identifying incidents as they can only identify the results and not the causes of backups. That is where cameras and observers and journalistic data from companies such as Clear Channel, Westwood One and Navteq’s Traffic.com come into the picture. Two years ago this analyst was a strong believer in the power that video could bring to the traffic data reporting and interpretation game. When I met the team at TrafficLand I came to believe that I had found the ultimate solution for the driving public: show people what the traffic disturbance is rather than tell them. TrafficLand had – and has – a near monopoly on DOT traffic camera installations, but its real value add is managing those images on the back end. TrafficLand not only captures most of the data but it also serves it up to handheld devices and Websites and, soon, to automotive head units. Alas, a lot can change in two years. Cameras do play an important role in traffic reporting and interpretation, but the cameras that are likely to make a difference are not the ones mounted along highways. Front-facing mobile phone cameras are the new frontier waiting for a clever entrepreneur. More than one industry executive has talked to me about the potential power of a network of camera probes transmitting real-time traffic camera information from the road. The user interface is a potential issue as is the required bandwidth, but what is a market changing proposition without a few challenges? There is more than one way to make such a network come to pass, these executives suggest, including everything from a dedicated dashboard camera to a smartphone-mounted device to a forward-facing camera on a PND or even the use of existing on-board cameras. Solutions already exist. Navigon has shown augmented reality navigation solutions using forward-facing cameras and Imaginyze has a lane-departure warning app based on a similar device. There is even a company, Apollo Video Technology, with an iPhone app to allow transit officials to view live video feeds from buses, trains, police cars and transit vehicles. Even the execs working on the Next Generation 911 solution for the U.S. are looking for ways to integrate video and text reporting of incident information from smartphones or other devices. It shouldn't be too long before a crowd-sourced traffic solution is introduced for smartphones that allows for the automatic uploading of photos and video stills from a dashboard perspective of traffic conditions under predetermined circumstances. To make such a crowd-sourced solution effective requires a sufficiently large and connected network of users and an automated application. In fact, it is almost shocking that neither TomTom nor Nokia have taken the leap into crowd-sourced traffic video feeds. Or is it? While I was a big fan of integrating traffic video feeds into navigation solutions two years ago, with today's emphasis on mitigating distracted driving the idea has lost significant traction. In fact, U.S. Transportation Secretary Ray LaHood is on a personal jihad to ban even voice calls while driving. Video is important and can be powerful, but the time is not right and the concepts currently in the oven - including Visteon's TrafficLand app - need more time to reach maturity. What is available today, however, is crowd-sourced traffic data from Inrix via its iPhone app (and soon on Android). The app-based Inrix system is the most complete solution, designed around one-touch incident reporting along with the ability to validate the entries of nearby drivers as well as to share the resulting data with local departments of transportation. Aha Mobile has been combining its own crowd sourced inputs with Inrix flow and Clear Channel incident data since late 2009. In fact, Inrix's approach stands as a model for future crowd-sourced traffic solutions with its tools for ranking participants and identifying "trusted sources" and the integration with local traffic authorities. Since June, 47 of 50 state DOTs in the U.S. have adopted Inrix's agency model for sharing this user-generated data, which the DOTs are able to view on the large screens in their traffic operations centers and then check by dispatching their own responders. Inrix says it is processing these crowd-sourced traffic feeds in real time thereby revolutionizing traffic reporting. In this way, Inrix is distancing itself from the existing competition through the integration of an entirely new source of data and a closed loop approach. The challenge for Inrix, though, is the limited size of its probe network, based on users of the downloadable iPhone app.  To have an impact Inrix, mainly seen as a white box supplier to the industry, will need a little help from its industry friends. Crowd-sourced traffic information has become the new standard and Inrix is setting the bar. Waze may claim to have the largest user population worldwide, but the company has chosen not to integrate other corroborating traffic information sources. Fusion of multiple types of data sources is a critical foundation for using crowd-sourced data, along with building  validation processes. Inrix has the largest North American population of users and has recently rolled out its apps in Europe. It is collaborating with ClearChannel in North America and other incident providers internationally for journalistic data. Crowd-sourcing of traffic data is nothing new. Crowd-sourcing by mobile phone users has been around for decades. It is only recently, though, that smartphone apps have enabled the automation of the process and, now, with Inrix's system, the integration of crowd-sourced data into local DOT traffic feeds - although Inrix traffic app users get the data right away, including inputs from nearby drivers. What is curious is that Inrix, while not the first to market with crowd-sourced traffic, is the first to take it to a level where it is integrated with official traffic feeds. While the crowd inputs are validated or rejected by other users on the network, the local DOT is also involved in the validation process. The open line of communication with local DOTs also means that real time street closings and openings can be transmitted along with incident validation. Inrix is not alone. TeleNav has a crowd-sourcing function for its app and TrafficTalk has been testing a crowd-sourced offering. Harman's Aha Mobile and competing mobile platforms will no doubt seek to bring their own offerings to market as well. Looking at the Inrix model, one has to wonder why TomTom, OnStar, ATX, Google, Nokia, RIM, TCS or TeleNav haven't moved in the same direction. OnStar has its good Samaritan function for reporting accidents, but there is no provision for instantly integrating an OnStar user-reported accident on the in-vehicle navigation/traffic display  - let alone sharing it with public authorities in real-time. The same is true for ATX. Conclusion: The automotive environment is ripe for crowd-sourced applications, which already include the reporting of speed traps (Trapster). The world of thumbs up/thumbs down, check-ins and trusted providers of reviews/data is rapidly proliferating on mobile devices and migrating into embedded automotive solutions. It is fitting that traffic information lead this migration since this form of data is of the highest relevance to drivers and rapidly changing. The power of crowd-sourcing of traffic data has the dual effect of creating a new source of incident data along with its own validation process. One of the greatest challenges to creating reliable traffic information systems is validating journalistic data inputs. The crowd is able to view live traffic data, create new data and validate that data. The next step is to open the taps to other data types from parking and gas pricing to weather and event information. Eventually, crowd-sourced video will work its way into the mix as well - and probably sooner than anyone expects. Additional insights: http://bit.ly/dniNxa - Navigation Heuristic Evaluation: Telmap5 – Schreiner – Automotive Consumer Insights http://bit.ly/95NCoW - Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority – Blight – Automotive Multimedia and Communications Service http://bit.ly/dtRE5C - Automotive Telematics Services: Shifts in Pricing and Monetization Expected – Canali – Automotive Multimedia and Communications Service http://bit.ly/bwdwcW - Connected Vehicle and Vehicle Device Connectivity System Database by Feature, Region, and Price 2010 – Canali – Automotive Multimedia and Communications Service http://bit.ly/d0aLhq - Connected Vehicle Telematics: Car Maker Profiles – Canali – Aumotive Multimedia and Communications Service http://bit.ly/deumcd -# Traffic Data Quality Will Determine #Telematics Winners - Lanctot - blog - Strategy Analytics

Retention is the key to the imminent rise of usage-based insurance. More accurate rating and customer acquisition may be the immediate motivations for insurance companies, but only customer retention has the power to transform the industry – and reduce carbon emissions in the process. These conclusions were clear from the Telematics Update Insurance Telematics event two weeks ago in Chicago. Returning home from the event, though, I was soon inundated with the daily tidal wave of car insurance advertisements on U.S. television. The multiple offers of the deepest discounts, lowest deductibles and superior service seemed like far more relevant messages to me as a consumer than the proposition of allowing the insurance company to monitor my driving behavior. Allowing an insurance company to monitor my behavior, to me, sounds like a particular circle of Hell inconceivable to even the vivid imagination of Dante. What I was forgetting in this kneejerk reaction is the equal and opposite force within me (or most consumers I presume) that is powerfully drawn to any discount – no matter how small – particularly if it is associated with cheaper car insurance – a product one pays handsomely for and hopes never to use. (Because if you use it you may lose it or end up paying more for it in the future.) The offers on television from Progressive, Nationwide, AllState, State Farm, Farmers and others addressed all of my concerns as a consumer. There were discounted rates earned by parents extended to teenage children. There were deductibles that decline over time when there are no claims. There were offers to top competing discounts. UBI insurance offers the prospect of cutting through the advertising clutter with a message that has the power to draw in new drivers while making them long-term committed subscribers in the process. On the surface, usage-based insurance looks like an expensive proposition (for the insurer) built around the concept of providing discounts to an insurance company’s best customers, according to multiple presenters at the Insurance Telematics event. So let me get this straight:  As an insurer I am going to spend millions of dollars to create a data acquisition and management system and deploy wireless monitoring devices all so I can charge my customers less money? It truly sounds crazy, until one understands the challenges of providing insurance. (No tears, please.) The insurance industry has few reliable tools to offer consumers proper insurance rates. What to the consumer appears to be a generally expensive product is priced based on an opaque process based on age, gender and location and a limited amount of driving history such as infractions, accidents and mileage. The industry was recently revolutionized by the deployment of credit scoring as a rating tool. Not surprisingly, credit bureaus featured prominently among attendees at the Insurance Telematics event. Credit scores, the early insurance company pioneers such as Progressive discovered, were an excellent segmentation tool and proxy for assessing risk. Possessing a more accurate tool for determining risk meant that underwriters using this tool could confidently justify deeper discounts than competitors and they won truckloads of business as a result. Of course, competitors soon learned about the new risk proxy and all companies began using credit scores for segmentation and risk analysis. Usage-based insurance is the new proxy and insurance companies are wary of missing a competitive advantage. From presentations at the event it is clear that the early movers in UBI insurance have learned that the process must be as simple as possible. As a result, Progressive has shifted from an OBDII plug-in device that had to be removed and connected to a consumer’s computer, to a wireless module the customer can plug in and forget. (Progressive has already moved on to the next incarnation as well, read on.) Similarly, Octo Telematics, the European pioneer of UBI insurance with more than 1M subscribers via multiple insurance partners, has introduced a device that clamps onto a car battery. This is an alternative to a device that was professionally (and expensively) installed on the vehicle and provided additional services such as stolen vehicle recovery. Multiple exhibitors at Insurance Telematics touted Bluetooth-based or cellular-based OBDII connections for extracting vehicle data – including Directed Electronics, Zoomsafer, Telenor, Walsh Wireless, Numerex, SmartDrive, Scope Technologies, Matrix Technologies, Xact Technologies and Octo Telematics. (Attendees actively discussed word of legal action between Hughes Telematics and insurance and device providers and others over the use of wireless technology for acquiring vehicle data via the OBDII port. Some companies are reported to have settled with Hughes or, as in the case of Progressive, countersued. Suffice it to say that the intellectual property underpinnings of insurance telematics are unresolved.) The powerful interest of consumers in obtaining discounted insurance taken together with the newfound ability of insurance companies to offer discounts based on more accurate risk segmentation is the motivating force behind a revolution poised to sweep the industry. But why is there little or no advertising of UBI insurance in the U.S. when Progressive has been in the game for 12 years? (European advertising of UBI insurance is widespread.) The answer is simple: The insurance industry is governed by 50 different state authorities, some of whom, such as Pennsylvania, have challenged the rating models and others that simply haven’t made their final ruling. (Pennsylvania withheld approval based on their requirement that Progressive disclose the details of there rating model.) Progressive’s SnapShot product is currently available in 23 states. Another learning from the early UBI movers has been that the device need not be indefinitely installed in the vehicle. Insurers active in UBI have learned that a limited time (ie. one month? six months?) “snapshot” of a driver’s driving behavior is sufficient to assess risk and applicable discount. The SnapShot approach also means the device can be removed and plugged into another customer's vehicle for yet another driver assessment.  Of course, this same snapshot is also key to determining which drivers qualify – and insurers have found that not all drivers are suited to UBI programs. As speakers at the Insurance Telematics event repeatedly said: Everyone thinks they are an above-average driver, but only 50% of those can be correct. The key to success in UBI insurance will be to move early. Insurers feel an overpowering need to deploy systems absolutely as quickly as they can because the likelihood is that the first module a customer installs will be his or her last. Once the insurer learns that customer’s driving behavior and can accurately and affordably underwrite their risk, the customer is unlikely to switch insurers. The competing insurer will always be at a disadvantage, not knowing the customer’s driving behavior. For this reason, the industry is struggling to move very quickly in the U.S. in spite of the state regulators and IP issues. UBI has the ability to change the balance of power in the industry and no company wants to be left disarmed. Conclusion: This battle has just begun. Insurers are likely to package offerings built around comprehensive portfolios of driver services such as roadside assistance, navigation and maybe even stolen vehicle recovery to say nothing of on-scene claims reporting – all built around the modules they are bringing to cars. UBI insurance will not only transform the insurance underwriting industry, it also has the potential to alter the relationships between insurers and OEMs. Insurers that deploy telematics systems are in a position to threaten OEM relationships with their own dealers and consumers. Wireless carriers too have skin in the game as insurance applications are already deployed to mobile phone platforms. Insurance companies have powerful leverage over the customer and cannot be ignored by any of these parties and the mobile phone is an alternative path for a UBI deployment. UBI insurance will rapidly achieve ubiquity nationwide. The prospect of obtaining discounts based on driving behavior will lead to some actual improvements in driving behavior but, mainly, it will contribute to a reduction in driving activity overall, which may be the best outcome of UBI deployment. In the end, the insurance industry will achieve the road charging objective of reducing carbon emissions (a Federal goal) which will forever be politically beyond the reach of  Federal authorities. 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 http://bit.ly/9PUqjp - UBI Market Poised for Growth - John Canali - Automotive Multimedia & Communications

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

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

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