It’s important for one to know one’s place in the world. This is especially difficult given the fact that one’s place may change. When this happens there may be telltale signs, like emails or polite taps on the shoulder or a whisper in the ear. TomTom should consider this commentary a “heads up” – the kind of alert a friend gives another friend when a sharp or heavy object is flying toward someone’s head.

The heads up is that it is time for TomTom to take a one-two punch to its current strategy.

Punch One: Launch a white label fleet telematics program to enable faster growth of the business services group and capitalize on the fleet industry’s current movement toward consolidation.  Servicing the fleet industry is a critical global market differentiator for TomTom and it is not too late to take advantage.

Punch Two: Shift to Android as a more potent platform for enabling in-vehicle app distribution.  (More on Punch Two at a later date.)

One has to love this company which has parlayed some of the cleverest marketing and product innovation into traffic and portable navigation market leadership.  The problem for TomTom, sadly, is that the market has moved on.  This has never been clearer than in the latest earnings report.

It’s true the company was able to report growth in its automotive segment (43% to €59 million), content and services (19% to €107 million), licensing (27% to €36 million) and business solutions (33% to €17 million), but the largest business, consumer, plunged (23% to €225 million).  The decline in the consumer business of €68 million, more than offset the aggregate gains in the other segments of €30 million. 

What was unclear from the company’s financial release was whether – after “impairments” and restructuring charges the company was actually profitable.  Earnings per share for the most recent quarter were positive though the year-to-date-earnings remain negative.

Core business is down

TomTom acknowledges that much has changed in its core business of selling mobile navigation devices.  While the company still claims portable navigation market leadership in Europe and some market share gains in the U.S., this leadership is over a dwindling market.

TomTom reported a decline in the total European portable navigation market during the quarter to 3M units from 3.4M in the year-ago quarter, with the U.S. falling even more severely to 2.1M units from 2.9M.  The company further noted that the speed of the market decline may be contributing to an inventory hangover, something that has plagued the segment for more than a year. 

If you have any doubts regarding the state of the portable navigation industry, a visit to your local electronics retailer will reveal a category suffering arteriosclerosis.  Without sufficient demand, existing products are not selling through quickly enough to maintain innovation momentum.  The new stuff is backed up because the old stuff is not selling through.  And, as a result, the portable navigation department is usually a mess.

The speed of the decline is spurring a restructuring at TomTom intended to reduce expenses by €50 million and likely to include significant personnel reductions.  Similar reductions have been experienced elsewhere in the industry including Navteq’s layoffs in its Traffic.com group.

To its credit, TomTom has moved to pursue business services and fleet opportunities under the WebFleet and WorkSmart brands. Yet despite claiming to be the fastest growing fleet telematics service provider in Europe and posting €17 million in revenue in the current quarter, TomTom is not keeping pace with more focused competitors in the fleet space.

The messaging on TomTom’s Work Website is out of step with more focused fleet operators, all of whom are enhancing their existing solutions with traffic and routing capabilities competitive with TomTom’s.  As the new kid on the block, TomTom may be able to successfully fight the good fight and convince operators it has a more robust solution for tracking drivers and delivering competitive traffic and routing information.  Or maybe it makes more sense to be a white label provider to all players in the fleet market.

White label enables scalability

The importance of the fleet business to TomTom’s prospects cannot be overstated.  With sales of portable navigation devices evaporating and inventory backing up, it is critical for TomTom to find new sources of revenue.  While the portable business is not entirely disappearing, the company has long depended on robust sales of these devices to support the content and services business which includes traffic data.

TomTom pioneered the use of probes in mobile devices to create traffic data which helps the company to deliver not only state-of-the-art traffic solutions but also for refining its industry leading routing engine.  So the success of content and services, best known for its traffic and routing offering, depends on the consumer mobile navigation business.

TomTom simply cannot afford to stand idly by while its portable navigation business shrinks taking its content and services business with it.  The fleet side of TomTom, however, holds the key to survival.  Fleets fitted with TomTom hardware or software are capable of taking up the slack from lost navigation device sales.

But TomTom needs to replace lost portable navigation nodes at a faster pace.  While the company noted an increased take rate for Live Services (which includes traffic data) for its mobile devices, the volume decline negated the increase in the take rate. 

By shifting to a white label service position in the fleet market TomTom can emphasize the fact that it has been a cloud service delivery player in the market since before the cloud was called the cloud.  TomTom was the first supplier to create an in dash app delivery platform for companies such as Toyota and Renault.  And the company’s routing, traffic and navigation tools are rock solid and ideally suited to the needs of the fleet industry.

Still, for some reason, TomTom clings to its brand position.  And while it clings, incumbent players in the fleet industry are adopting or partnering or creating their own traffic and routing solutions.  TomTom need look no further than ALK Technologies to find a company with a laser like focus on the needs of the trucking industry and a flexible business model to enable it to support customers branded or otherwise.  ALK’s flexibility has been rewarded with deals with Qualcomm and Xata among many others.

The point of a white lable initiative is to accelerate growth and rapidly scale.  Thirty-three percent growth, though impressive, won’t rescue our friends in Amsterdam.

Implications

The fleet market holds the key to TomTom’s revival and a white label strategy is the engine.  But let’s not stop there.  To keep driving its automotive business, where competition is keen and margins thin, TomTom ought to heave its brand ambitions overboard and slip into something unbranded to lubricate its Tier One relationships.

Automotive Tier Ones are looking for navigation partners with content and app delivery platforms.  TomTom still, to this day, offers the only effective in-dash app deliver platform, most recently adding TripAdvisor, Twitter and Expedia to the range of apps enabled for its mobile devices.

While auto makers and their suppliers are struggling with Bluetooth and USB connections, iPod Outs and MirrorLinks, TomTom has the slickest solution in the industry for delivering applications and content safely and securely into the dashboard.  C’mon TomTom, you don’t have to turn on the red light.  It’s time for the white label. 

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

 

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

 

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

 

in-Drive to the Rescue

 

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

 

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

 

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

 

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

 

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

 

Hughes Enabling Next-Gen UBI Solutions

 

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

 

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

 

Automotive Data Services

Telematics

Family Co-Pilot

 

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

 

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

 

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

 

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

 

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

 

Implications:

 

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

 

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

 

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

 

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

 

Progressive Update:

 

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

 

 

 

 

 

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

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

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

Third Generation Mobile Advertising

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

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

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

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

Relevance Rules

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

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

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

Predictive Advertising Model

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

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

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

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

Conclusion:

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

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

For further insight:

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

SAIC brought its InkaNet embedded telematics system into the market earlier this year at the Beijing Auto Show under the Roewe brand. The system is now available in dealer showrooms and it is opening eyes to the possibilities around innovative telematics solutions in China and elsewhere. The ability to deliver location-aware advertising is one capability worth a closer look especially for its potential to subsidize telematics services. The InkaNet system was created with the assistance of Pateo. The founder of Pateo is also the founder of Energy Source, which is an advertising agent established in 2001. The functionality of the system, described in literature distributed in Roewe dealerships, includes a wide-range of location-relevant applications and services. While the system does not explicitly state this objective or capability, the description of the system suggests it may well be the first automotive system (in China) able to deliver location-relevant advertisements. If so, it is not unlike the service deployed in New York City cabs by Creative Mobile Technologies. Fitted for rearseat viewing by taxi passengers, the Creative Mobile Technologies solution is able to use GPS data to determine when and where ads are shown in the rearseat. The system also enables credit card payments and CMT has started to release data regarding the kinds of information passengers have requested from the system by day of the week, such as news, weather, sports, business, Zagat or People Magazine. New York’s taxi commissioner commented in a recent NYTimes article that in lieu of demanding advertising revenue, the city hoped that the additional income for vendors might encourage them to lower the fees they charge to cab owners, which could in turn reduce the pressure to increase fares. The only current player in the telematics eco-system offering the prospect of sponsored content or services is Pioneer Electronics with its Platform for Aggregation of Internet Services (PAIS). Pioneer has made clear that this social networking oriented system, enabled through a smartphone connection or an embedded module is built around a revenue sharing model unmatched in the industry. As Google and Bing bring their browser battle to the automotive segment, the opportunity for sponsored search or other subsidized content in the car is on the table. (Will Baidu offer sponsored search for connected cars in China?) And ClearChannel’s iHeartRadio Internet radio service deal with Toyota Motor Sales could include some advertising or promotional element. It is worth noting that one of the most successful connected services delivered to cars – as measured from a profitability standpoint, is Sirius XM. Sirius and XM bought their way into dashboards which eventually led to positive cashflow. Maybe it’s time for more content and service providers to pay up. InkaNet is showing the way. NOTE: The InkaNet system is not without its shortcomings. For further details: http://tinyurl.com/2b5vbvx - Enter, the Dragon: China Getting Its Moment on the Telematics Stage - Lanctot - Insight – Automotive Multimedia & Communications Service http://bit.ly/gWT4QX - Automotive Electronic Design Heads East - Kevin Mak - Automotive Electronics 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

TomTom’s marketing machine was in overdrive last week with announcements of a new OEM relationship (Mazda) and advances with existing partners (Toyota, Renault), enhancements to its (European) market-leading traffic solution (HD Traffic) and a traffic manifesto. But undoing all that positive spin was the note that the company still wants to charge about $50/year for its Live Services. It looks like TomTom didn’t get the latest email about automotive value propositions. As connectivity comes to more vehicles, drivers (and passengers) will get more of their content and services from the “cloud.” What this means is that car makers will increasingly have in place systems for sending, receiving, processing and managing all types of vehicle data – the “back end.” (This is not unlike what is happening at your average NASCAR or Formula One event every weekend – without the parking space availability and Internet radio.) The value of this data is manifest to the car makers for better understanding the performance of their vehicles on the road as well as better understanding how consumers use and abuse their cars. The implications for cost avoidance, warranty and recall management are in the millions of dollars of savings. There is no immediate or obvious benefit to the driver. For this reason, this kind of vehicle connectivity ought to be free. (On the other hand, OnStar and others have demonstrated that people will pay for safety and security.) As more drivers shift to smartphones (with mandatory data plans) with access to a wide range of content and services, they will be less likely to pay for any service from the car (or PND) maker that is available for free (or for which they are already paying) via their mobile phone. So how is the industry (and TomTom) going to monetize all this connectivity? Enter the back end value proposition. Auto makers and Tier Ones have gotten the message and recognize that driver and passenger eyeballs and “click-throughs” have value. A driver asking for directions to a restaurant or movie has economic value. A system that knows the location of the driver has value. Beyond this, a system that is able to provide a broader “cloud” perspective of all location-related activity – including everything from prosaic traffic information to “heat” maps of gatherings of people, weather, etc. – has other value-add implications for drivers, passengers and roadway systems and public transportation overall. But in the short-term, vehicle related information for diagnostics, safety and entertainment take priority. Continental, Harman, Visteon, Delphi and Pioneer clearly understand this. All of these companies have introduced systems or platforms that seek to leverage vehicle location information for commercial opportunities. Even Best Buy’s connected PND delivered sponsored links in its Google Search. Unfortunately, Tier Ones face an uphill struggle in trying to get a piece of this action. The telematics eco-system consists mainly of a telematics service provider (ie. ATX), a carrier (ie. Sprint or Verizon) and a system integrator (ie. TCS). Each of these operators is interested in the other’s business – with the possible exception of the call center. (No one wants the call center hot potato – too much cost.) While the call center tends to be shunned, the data back end tends to be either misunderstood or underestimated. But the back end system is rapidly becoming the backbone of the system altering the competitive landscape. The power and influence of back end systems is visible to the consumer in the growing variety of free content and services via smartphones. Google probably has the largest back end system currently influencing developments in the automotive market. With its free navigation, traffic and search and an open source operating system, Google has rattled the industry mightily over the past two years. Carriers, meanwhile, are trying to fight there way in – not content to be simply white label suppliers of bandwidth. Among the carriers sniffing around the telematics back end opportunity are Verizon, Sprint, T-Mobile, Telenor, Orange, AT&T Mobility, Vodafone and Ericsson. All of these companies recognize that their servers are as valuable as their networks. Some of these companies fancy themselves Tier One players. At least three handset makers have the potential to rise to the Google challenge: Nokia, Apple and RIM. Like Google, Nokia is offering free navigation while also seeding the market with open source development tools (Qt), operating system softare (MeeGo) and smartphone connectivity technology (Terminal Mode). But Nokia remains ambivalent about the automotive opportunity. MeeGo is not ready for market and Ovi has not been designed for automotive opportunities. RIM brings a unique value proposition combining its smartphone system experience with its newly acquired QNX automotive expertise. RIM represents the most immediate threat to Google’s potential dominance in the automotive market because of its potential to deploy navigation and traffic applications (based on handset probe data) and its ability to monitor, manage and mine its network data traffic. Apple’s strength lies in its secure systems for managing commerce for downloading applications and enabling the purchase of content. For these reasons, Apple and RIM both have the scope and scale to add value to automotive opportunities. The massive giveaway of content and services by both Google and Nokia is a setup for capturing click-through traffic and back end processing opportunities for creating metrics and analytic output. Google already has the analytic tools in place, unlike Nokia. The current landscape for back end services is highly fragmented and includes companies such as TeleNav, Airbiquity, Hitachi, TeleCommunications Systems, Hughes Telematics, WirelessCar, Oracle and IBM, along with the previously mentioned wireless carriers, RIM and Apple. (Strangely, Microsoft seems to have disqualified itself – having disbanded its automotive business unit. The original vision defined by Microsoft at multiple industry events included integrating more and more Microsoft solutions such as Bing, Tellme, and Silverlight into automotive platforms, but the complete vision – including back end services – never materialized. The one exception to this no-show for Microsoft are the company's ongoing efforts to capitalize on the Bing search engine.) The value proposition of back end service providers revolves around secure management and processing of vehicle and driver data for applications ranging from vehicle performance and safety to content and infotainment and, ultimately, commerce opportunities. Neither OEMs nor Tier Ones are equipped to manage this opportunity and traditional telematics providers lack the scale. The lack of scale is one reason Airbiquity has partnered with Hitachi to service Nissan’s connectivity needs around the world. It is likely that companies such as Hughes and TeleNav will seek partnerships with larger integrators such as IBM or Oracle for the same reason. Nokia, like RIM, already has the scope and scale and like Apple already has the commerce platform (Ovi) but, unlike Apple, has done little beyond the introduction of terminal mode to optimize its offerings for automotive. TomTom is another player in need of a partner to provide the scope and scale necessary to compete in the connected space. The larger organizations that are able to monetize the connectivity proposition will force out smaller players dependent on subscription revenue. If TomTom can enhance its navigation and infotainment platform to include safety and security telematics, it will greatly improve its value proposition and the likelihood of building a devoted subscriber base. Conclusion Google and RIM are best positioned to leverage the back end data processing opportunity presented by the automotive industry. Google faces trepidation among potential OEM customers who are suspicious of the company’s motives and objectives. Google’s failure to validate its Android OS for automotive applications is another stumbling block. Nokia has discrete elements of a solution in place but so far lacks the commitment and execution to challenge either Google or RIM. Apple is a wild card player in a market that remains fragmented with the door open to new entrants. Microsoft's Bing search engine is another contender gaining traction, but, in the end, Microsoft is more of an arms supplier to the contesting parties. Winners in the battle for the back end will be those companies able to bring security and state-of-the-art analytics and commerce management to the automotive industry. Google knows analytics. RIM knows security and network management. It remains to be seen whether Nokia or some dark horse will step forward to challenge these two dominant players, but the race is on. Additional Insight: http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c1nvTq - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights http://bit.ly/aGJHDj - Smartphone Market Evolution and the Automotive Opportunity Implications -Fitzgerald - Automotive Multimedia & Communications

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

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

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

Presenters at Freescale’s Technology Forum sought to clear the air on some fundamental automotive development questions. Chief among the topics debated at the event were operating system trends generally and Android specifically, and the emergence of automotive application stores. Representatives from OnStar, Kia, Hyundai, and Visteon as well as system integrators such as IAEC all agreed that apps are coming to cars. It does not appear to matter whether they are built-in, brought in or beamed in. They are coming. To cope, auto makers will confront the challenge with a few key priorities in mind: Safety Liability In-vehicle HMI Branding Security OEMs say they need to ensure that the vehicle can be operated safely; that liability issues are pre-empted; that key elements of in-vehicle HMI are properly integrated; that branding messages are preserved and not superseded; and that the security of the on-board systems and the customer’s information are maintained. For these reasons, OEMs will be seeking assistance to establish validation processes and criteria for apps coming into the vehicle. Liability stood out among these issues as a point of disagreement. While OEM representatives say car makers will be blamed for any app failure, and dealers will be forced to cope with these complaints, non-auto industry executives thought consumers would simply blame the app maker, telecom carrier or handsets supplier. Unfortunately, car makers cannot afford to gamble that they won’t be blamed for failures. Because of the magnitude of this task, OEMs are already adding staff for software development while partnering with third party developers to create their own approved, branded solutions. While some applications are being developed in house, most development activity is taking place within the software developer community to OEM specifications. The long-term implications of these developments are monumental when the need for software updates is taken into account. It also means that OEMs are in many instances taking on the role of being their own tier ones – a function first defined by Ford with the launch of Sync. Ford has pioneered and, some say, mastered the strategy of acting as general contractor for its Ford Sync system with its growing community of software developers and service providers. Companies such as Kia Motors, Hyundai Motor America and Toyota Motor Sales all have followed suit with varying degrees of success. OnStar has made no secret of the fact that it is hiring technicians and expanding its supplier eco-system as it modifies its hardware and software model to make room for the app phenomenon. Hardware tier ones such as Delphi, Continental, Visteon and Johnson Controls are attempting to step into the general contractor role as well, offering to play the role of application certifiers. The acceptance of these appeals remains to be seen. Visteon and QNX demonstrated application store and content aggregation platforms at the Freescale Technology Forum. Visteon’s solution was built on Canonical’s Ubuntu Linux distribution. QNX’s offering was based on its own OS, although QNX is able to implement ann Android-based solution, if required, via its abstraction layer. Other automotive software suppliers on hand at the event included Canonical, Mentor Graphics, Wind River, Green Hills and Microsoft. Given the rapid growth in developer support for Android and its proliferation in the mobile market, it is logical that there be a connection to the app store debate. Suppliers to the automotive industry continue to debate the question of Android in the car. But several presenters at the Freescale Technology Forum suggested the question was moot, not only because Android was simply another version of Linux, which is already widely distributed in the car, but because the automotive platform is already being implemented. Lingering objections to Android appear to boil down to two issues, according to a Freescale executive at the Technology Forum: boot time and versions. Android can take as long as 40 seconds to boot, as anyone who owns an Android phone can attest. Android supporters say the millisecond boot times required by automotive specifications can be achieved with hardware and software workarounds. With regard to the multiplying versions of Android, it is true that the platform is still at least partially in the hands of Google and new versions arrive on a regular basis. Additionally, the priorities for the propagation of new versions are governed by the exigencies of the mobile, not the automotive, marketplace. Android supporters say it is hard to imagine that any operating system platform will not be subject to change and updating, hence this objection does not appear to hold water. Freescale has waded into the debate with developer support for Android applications for mobile devices. Freescale has an i.MX51 evaluation kit with Android OS board support package (BSP). Freescale says its BSP is ready to be adapted to select i.MX platforms. “The i.MX51 multimedia applications processor running Android is an excellent platform for building a high-performance, low-power and cost-effective mobile device that successfully passes the Android Compatibility Test Suite (CTS).” According to an executive from Intrepid Control Systems (ICS), which has created an Android application - Sensor Spy - for extracting sensor data from a vehicle for triggering mobile device functions, Google retains control over access to a few aspects of Android including the Android Market, access to specific Google APIs, and access to cloud features such as voice recognition and push technology. But the ICS executive pointed out that Android can be used for its APIs and tools and that a home screen can be used to hide Android from the end user (via Mentor Embedded Inflexion UI). The ICS executive proceeded to describe how the Android model works concluding that Google TV may be an ideal automotive application. In conclusion, he pointed to the Android-based SAIC InkaNet optional connectivity platform introduced for the Chinese market earlier this year as the first automotive Android implementation. Indications in the industry are that it is only the first of many to come. Conclusion: App stores are a reality in the automotive marketplace. But automotive app stores will differ from the Apple App Store or Android Market. Automotive applications will have to be properly vetted for liability, security, HMI, safety and branding. For this reason, it is unlikely that car makers will be able to implement off-the-shelf application solutions. Car makers will be forced to create new supplier relationships and a new eco-system to support the app store model. They will be forced to do this in the context of an ill-defined path to revenue generation (from selling apps? from selling app-related enhancements or content?) in the hope that app stores will stimulate vehicle sales or as a customer-driven defensive response to the proliferation of smart phones and smart phone connectivity platforms in the automotive industry. The message from the Freescale Technology Forum: Like it or not, automotive app stores and the Android OS have arrived. Additional insights: http://bit.ly/cYvFZH - InkaNet – Mobile-Based Infotainment Comes To Chinese Autos - Automotive Multimedia and Communications Service - Kevin Mak http://bit.ly/aBwXvE - Enabling Technologies Forecasts A to E - Wireless Device Strategies - Bonny Joy http://bit.ly/bUxwrT - Automotive Semiconductor Demand Forecast 2008 - 2017: Datafile - Automotive Electronics Service - Chris Webber http://bit.ly/b5W8ZS - Nokia and RIM Push Into Automotive as 'Apps' Competition Mounts - Automotive Multimedia and Communications  Service - Joanne Blight Intrepid Control Systems - Android OS for Infotainment: Advantages of an Open Architecture - http://bit.ly/cTfBFG