Porsche is changing horses in the stolen vehicle recovery department, opting for Autotxt’s stolen vehicle recovery solution for the 911, Boxter and Cayman, according to industry sources. The change may be coming as a result of Autotxt’s new architecture which enables a single electronic control unit (ECU) to provide a wide range of vehicle diagnostic and remote control capabilities in addition to vehicle tracking. An official announcement is expected later this week. This single ECU solution from Autotxt has the potential to transform the relationship between the driver, the smartphone and the car, providing an enhanced opportunity to sell stolen vehicle recovery systems in the context of a low-cost smartphone-based telematics application. The technology has implications for customer and dealer relationships as well as for broader branding and marketing purposes. It also creates a new path for app distribution to drivers. Finally, the announcement shows Porsche taking one step closer to the inevitable introduction of telematics. Porsche has had a telematics system in place, ready to launch, for many years. The choice of Autotxt move the company that much closer to that decision while providing an in-place solution to satisfy the European eCall mandate. The Autotxt solution for Porsche - which will supplant the existing offering from Cobra Automotive - provides for both reactive and proactive stolen vehicle notification and recovery. In the reactive mode, the vehicle owner must notify the service provider, Autotxt, when the vehicle has been stolen. In the pro-active, or early-warning, application, the service provider is notified of any unauthorized vehicle movement at which point the driver is contacted. The Porsche application – which is a dealer install - may also offer the same functionality provided by Autotxt for Jaguar Land Rover and Aston Martin. Those implementations use the driver’s Bluetooth-enabled phone as the driver identification tag. Alternatively a keyfob can be provided. The system allows for up to seven Bluetooth driver IDs. Porsche is still evaluating this provision. The Autotxt offering is unique in the flexibility of its ECU. Like other modules coming into automobiles for related tracking, tolling and telematics applications, the Autotxt device is deeply embedded in the vehicle with access to the controller area network (CAN) codes. Autotxt expects to make available by Q2 2011 a smartphone application for remote vehicle control and diagnostics. Autotxt executives expect to be able to provide remote control functionality including remote activation of heating and air conditioning, windows, door locks and remote starting along with data logging and vehicle diagnostics. The multifunction ECU, therefore, can become an event data recorder as well as an eCall or bCall platform while also gathering and distributing data on overall vehicle operation available to either the driver or the dealer or both. The device could also handle trip reporting, battery status for electric vehicles and a wide range of location-aware applications. In this way, the car maker retains control of the in-vehicle connectivity experience in contrast to the widely reported terminal mode approach of conveying the smartphone HMI into the car. Autotxt expects to have versions of its system available for Android and other platforms by the middle of next year. The Porsche deal is global in scope as are the implications of the ongoing Autotxt development activities.

As Hyundai Motor America has surged to the top or near the top of ratings and sales rankings, the company has also been preparing a unique launch strategy for its Equus luxury sedan while simultaneously laying the groundwork for a January 2011 launch of a telematics system comparable to General Motor’s OnStar - a launch that is likely to take place in conjuction with the 2011 Consumer Electronics Show. Hyundai’s goal is nothing less than to become the most loved, most trusted and highest satisfaction mass market automotive brand. That is the word from U.S. president John Krafcik, whose background includes tenures with Ford Motor Company and Toyota Motor Sales. Krafcik says digilence, frugality and harmony are the internal principals that have guided Hyundai Motors to a remarkably competitive stance in the market. He proceeded to share the roster of recent company achievements this week at the monthly Washington Automotive Press Association luncheon: -> Projected 4.4% share of 2010 global unit vehicle sales -> 7^th largest brand in the U.S. – expects to surpass Dodge for 6^th place by the end of 2010 -> 4^th largest OEM globally 2010 -> 4th in J.D. Power’s IQS (Initial Quality Survey) in 2009 behind Lexus, Porsche and Cadillac -> 4^th in Consumer Reports reliability report card for 2010, up from #9 in 2009 -> Genesis: 2009 Car of the Year -> Automotive Lease Guide residual values: Sonata tops Honda Accord, Tucson tops Toyota Rav4, Veracruz tops Toyota Highlander, Genesis tops Lexus GS350 -> #1 in EPA’s average fuel economy rating: 30.9 – 2008, 30.1 – 2009 (projected), 31.9 – 2010 (forecast) -> Overall transaction prices up 11% relative to 2008 – now 97% of Toyota transaction prices -> Sonata most shopped on Edmunds.com for past straight eight weeks -> Hyundai included in the shopping lists of 28% of light vehicle purchase intenders – company survey -> Sales up 51% year-to-date vs. 2009 Key elements to Hyundai’s strategy include rapid deployment of marketing programs such as Cash for Clunkers (deployed July 2 – ahead of the July 24^th completion of the policy announcement) and the assurance program for customers that might lose their job after their vehicle purchase. Perhaps most important was the company’s 10-year/100,000 mile warranty, which internal surveys showed to be the primary reason customers chose Hyundai. Hyundai also implemented free roadside assistance for five years, which surveys showed was the third highest reason for brand selection. A strategic decision that reduced cost and weight on the company’s highest profile vehicle, the Sonata, helped the company achieve category leading fuel efficiency. Hyundai chose to offer the Sonata with only four cylinders, including direct injected and turbo versions. By offering only 4-cylinder engines on the Sonata, the company saved 50-100 lbs. in weight from not needing the hardware on board to support optional 6-cylinder engines. Hyundai was thereby able to achieve both category-leading 274 horsepower and 37 mpg fuel efficiency. The next step for Hyundai is the launch of the Equus. The company is limiting distribution to a select group of exclusive Hyundai dealers (ie. that sell only Hyundai-brand vehicles) capable of supporting a program characterized by test drive requests fulfilled at the customer’s home or office, pick-up of vehicles for service calls with the drop off of a loaner at their home or office and the inclusion of an Apple iPad pre-loaded with the vehicle’s owner’s manual and a service scheduling application. In fact, after a recent meeting with its dealer council, Krafcik says Hyundai is considering the possibility of offering Equus-like customer service across its fleet. He noted that the Equus is expected to arrive in September with extraordinary luxury appointments (ie. heated rear seats and refrigerator) yet priced between the mid-50’s and mid-60’s. Other calendar year 2011 introductions detailed by Krafcik include new versions of the Elantra, Accent and Santa Fe and a hybrid "sporty coupe" to compete with Honda's CRZ. Of course, the icing on the cake for Hyundai will be the launch of its telematics service in January of 2011. Krafcik offered no details except to suggest that the company will opt for an embedded solution a la OnStar. Hyundai is no-doubt envious of the kind of customer loyalty a well-executed telematics strategy can deliver. Hyundai clearly thinks telematics will only get them closer to fostering the love and trust they are seeking. The timing of the telematics launch suggests Hyundai will seek to make a Ford Sync/Microsoft-like splash at the Consumer Electronics Show in January. The 2011 CES is shaping up as a significant automotive technology launch pad as rumors of Apple- and Google-branded cars are swirling in the industry seven months in advance of the event. Additional Insight: http://tinyurl.com/249ajt7 - Tier 1 Vendor Regional Design Center Database – Kevin Mak – Automotive Electronics Service http://tinyurl.com/27jt7bt - EV/HEV Technologies Supply & Fitment Database - Kevin Mak – Automotive Electronics Service

Audiovox Corporation reported a profitable fourth quarter and fiscal year today suggesting a significant turnaround fueled by the resurgent automotive industry generally and recovering satellite radio and rearseat entertainment categories specifically. The report was terrific news for Audiovox, which held its earnings call this morning, but the good news seemed somewhat empty in view of a lack of innovative new solutions or even a stated vision of vehicle connectivity from the normally creative electronics supplier.The company built upon the good earnings news by announcing that it foresees developing a $100M OE portfolio for fiscal 2011 thanks to the addition of Qualcomm’s in-vehicle Flo-TV business and the acquisition of RSE supplier Invision and remote start/vehicle security player Omega. Invision’s existing RSE deals with GM and Toyota represented a solid shot in the arm to Audiovox’s own aftermarket business. The electronics segment of Audiovox’s business saw a revenue decline in fiscal 2010 due to reductions in inventory and the exit from several product lines including flat panel televisions and portable navigation devices. Combining the Invision RSE line with its own aftermarket RSE business, Audiovox now boasts relationships with GM, Ford, Chrysler, Nissan, Hyundai, Porsche, Kia, BMW, Toyota, Subaru and Mazda. With expectations of 11M cars being sold in calendar 2010 in the U.S., Audiovox expects the current boost in its fortunes to continue. The electronics segment’s sales were $375M for fiscal 2010, down 16.6% vs. the year-ago period due mainly to the decline in automobile sales and the recessionary economic environment. The company pointed to the positive impact from new programs with Sirius XM, Sony (PS3 integration with RSE system) and Flo-TV and noted that the acquisition of Invision has been instrumental in positioning the company to build on its existing OE relationships. Many of Audiovox’s existing relationships derive from the support of its own expeditor network, one of the largest and most effective installer networks in the industry. In its earnings call, Audiovox said mobile sales were up over the fiscal 2009 fourth quarter due primarily to increases in satellite radio, security and multi-media products, and the addition of new sales from Invision, Omega and Flo-TV. As a percentage of net sales, Electronics represented 71.4 percent of sales for the fiscal 2010 fourth quarter as compared to 62.3 percent for the comparable period in fiscal 2009 - demonstrating the increased importance of mobile electronics sales.

Audiovox is uniquely positioned for a range of significant automotive business opportunities including remote vehicle connectivity and security and video distribution within the car. The company does offer a range of head unit products that provide for multiple connectivity options and continues to offer non-desktop computing platforms suitable to automotive applications. The onset of connectivity and social networking present a range of potentially profitable opportunities awaiting a solution from Audiovox..

 

If there was anything missing from the earnings call it was a statement of strategy vis a vis social networking applications and Audiovox’s plans to capitalize on the trend. The partnership with Qualcomm for Flo-TV represents one avenue for Audiovox to connect with the rapidly growing smartphone market. The company introduced the Jensen Anyware Ultra-Mobile PC last fall, but there was no mention of the product on today’s earnings call, nor was their mention of Audiovox’s range of head unit offerings under multiple brands. Perhaps the next earnings call will bring news of more creative mobile initiatives and a vision of future vehicle connectivity.

The pressure to reduce vehicle carbon emissions is exacting an influence on the automotive industry beyond the handful of ultra-compact and EV/HEV announcements around the world. The calendar year 2009 installation rate for gas hungry V-6 and V-8 engines, for example, fell to 57.1% from 63.9% in 2008 in the U.S., according to Ward’s Automotive, continuing a five-year decline from a peak of 76.2% in 2004.

 

But the impacts are more wide ranging, as detailed by the president of the Association of International Automobile Manufacturers at a luncheon of the Washington Automotive Press Association this week. AIAM quotes U.S. government estimates that automobiles are responsible for 20% of carbon emissions.

 

Most governments around the world seek to discourage driving and thereby reduce carbon emissions with taxes on gasoline or via road charging – a solution being pursued most recently in The Netherlands. The U.S. is unique in the world in mandating Corporate Average Fuel Efficiency standards – known as CAFÉ.

 

With the ultimate goal in mind of reducing vehicle emissions to near zero carbon, the CAFÉ standards were recently updated (May 9, 2009) by the Obama administration in the U.S. to a 2016 target of 35.5 miles per gallon. The mandate became law April 1 and partially harmonized ruled from the Department of Transportation, the National Highway Traffic Safety Administration and the Environmental Protection Administration.

 

One of the more unusual elements of CAFÉ is the different goals for each OEM as well as its basis in vehicle footprint – originally defined and codified in 2007. The vehicle footprint is defined as the vehicle’s wheelbase multiplied by its track width – or the area enclosed by the points at which the wheels meet the ground. The new guidelines will show Porsche needing to improve its overall efficiency by 9.9 miles per gallon by 2016 while the overall average improvement per OEM will be 7.4 miles per gallon, based on existing forecasts of production and sales.

 

Using this footprint attribute, the government has been able to define targets by vehicle type as a way to get around the need for OEMs to offset sales of larger cars with sales of smaller cars. Each vehicle footprint has its own efficiency targets under the current guidelines and all face their own requirements to improve between 2012 and 2016.

 

Complete harmonization of all government green house gas (GHG) reduction policies has not yet been achieved. CAFÉ is defined by the Energy Policy and Conservation Act while CO2 emissions are also governed by the Clear Air Act. The EPCA concerns itself with vehicles as they are produced, for example, while the CAA concerns itself with the emissions of vehicles during their entire operating life.

 

The impact of these efforts are, in fact, pushing car makers to improve efficiency and technologies that respond to that need will benefit from these initiatives. Everything from stop/start to clean diesels and EVs are expected to see wider deployment and consumer acceptance. Strategy Analytics research shows consumers in Europe and the U.S. are more interested in electric vehicles than they are in shifting to smaller vehicles.

 

With that goal in mind, AIAM described the range of fuel efficiency initiatives reflected in the government guidelines as including:

 

Types of Engine Technology:

-         Low friction lubricants

-         Reduction of engine friction losses

-         Cylinder deactivation

-         Variable valve timing

-         Discreete variable valve lift

-         Stoichiometric gasoline direct-injection technology

-         Combustion restart

-         Turbocharging and downsizing

-         Exhaust-gas recirculation boost

-         Clean diesel engines

Types of Transmission Techology:

-         Improved automatic transmission controls

-         Six-, seven-, eight-speed automatic transmissions

-         Dual clutch or automated shift manual transmission

-         Continuously variable transmission

-         Manual 6-speed transmission

Vehicle Technologies Considered:

-         Low rolling resistance tires

-         Low drag brakes

-         Front or secondary axle disconnect for four wheel drive systems

-         Aerodynamic drag reduction

-         Mass reduction and material substitution

Electrification/Accessory and Hybrid Technologies:

-         Electric power steering

-         Improved accessories

-         Air conditioner systems

-         12-Vole micro-hybrid (MHEV)

-         Higher Voltage stop-start/belt integrated starter generator (BISG)

-         Integrated motor assist (IMA)/Crank integrated starter generator (CISG)

-         2-Mode hybrid (2MHEV)

-         Power-split hybrid (PSHEV)

-         Plug-in hybrid electric vehicle (PHEV)

-         Electric vehicles

 

Longer-Term Technology Solutions Include:

 

Plug-In Hybrids:

-         Battery R&D is still critical

-         Cost and durability are factors

-         Plug-in HEVs need about 5-8 times the battery capacity of a current HEV

-         Current goal is up to a 40 mile all-electric range

Battery EVs:

-         Remain an attractive target

-         Need battery capacity of 12-15 times a current HEV to provide adequate range

-         Same battery issues (cost, durability) plus operation in extreme weather (hot and cold temperatures)

-         Nissan has announced having BEVs in California market in 2010. White House regarding removing barriers

Fuel Cells:

-         Use hydrogen to generate electricity to run the vehicle, so they are a type of EV

-         Internal combustion engines can also be designed to use hydrogen

-         There are major hydrogen infrastructure issues – where do we get it; hot to distribute it?

Alternate Fuels:

-         Compressed natural gas

-         Ethanol – CAFÉ credit

 

Further Strategy Analytics insights:

 

http://bit.ly/cP39II - Hybrid Technologies Legislation/Support - Kevin Mak

http://bit.ly/bplBqV - EV/HEV Technologies Supply & Fitment Database - Kevin Mak

http://bit.ly/bv3Q0B - Hybrid and Electric Vehicles: OEM Strategies Reviewed - Kevin Mak

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.

Amid the hybrid hype and horsepower hoopla at the New York Auto Show this week Ford Motor company presented a unique vision of the future of efficient driving in its partnership with Microsoft’s Hohm power management initiative. Launched in June of last year, Hohm is an energy management application developed in cooperation with U.S. energy suppliers and intended to manage and conserve home energy consumption.

Ford president and CEO Alan Mulally acknowledged what few car makers have addressed, which is the potential doubling of home energy consumption for home owners who choose electric vehicles. Ford is working with Microsoft to help mitigate that added cost of ownership. Hohm is an Internet-based application that will help owners of electric and plug-in hybrid vehicles determine when and how to most efficiently and affordably recharge their batteries.

Microsoft says Hohm is available for free to all U.S. residential energy consumers and has multiple partnerships with utilities and other relevant partners. Ford is the first auto maker partner in the program. Ford also announced its plan to offer a smartphone-based application to remotely assess vehicle charge status and find charging locations, not unlike the application shown earlier this year by OnStar in connection with its Volt EV launch.

Ford’s electric vehicle and hybrid plans announced at the New York show include five vehicles in North America and Europe by 2013. For North America, Ford has planned the launch of the Transit Connect Electric later this year, the Focus Electric in 2011, a plug-in hybrid and two next-generation hybrids in 2012, joining four Ford and Mercury hybrids already on the road and a new Lincoln MKZ Hybrid coming this fall.

Other major EV and HEV announcements at the New York Auto Show included:

Kia said it will offer a 2.4L hybrid version of the Optima late in 2011.

Lincoln introduced its first hybrid – the 2011 MKZ Hybrid premium midsize car. The car is expected to deliver 41mpg in city driving when it arrives in the fall.

Think announced plans to begin selling the Think City EV in New York and other select cities later this year.

Hyundai showed its first hybrid, the new Sonata Hybrid based on lithium polymer technology offering what it claimed as more horsepower (169hp), more torque (156 lb. ft.) and better gas mileage (52mpg) than competing hybrids and using Hyundai’s Hybrid Blue Drive architecture with its 2.4L Theta II engine.

Volkswagen showed its first hybrid at the show – a Touareg with a nickel-metal hydride battery due later this year. The hybrid drive is paired with a 3L supercharged, direct injection V6 and VW claims a 40% reduction in CO2 emissions and 25/21mpg in highway/city driving.

Porsche showed its first production hybrid, the 2011 Cayenne S Hybrid due this fall, which will sell for $4,000 more than the $63,700 Cayenne S with a 400hp V8.

 

For further insights into global EV/HEV programs:

http://bit.ly/bv3Q0B - Hybrid and Electric Vehicles: OEM Strategies Reviewed – Kevin Mak

Harman announced a return to profitability for its fiscal second quarter in an earnings call earlier this week. In that call, the company detailed its marketing plan which could be taken as a blueprint for the entire industry – particularly the company’s inroads into larger volume mid-segment vehicle categories.

Harman is pursuing emerging market opportunities in China, Brazil and India with local development and manufacturing presence – including a $1B revenue target for China by 2015. The emerging market initiative is reflected also in a targeted shift of engineering/R&D balance from 99% high capital and cost (HCC) markets to 60% HCC, and manufacturing/assembly from 81% HCC to 50% HCC by 2012.

The company expects to maintain its luxury segment leadership while leveraging its previously announced “scalable system” strategy, which has already contributed to a Toyota European design win for MY2011. The scalable system is part of an initiative targeting what Harman sees as a $5B high-growth, mid-segment market opportunity reflecting the company’s desire to capture a broader portfolio of business.

In that regard, Harman wants to pioneer energy-saving GreenEdge technologies for hybrid and electric cars in partnership with Intel and Texas Instruments developing solutions to reduce power consumption by 75% including high efficiency speakers, one of the few objectives the company has yet to realize in the marketplace. Similarly, the company is working with Lotus Engineering on Active Noise Management solutions for hybrid, electric and conventional vehicles to address impending legislation regarding pedestrian safety. Noise management will also apply to in-cabin noise cancellation and reduced weight and CO2 emissions. And Harman is also targeting advanced driver assist systems, an entirely new segment for the company.

In its earnings call the company mentioned winning $2B of additional business, expanding its contract portfolio to $10B, a figure the company claims is the largest in the industry. Included in its current and recently executed order book are:

->     Infinity branded audio systems for next-generation Chrysler SRT series high-performance vehicles;

->     Launch of Mark Levinson premium surround sound for MY10 Lexus GX 460;

->     Launch of JBL premium sound for MY11 Toyota Sienna in U.S.;

->     Launch of Harman Kardon Logic 7 HD system with Range Rover for MY10 mid-model year introduction;

->     Launch of Ferrari 458 Italia equipped with Harman audio and infotainment;

->     Exclusive Haman Kardon sound lounges at BMW brand centers in Munich and Berlin;

->     Press launch of Harman/Lotus Engineering HALOsonic sound synthesis technologies;

->     Selected by BMW for next gen, high-end “Professional infotainment system for all new platforms including BMW, Mini and Rolls Royce;

->     Selected by Daimler for next gen Comand infotainment system for new Mercedes S-Class and C-Class models;

->     Selected by Toyota to provide Harman next gen scalable infotainment for vehicles sold in Europe beginning MY11;

->     Selected by Toyota to provide premium JBL branded audio for 4Runner and Land Cruiser in the U.S., Europe and Middle East and the MY11 Siena in U.S.

All of this contributes to what Harman estimates as 45% global branded automotive audio market share, with Bose at a distant 25%. Harman’s branded audio solutions are used in more than 200 car platforms from 12 OEMs shipping more than 2M audio systems annually. Sources indicate that this 500,000 units/quarter pace is actually approaching 1M units/quarter – a pace that will no doubt be stimulated by the recent Toyota wins and future higher volume segment wins.

The pace of launches has eased somewhat for Harman, which may help explain the return to profitability as profits cusually come later in the program cycle. The company hit a peak of six program launches in FY08, followed by five in FY09. The programs for those years included Mercedes, PSA, Porsche, Audi, BMW, SSangYong, Chrysler and Hyundai. Going forward, Harman says it will have four launches in FY10 (including Audi, Mercedes and BMW (2)), three in FY11 (Toyota, Mercedes and Chrysler) and one in FY12 (BMW), before ramping up again in FY13 with four: Harley-Davidson, Mercedes and BMW (2).

The company further notes the evolution of its infotainment architecture:

1997: SH1/16MB – Tuner/CD/Navi – Turn-by-Turn

2002: SH3/32MB – MMI2000 – VxWorks – Tuner/CD/DVD – Phone/SDS – MOST25 – 2D/2.5D Map

2008: SH4/512MB/1024 – MoCCA Framework – QNX CAR Platform – Tuner/CD/DVD – Phone/SDS – MOST50 – 3D Map – Internet Connectivity

2012: Intel Atomm/1GB – MoCCA & DSI 2.0 – QNX CAR – Tuner/CD/DVD/Blu-Ray – Phone/SMS/Email – MOST150 – NDS Navi – Enhanced 3D Map – Internet.

Worth noting in the architectural evolution is the growing role of both QNX (CAR Platform) and Intel (Atomm) as well as the onset of Internet connectivity - pioneered by BMW - Blu-Ray, MOST and enhanced navigation features, many of which will revolve around 3D and augmented reality implementations.

Overall, Harman appears to have emerged victorious from its cost cutting regimen with fewer European facilities but with a profitable organization in place pursuing business building initiatives throughout Europe, Asia and the U.S. The most significant business transformation of all, though, will be the Toyota wins. Not even Toyota's recent marketing stumbles can tarnish this achievement and how its will transform Harman's operations and growth profile.