Best Buy reported some disappointing financial figures last week blaming stalled consumer demand for TVs – including new IPTVs and 3DTVs. Going unmentioned in the company’s earnings call was its ongoing outreach to Detroit with a deal to sell and install EV charging stations for the Ford Focus EV and its plan to sell and install OnStar’s aftermarket mirrors. It’s time for Best Buy – and other large box retailers around the world – to seek closer ties to domestic car manufacturers to leverage the emerging connected and electric vehicle opportunities.

The Best Buy-partner announcements:

Best Buy-Ford Sync: http://bit.ly/eNGZ18

Best Buy-Ford Focus EV Charging Stations: http://bit.ly/e0CHWF

Best Buy-OnStar: http://bit.ly/eoJGeq

 

Best Buy understands the importance of connectivity as its Best Buy Mobile strategy has clearly become the engine of growth for the company. Best Buy Mobile is gaining more square footage in Best Buy’s large box stores – absorbing floorspace previously dedicated to selling shiny discs. And the company says it intends to open 150 Best Buy Mobile standalone stores in the U.S., bringing the total to 325.

 

The importance of Best Buy Mobile to the future of Best Buy is important to understand on two levels. The arrival of smaller Best Buy Mobile stores reflect Best Buy’s need to explore alternatives to its existing large box retail store model – built around destination shopping. And it also reflects the wider so-called “connections” business strategy of selling hardware that comes with a connection and, usually, a service subscription.

 

The category cited on the Best Buy earnings call as generating the single largest sales increase was mobile broadband and Wi-Fi connectivity devices, up 50%. The only category garnering more attention from Best Buy merchants than mobile broadband devices and, of course, smartphones themselves (where Best Buy claims a 6% U.S market share) is tablet computers. Best Buy has seen significant sales from tablets and expects even bigger numbers in the future, hopefully replacing sales lost from other computing platforms.

 

This is precisely where the automotive industry outreach comes into the picture. Traditionally at odds with the automotive industry, Best Buy has suddenly become the go-to retail partner for auto makers seeking stronger customer relationships. Car makers are themselves wrestling with the rise of the smartphone and table computing platforms and their influence on consumers.

 

Best Buy is experiencing this outreach from Ford and OnStar at precisely the moment it is experiencing the most competitive heat from online retailers and audio and video content streamers. Ford and OnStar need Best Buy’s trained sales people to explain new connectivity solutions to their customers – and to validate device compatibility, as in the case of Ford Sync. Best Buy needs Ford and OnStar to connect with new car buyers who may be considering aftermarket purchases.

 

 Best Buy fields an army of connectivity experts in its stores – which is precisely the marketing force needed by car makers bringing systems such as MyLink, Sync, Entune, mbrace and Uconnect to the market. But is Best Buy missing the boat even as it welcomes Ford and OnStar aboard? Yes!

 

The challenge facing Best Buy is preserving the relevance of its large box retail stores – where growth has eased or ceased altogether – in a market where consumers have almost perfect visibility to product assortments, information, and pricing online and gasoline is expensive. It is no coincidence that Best Buy launched two new online-to-store initiatives in 2010: Ship to Store and Friends and Family guest pick up.

 

Best Buy touted the improvements in its online-to-store initiatives in the past year. The company said in its earnings call that the number of in-store pick-ups for online sales grew to 40% from 35% in the year-earlier period. And 80% of big screen TV purchases made online were picked up at physical stores.

 

Best Buy’s large store future is inextricably linked with the pervasive car culture in America and elsewhere. It is a strange irony, then, that the mobile electronics department has become a virtual afterthought buried in the back of most Best Buy stores and frequently unstaffed.

 

One of the indications that Best Buy has not recognized, on its own, the opportunity presented by its new-found auto industry connection is the disconnect between the OnStar initiative and the Ford initiatives. The OnStar mirror is handled by the mobile electronics department, while the Ford Sync initiative is handled in the mobile phone department – and never the twain shall meet.

 

Normally such a disconnect would be rational and tolerable except for the fact that smartphones and tablet computers are playing an increasingly important role in the automotive market. What better marketing environment than a large box Best Buy store for companies such as Apple and RIM and Motorola (and?) to tell their tales of in-vehicle integration?

 

The opportunities to be derived from leveraging auto maker relationships include:

 

• Demonstrating smartphone and tablet computer integration alternatives in cars – along with distracted driving mitigation messages. (Tablet computers are ideally suited to aftermarket rearseat video solutions.)
• Demonstrating and selling aftermarket safety systems.
• Demonstrating and selling mobile broadband devices.
• Safe driving clinics for teens
• "Pimp My Ride" rallies in the parking lot?

Best Buy’s large box stores are veritable palaces to destination shopping actually dependent on the automobile. It makes sense for the company to take advantage of the in-store space and product assortment and trained sales force to promote enhanced driving experiences.

 

Implications:

 

The strangest thing about this emerging opportunity is Best Buy’s failure to recognize it. Auto makers have historically been hostile to automotive aftermarket retailers – and with good reason. A substantial proportion of a typical OEM’s profitability and of the profitability of its dealer base comes from aftermarket sales. (Maybe Best Buy could coordinate its efforts with local car dealers. Better yet, maybe Best Buy could negotiate pricing on new cars - it works for Costco.)

 

The mere fact that OnStar and Ford are reaching out to Best Buy and other retailers marks a tipping point in the industry. Auto makers are suddenly recognizing that they have entered into the consumer electronics market. On this new turf they clearly understand that they will need all the help they can get in explaining and demonstrating their own consumer electronics solutions. (Coincidentally, Ford and GM have drastically cut the size of their dealer organizations - adding a further rationale to the retail outreach.)

 

While Ford has reached out to its dealers to offer more training and more incentives to usher them into this new consumer electronics-laden era, retailers like Best Buy are being asked to fill a yawning gap between the available technology and the available means of explaining it. The marriage of Best Buy and the automotive industry is a marriage of convenience, but Best Buy should take advantage of this opportunity to build stronger customer relationships, higher connectivity market share and increased profit from the resulting service and installation business.

 

Additional insight:

 

http://bit.ly/ePD2Df - GM Shrinks Development Cycle in Game of Connectivity Catch-up - Roger C. Lanctot - Automotive Multimedia & Communications Service

http://bit.ly/dJXnU2 - Aftermarket Telematics: Let's Get It OnStar - Roger C Lanctot - Automotive Multimedia & Communications Service

At a time when radio struggles with its role as the red-headed stepchild of the broadcast industry it was refreshing to discover a group of enthusiastic radio marketing executives discussing what the organizers of the event described as the arrival of the fourth golden age of radio. The discussion was occurring at the RAIN (Radio and Internet Newsletter) Summit in connection with the Radio Advertising Bureau event in Washington, DC., this week. Kurt Hanson, CEO of AccuRadio.com and Publisher of RAIN, defined the vision of the fourth golden age of radio as that period following the first (1935-55), second (1960-75 = Top 10, emergence of FM), and third (1976-99, listener fatigue, consolidation). Hanson pointed to Internet radio as a transformative force creating new value for radio advertising and content. For these executives, the hand-wringing regarding the impact (read: threat) of Internet radio is past, replaced by an intensifying embrace of a technology that is transforming the industry. Broadcasters left the event with the newfound conviction that Internet radio was a valuable tool for enhancing their influence and reinforcing their ties to listeners – and the mobile phone and the automobile are increasingly important venues via which to pursue that opportunity. For these broadcasters, the so-called fourth golden age of radio is characterized by the emergence of Internet radio and five aspects defined by the event organizer as: 1.                   Personalization and control manifested in pause, fast forward and thumbs up/thumbs down functionality; 2.                   Variety in the form of thousands of available stations targeted at all forms of regional and genre/sub-genre-based interest; 3.                   Lower spot load – ie. fewer ads – but better targeting of ads – and the corollary of more detailed and accurate metrics; 4.                   Ubiquity – Internet radio is accessible via televisions, mobile phones, standalone radios and, soon, automobiles; 5.                   Global/National reach vs. local – after all, listeners can be anywhere. Internet radio use currently stands at a 3.8% share of radio listening, according to data from Ando Media referenced at the event, representing the equivalent share of radio listening captured by FM radio in 1971. Arbitron data shows the percentage of online radio listening (% who have listened to online radio in the past week) as steady at 17% between 2009 and 2010 (equivalent to 43M listeners). Pandora, the most successful online music provider to date, showed an increase in # of listeners per average quarter hour (AQH) from 257K in January to 366K in July. At the same time the total AQH for the top 20 online radio sources was 780K and the total online radio listening figure was 1.3M. The numbers indicate that Pandora has a 28% share of all online radio listening, according to Hanson, and an overall radio listening market share of 1% - equivalent to 1% of listening in every market in the U.S. The trend, according to Pandora’s own data, continues upward with the number of hours of listening on Pandora growing from 200M in January to 275M in July. And the majority of the increase is coming from mobile users, who now account for more than half of those listening hours. Pandora’s overwhelming brand recognition in the space was reflected both in the listener data and in research presented by Coleman Insights which found Pandora, Slacker and iHeartRadio as the only brands with any significant unaided recognition. The larger message from the Coleman study was that Pandora may have strong recognition but does not yet have a dominant image in the minds of consumers – ie. the market is still fairly fragmented and an open opportunity. The implications for the automotive and mobile device markets come through loud and clear here and in Strategy Analytics’ own data where interest in and usage of Internet radio on mobile devices is on the rise. Not surprisingly, auto makers are seeking to capitalize including front runners BMW, Ford and Mercedes-Benz. Only a year ago, Internet radio in the car was greeted with skepticism and derision for a variety of reasons including: 1.                   Cost – As unlimited data plans begin to disappear, the perception is that Internet radio will become prohibitively expensive to mobile users; 2.                   Network capacity – Cell towers have limited ability to support an unlimited number of data users, which is what Internet radio users are; 3.                   User experience – Capacity and signal issues have created a listening environment carried by drop outs and lost signals. All of these objections have either been resolved or will soon be resolved: 1.                   Cost – Do the math. Taking AT&T’s tiered plan as an example, the $30 for 2.4GB likely represents MUCH more than enough time and bandwidth for all but the most out-of-control mobile listener. Cost is NOT an issue. 2.                   Network capacity – Carriers are adding smaller cells and Wi-Fi access points in major metro areas to alleviate the capacity issues. AT&T complaints have almost (I say “almost.”) completely stopped. 3.                   User experience – There will always be challenges in delivering music consistently, but the creators of these solutions are providing for caching and buffering at the receiving end while broadcasters are filtering content to lower-bandwidth alternatives at the broadcast end. The dominant mode of delivery for Internet radio in the car will be the smartphone in the short term. And with a growing population of smartphones in the marketplace, the opportunity is large and growing. But the concept of an embedded telematics infotainment system with access to Internet radio is no longer anathema in the industry. In fact, the Mercedes-Benz MyComand concept of such an embedded solution shown a year ago at Telematics Munich now looks not only doable but downright prescient. Some bumps in the road remain.  Music service-type Internet radio, such as Pandora and Slacker, will have a user experience advantage over true Internet radio platforms such as RadioTime and vTuner. Because of their personalized nature, Pandora and Slacker will have the advantage of leveraging buffering and caching to preserve the listening experience where cell connections are lost. (Slacker, of course, is primarily a caching-based service and, by definition, won’t lose connection mid-song.) Nevertheless, with carrier network improvements and the transition to LTE technology, the radio aggregators such as RadioTime and vTuner may gain the upperhand by facilitating access to a wider range of content with more creative means to manage and discover new music. RadioTime, for example, has deployed a song search feature able to locate a song being played on any of its participating radio stations. These aggregators also have the advantage of making podcasts and other non-radio content available while also integrating terrestrial sources such as analog AM/FM and HD Radio sources using location data. Competing Radio Platforms It is no coincidence that Sirius XM is making its content available via the Internet. Sirius XM clearly recognizes the competitive threat posed by Internet radio. To respond to the content searching and sorting functions of some Internet radio services and the ability to store or buffer some music, however temporarily, Sirius XM can be expected to bring content management enhancements to its Satellite Radio 2.0 platform due late in 2011. (Sirius XM has raised its subscriber guidance, forecasting 20.1M U.S. subscribers by the end of 2011.) Sirius XM already offers smartphone app functionality already widely deployed by Internet and terrestrial broadcasters. (In fact, much of the talk at RAB revolved around leveraging these apps for advertising and promotional engagement with the listener.) But with the enhancements in satellite radio requiring further hardware investments by OEMs, Sirius XM will have to continue to subsidize its OEM customers. HD Radio will continue to see widening deployment via automotive OEMs, especially since the required hardware investment is substantially less than for satellite radio. According to a recent Twice magazine report HD Radio is built into 5% of new cars sold in the U.S. reflecting deployment by 15 brands on 86 vehicle lines and as standard equipment on 36 car models. There are 2,085 converted stations and 1,226 multicast channels. More than  3M HD systems of all types have been shipped, according to iBiquity Digital, and efforts are underway to see HD Radio technology integrated in handsets. Conclusions The two challenges for OEMs will be to monetize the Internet radio opportunity and to solve the user interface challenge of accessing multiple radio sources safely in a vehicle. From a monetization standpoint, the goal will be to enable users to purchase songs and to enable access to premium content. In addition, the integration of Internet radio into embedded systems will make a powerful and positive contribution to the perceived value of telematics infotainment systems. Smartphone integration continues to advance and a variety of approaches will be tried, no single one of which is likely to dominate. As an example, BMW’s Mini Connect integration reproduces the smartphone display in the instrument cluster, while the solution in the 1 Series lets the driver use the smartphone’s interface. The latter approach is used by Mercedes in its Smart integration product. The bottom line is that Internet radio in the car is much closer to a reality than it appeared just 12 months ago, and it will likely contribute positively to convincing consumers to pay for telematics systems. 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 http://bit.ly/bD5RzL - Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority - Blight - Automotive Multimedia & Communications

IntelliDrive, the USDOT program intended to create intelligent highways, stands at the crossroads of major funding and deployment decisions but may be overlooking a solution capable of realizing the smart roadways dream in the twinkling of an eye – relative to current timelines. To do so, though, may mean setting aside, for now 5.9GHz DSRC technology in favor of a technology most recently associated with bad driving behavior. Smartphones and the cellular network hold the key to the deployment of wireless systems and services capable of revolutionizing automotive safety and achieving the dream of safe connected highway systems. This goal can be achieved through opt-in solutions that provide for the sharing of device data and could serve as a transitional technology between existing systems and the DSRC technologies not likely to be deployed for another 5-10 years. Alternatively, the government could step in with its regulatory and legislative powers and mandate the provisioning of cellular data transmissions for connected vehicle communications. (Such a scheme was described to me by an ITS America member at the recent Distracted Driving event in Washington, DC. The executive asked to remain anonymous because his proposal may actually be at odds with the short-term interests of his employer.) So cellular technology, which is already part of the IntelliDrive vision along with DSRC and Wi-Fi, can be used as a transitional alternative to DSRC on a voluntary or involuntary basis. (DSRC is universally preferred for safety applications because of its low lacency.) On the involuntary side, concept is to require smartphones to share their location data and to be used for the reception of targeted emergency or road sign messages. The proposition involves a monthly charge to the subscriber of approximately 10 cents – not unlike the current eight-cent charge for mandated 911 calling on mobile phones – to cover the cost of the first 500Kb of monthly data use on the phone for ITS purposes. (It is worth noting as an aside that Wi-Fi technology has already been pioneered – notably by Dash Navigation – as a V2V technology for communicating highway and traffic conditions. With Wi-Fi technology proliferating on smartphones it will not be long before this same capability emerges in the handset space.) Confronted with this opportunity opponents are quick to note the privacy and liability concerns associated with cellular (and Wi-Fi) technology and the need for, at the very least, an opt in mechanism. The bottom line is that these concerns are not insurmountable and a mandated system is feasible. Opening up a data channel on all phones for location data and automatic crash notifications (transmit) and in-vehicle messaging (receive) will open the door to wide adoption of telematics technology and achieve the goal of connecting vehicles to the infrastructure, in-vehicle messaging and to emergency services. The business models to support the service rationale are not unlike those for RDS-TMC, 911 and 511 services, which means this solution is designed to be low cost but still requires some third party support from private companies. The barriers to be overcome are numerous and include – inter-carrier cooperation, the creation of a data clearinghouse for processing and filtering data, and the creation of a broadcast mechanism most likely via multiple private entities. Achieving comprehensive deployment on mobile phones will also require federal legislative and regulatory action. Because the mobile phone-based system will pay for itself while also taking advantage of ubiquitous handset technology and the cellular network it has massive advantages over the proposed DSRC-based system. The 5.9GHz DSRC technology will require BOTH auto maker support for an added module and antenna AND a huge deployment of transmitters and receivers along roadsides and the corresponding data processing infrastructure. DSRC is inevitable, but why must the driving public wait for a solution that will save lives. If the mandated approach is too onerous, then it is more or less left to private enterprise to implement their own prove networks along the lines of Waze and the CloudMade communities which are multiplying around the world. These emerging networks have the capability to bring these services to market almost immediately. More importantly the proliferation of OBDII connections (admittedly using wireless communication protocols claimed by Hughes Telematics) means smartphones are also capable of communicating vehicle sensor and camera data, further enhancing the value of the proposed systems. The proliferation of low-cost sensor and camera systems means there is a wealth of available inputs such a system can put to work to enhance safety, reduce congestion and hazardous driving conditions, and improve the overall driving experience. In fact, the proliferation of smartphones and inexpensive cameras and sensors are rapidly combining to mitigate the demand for the IntelliDrive DSRC vision. Consumers and industry representatives may discover after the implementation of a smartphone based network sharing vehicle and sensor data and communicating traffic conditions, the incremental enhancement of DSRC deployment is unnecessary. The concept also suggests that those car makers with embedded systems should be able to gain an advantage from having more direct and complete control of the user experience. And those car makers with existing probe networks will gain the first-mover advantage of having a larger volume of inputs to process for the benefit of their subscribers. Facilitating the implementation of this vision will be the rapid development and deployment of handset connectivity technology. From terminal mode to Delphi’s D-Connect and Apple’s iPod out, the technology is rapidly falling into place – alongside OBDII communications and sensor proliferation to facilitate the communication of traffic and other urgent messages to primary and secondary displays in the car. In fact, the mobile phone industry is facing the prospect of a handset FM receiver mandate that will create yet another pathway for communicating information into the vehicle either via the on-board radio or via the mobile phone. The handset FM mandate is intended mainly for the transmission of emergency alerts, but will also enable regular FM transmissions. Conclusion: The concept of using mobile phones and cellular technology to supplant or serve as a transitional solution to the proposed DSRC network for V2X communications is radical and lacks an advocate as a mandate but is already emerging as a voluntary solution in the form of discreet smartphone applications and related user communities. The mandate path is likely to die since the very companies that most recognize its value – those with currently deployed embedded telematics systems  - have the most to lose from its implementation. Other market participants such as content and applications providers and even telecommunications carriers may also be opposed to a mandated proposition as it threatens existing business models and relationships. But all parties are beginning to recognize the mobile phone as the key to solving multiple safety challenges in the vehicle. Whether anticipating hazardous intersections (Global Mobile Alert) or sharing probe data (Waze, TrafficTalk) the smartphone has established its credentials as a safety device. The phone also benefits from the support of a rich developer community rapidly moving smartphone technology into realms not previously foreseen. Additional Insights: http://bit.ly/aWhNuC - Automotive Sensor Demand Forecast 2008 to 2017: Global Economic Rebound Sparks Growth - Mark Fitzgerald - Automotive Electronics Service http://bit.ly/9QCIVw - Automotive Sensor Demand Forecast 2008 to 2017: Global Economic Rebound Sparks Growth - Datatables - Mark Fitzgerald - Automotive Electronics Service http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c1nvTq - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights

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

Delphi used the SAE 2010 World Congress event in Detroit this week to unveil D-Connect, its answer to Nokia’s terminal mode smartphone connectivity solution. D-Connect addresses an array of in-vehicle connectivity challenges – including automotive-oriented application stores - while defining a radical new vision of center stack architecture. The system architecture is described as being built around an Intel or ARM processor with a Linux kernel, common Linux packages, Genivi, ported device applications and, finally, an HMI layer. Availability of D-Connect is likely dependent on OEM adoption. For the U.S. market, its significance is its representation of Delphi’s vision of universal smartphone connectivity and arrives as the company emerges from Chapter 11. The D-Connect vision simultaneously provides center stack connectivity for any smartphone – reproducing the on-device display in its entirety on a large touchscreen display mounted in portrait mode – with separate interfaces for when the vehicle is static or in motion. When the vehicle is not moving, the display allows access to all the apps displayed on the device and allows the device to be manipulated and the apps to be accessed directly from the large display via touch or voice interface. The system was shown with a physical connection, though Delphi says the system will support Bluetooth, USB or Wi-Fi connectivity. The D-Connect vision includes Delphi’s announced intention to provide app store support. Delphi says it will certify applications to determine which will be accessible when the vehicle is in motion. When in motion, the separate HMI display will appear with large on-screen icons including “Voice Search,” “Navigation,” “View Maps,” and “Contacts.” The system appears to be positioned as an alternative to Nokia’s terminal mode, shown most recently at CeBit and at the Geneva Motor Show. Nokia’s solution similarly provides for vehicle HMI control of smartphone functions and is being developed by Nokia in conjunction with Tier Ones such as Harman, Magneti Marelli and Continental along with some OEMs. Both the Delphi and Nokia solutions are still in concept mode. The significance of the Delphi solution is magnified by its proposed use of a large portrait display in the center stack, its ability to be operating system and connectivity agnostic, its in-motion interface with app certification and its use of the Genivi operating system in conjunction with separate Linux packages. The use of Genivi and Linux is unique and represents the first demonstration of a complete solution based on the newly proposed automotive operating system. It also allows Delphi to define a new path to the much discussed in-car application store. As far as the app store is concerned, Delphi sees application downloads working strictly via the device and functioning through device connectivity – not through a direct download into the car. Delphi uses the Genivi operating system and other Linux-based applications, to interface to downloaded apps, but prefers to keep the applications themselves outside the center stack software environment. Delphi’s approach contrasts with Continental’s AutolinQ system, which brings Android into the center stack. D-Connect will connect with Android phones and applications but does not bring that code on-board.  To further build the D-Connect brand, Delphi has also chosen to name the actual phone application D-Connect.

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

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

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

Nokia, BMW and Daimler highlighted mobile phone integration in their Geneva Motor Show announcements this month. But each company took a different path with its own merits and shortcomings. The most flexible solution was shown by Daimler, but the BMW and Nokia solutions will influence future integration decisions.

 

The solutions – two iPhone-based and one Nokia specific - reflect the three fundamental paths to integration. Nokia’s terminal mode emphasizes leveraging the vehicle human machine interface via a bi-directional data exchange that transfers the device display into the vehicle head unit; hands control of the device over to the vehicle HMI; and makes use of vehicle CAN data for contextual feedback to the driver.

 

The BMW Mini iPhone integration puts iPhone applications, most notably Internet radio from RadioTimes, behind a large-screen embedded interface. Availability of this new connected solution is unclear, although the implication is that additional functions will ultimately be enabled and the vehicle HMI – in particular, a multidirectional, finger-sized toggle – will allow the driver to interact with phone-based applications without touching the phone.

 

The Daimler solution, offered for its Smart cars, is the closest to market – due this summer with a $400 price tag – and represents the most elaborate offering. It is also a third path to integration, providing a dash mounted iPhone holder with a suite of automotive applications – the first such suite developed by an OEM. Daimler has even gone so far as to customize the on-device interface with larger fonts and buttons.

 

Among the big differences between the Daimler integration solution and the competing offerings is that the driver mainly makes use of the on-device interface. Included in the application suite in the Smart iPhone application are hands-free calling, access to the on-device music library and Internet radio, Bing Internet search, a car finder function, and navigation with a “smart touch” feature. The cradle acts as a control unit, charger and microphone with stereo integration for muting during calls.

 

An additional enhancement due later in the year is a Smart drive kit camera, for fitting on the windscreen. The device will be able to transmit pictures of the area in front of the car to the smart drive kit via Wi-Fi and will thereby provide traffic sign recognition functionality including speed limits – a feature offered on a handful of portable navigation devices.

 

The smart drive app for the iPhone can be downloaded from the App Store at a one-off price of €9.99 for the basic version. The navigation upgrade with up-to-date maps costs €49.99 per year. Daimler says its researchers are currently putting the final touches to the smart drive kit camera functions.

 

The Daimler solution for its Smart car line-up is particularly appropriate since Smart cars in Europe are quite often sold without a head unit. In this case, the customer’s iPhone indeed becomes the vehicle’s on-board car radio, hands-free phone, navigation and driver assist system.

 

In contrast, the BMW Mini offering requires an embedded solution which will limit its scalability and upgradability, although the display real estate is substantial and the use of the vehicle’s HMI elements is preferable. The Daimler unit requires the driver to use the iPhone screen as the main interface. All three of these solutions will benefit from voice interfaces.

 

Like the BMW solution, Nokia’s Terminal Mode is intended to hand off HMI responsibility for smartphone functionality to the car. While the solution is promising, and Nokia is working with partners including Alpine, Magneti Marelli and Harman Becker, it is proprietary. As a proprietary solution, Nokia will face challenges to achieve market adoption despite working closely with the Consumer Electronics for Automotive (CE4A) coalition of German car makers.

 

Concept vehicles using the Nokia technology were shown at Geneva by Fiat and Valmet Automotive. In fact, the solution shown by Fiat, mounting a Nokia phone on a dash board as a navigation device connected to the Blue&Me system was significant given Fiat’s existing relationship with TomTom for a Blue&Me integrated PND.

 

Nokia’s terminal mode is promising, especially given its anticipated ability to obtain CANbus data for integration with different applications, but as a proprietary solution it is likely to be geographically challenged (ie. Eurocentric). A good example of an equally elegant solution with limited distribution is Novero’s proprietary Bluetooth interface developed for Ford. This solution is at risk of being marginalized once Ford finally decides to bring Sync to Europe.

 

Nokia has the right idea in pushing hard at smartphone integration, but the company would do well to enable standards-based technologies already deployed rather than seeking proprietary solutions. Even in the best of scenarios, the deployment of a proprietary Bluetooth profile on handsets and in cars is a years-long proposition. Daimler’s solution arrives in a matter of months with upgrades and enhancements to come before the end of the year, no doubt. Mini won’t be far behind.

CSR is capitalizing on the strength of its GPS line up acquired from SiRF to garner automotive segment wins for its Bluetooth and Wi-Fi solutions, according to the company’s latest earnings report. In its fourth quarter and full year earnings report last week, CSR reported a revenue increase of 149% for its automotive and PND segment. With the addition of SiRF, the combined automotive and PND division now accounts for 21% of total company revenue vs. 7% in the prior year. CSR said fourth quarter demand was strong as a result of the increasing volume of new cars being built and a general move to embed more connectivity and location technologies in those new cars. CSR, which is better known for its dominant position in the handset Bluetooth market, claims combined Bluetooth and GPS leadership in the automotive market. The company also noted it had secured a design-win at a Tier 1 automotive supplier for its latest generation Wi-Fi, the UF6000. The company noted weak PND demand in Europe and the U.S. which was compensated for by increased levels of demand in the Far East and the developing world. CSR announced a design-win for a leading North American electronics manufacturer’s new connected PNDs where CSR is providing both GPS and Bluetooth. In Europe, CSR secured a design-win with Vincotech for new GPS modules and telematics product platforms. CSR says its SiRFPrima high-end SoC platform focused on the in-dash automotive market also received two design-wins in China expected to lead to significant volumes. Overall, CSR says its has begun mass production and shipping of its Wi-Fi/BT/FM connectivity platform; a GPS design win for a N. Am. smartphone maker; and BT and FM design wins for Tier One handset makers. CSR sees “positive trends” in the adoption of wireless connectivity technologies by the automotive sector.  Many vehicles already feature Bluetooth and GPS and the company believes Wi-Fi is a next step. The most important development for CSR in 2009 was that automotive emerged as a substantial third market segment, picking up slack from the company’s audio and consumer segment which saw revenue nearly halved during the year. CSR is now poised to leverage its complete wireless portfolio of Bluetooth, GPS, FM, NFC and Wi-Fi to address emerging automotive opportunities. For additional Strategy Analytics perspectives on in-vehicle connectivity: Global Automotive Vehicle-Device Connectivity Forecast 2008-2016 - http://www.strategyanalytics.com/default.aspx?mod=ReportFormatsViewer&a0=5289 Vehicle-Device Connectivity to Drive Adoption of CD-Less Systems - http://www.strategyanalytics.com/default.aspx?mod=ReportAbstractViewer&a0=5293

Leveraging its TotalGuide interactive programming guide and Lasso and Connected Platform networking technology, Rovi is seeking to become master of all content.  The company wants to own the interface between the user of audio and video content and the process of discovering and acquiring that content regardless of source or device platform. At the CES show in January, the company was touting new content partnerships with Showtime Networks, ZillionTV and Rhapsody in the U.S. along with a list of European based firms.  Existing sources include CBS, Blockbuster, YouTube and Roxio CinemaNow.  Rovi’s technology is built upon, among other things, the growing metadata and user review databases of its own AllMediaGuide and partner Flixster, along with WideVine’s digital rights management solution.  The company claims more than 25 million U.S and 50 million worldwide households using its interactive programming guide which also serves as an advertising platform. While Rovi’s role in the automotive market is less obvious, the company is more than three years into a drive to resolve content and rights-related challenges to accessing media and content from multiple sources conveniently and legally on mobile devices and in cars as well as in homes. Rovi’s role in the automotive market is growing as in-vehicle device interfaces such as USB ports and Wi-Fi connections proliferate along with external connections via embedded modules or smartphones.  More content and media are being brought into cars and Rovi is coming along for the ride.  Current partners in the automotive segment include Kenwood and NXP. Rovi’s technology is also used by Apple’s iTunes store among many other online content sellers. Introduced late last year and currently available, Rovi’s automotive solution combines its Lasso and Connected Platformm technology for the automotive market and includes:

• Media Lookup: the ability to use Rovi's metadata library to identify, tag and manage digital content.
• Rich Entertainment Metadata: information on a variety of music and movies, supports multiple content types from CDs, digital files, DVD, Blu-ray Discs.
• Software Update: periodic updating of embedded databases via removable media or home network connectivity.
• Content Transfer: transfer of audio files and metadata to the vehicle from standards-based devices on a home network.
• Device Sharing: interoperability of portable devices via USB and standards-based connectivity.

To achieve the necessary connectivity, Rovi is supporting the Digital Living Network Alliance’s (DLNA) new guidelines for the service provider market that will enable consumers to play back and share commercial video and music across DLNA Certified devices. DLNA certified devices are proliferating in the PC (Windows 7), set-top box, TV, Blu-Ray, and mobile device markets, paving the way for smoother access to content from multiple sources. In the consumer electronics market, Rovi wants to become the default programming guide for the next generation of HDTVs, Blu-ray players and set-top boxes.  The importance of this effort is that the company is bringing together both in-home consumer electronics content access and mobile device access.  TotalGuide will integrate cable and broadband video content side-by-side, in a single unified interface in the home, but can be expected to deliver a similar solution in mobile environments. This means, Rovi will help enable the discovery and distribution of content, regardless of the delivery source or device platform.  And Rovi also has the user reviews and metadata from partners like Flixster to offer social recommendations for video viewing.  Competitors include Vudu, Boxee and TiVo, among others, but Rovi arguably has an edge with its unique combination of content, rights protection, metadata, and user reviews. And Rovi is the only player pursuing automotive opportunities.

Rovi’s rights protection technology comes from Widevine’s video optimization and DRM solutions.  Widevine is a provider of adaptive streaming, interactive DVD/Blu-ray and DRM technologies to Internet content services as well as cable, satellite and telecommunications companies.  Rovi says that by working with Widevine, consumers using its TotalGuide will be able to have access on their TVs to more content, such as movies and TV shows, from more providers.  At the CES show, Rovi showed its new Media Management content management solution.  Media Management helps manufacturers of PCs, set-top boxes, mobile handsets, and network-attached storage devices identify, tag and organize digital music, videos and photos by attaching descriptive metadata to the asset for easier filing and searching..

The battle lines are drawn between Flo-TV, the service that transmits television in the 716-722MHz band, and the new ATSC mobile DTV standard, which had its coming out party at the recent Consumer Electronics Show. Flo-TV executives were keen to raise questions regarding the viability of mobile DTV even as products using the technology are just arriving on the market. The reason for the rivalry is that both technologies are vying for automotive line fit and aftermarket opportunities, although the automotive market is admittedly secondary to the primary goals of enabling mobile devices to receive live television. The ATSC mobile DTV standard is supported by the Open Mobile Video Coalition. Both the OMVC and Flo-TV anticipate millions of users of mobile TV technology even though Flo-TV's subscribers are still estimated in the low hundreds of thousands (See: FLO-TV Hesitant Start: Automotive TV Market Not Assured - Strategy Analytics) and mobile DTV has not yet reached the market. Flo-TV, a $10/month subscription-based service, offers less than 20 channels in 50 markets, but the available channels include a range of premium and leading network broadcast content. Picture quality is adequate, especially for a small mobile screen, and comparable to ATSC. Nevertheless, Flo-TV executives speaking privately at CES raised several questions about the new ATSC mobile DTV standard including: -> The inconsistent availability of channels from market to market; -> The quality of reception; -> The existence of a business model to justify the mobile DTV investment; -> The availability of particular content governed by mobile licenses - ie. NFL broadcasts; -> The potential for the government to reclaim the allocated spectrum. The significance of the raising of these points is that Flo-TV has its own coverage and picture quality issues, according to industry observers, although it does have the advantage of a consistent offering of content throughout its (limited) program areas.  And the potential for the government to reclaim the spectrum, though a serious possibility, is a bit of a red herring given that the spectrum was only recently allocated and any change will likely be met by massive opposition. The question of mobile licensing of content will likely be resolved via negotiation among interested parties, and a resolution is likely because there are in fact a variety of business models designed to eventually deliver billions of dollars in revenue including both advertising and conditional access. The mobile DTV standard provides for conditional access to content in addition to free content. Flo-TV has no free content other than a preview channel today. One way for Flo-TV to get better traction might be to shift some of its content to a "free" ad-supported model. Still, the variety of available content, the number of available channels and the range of use cases for managing content via Mobile DTV will remain more robust. Rather than list the use cases, it is probably easier to visit this link: Use cases: http://www.omvc.org/_assets/docs/broadcasters/mobile-dtv.pdf Suffice it to say mobile D-TV provides for push, interactivity and time-shifting and all of the advertising and commercial possibilities implied in those capabilities. The remaining question, though, is the size of the automotive market opportunity. Unlike Asian and European markets, front seat viewing in the U.S. is out of the question for the time being and, even when it arrives (via dual view technology) is likely only to be intended for passengers. With most automotive viewing, therefore, done in the rearseat, mobile TV of any kind will - for the most part - be limited to families with young children, couples and tailgaters. Flo-TV has already gotten the jump on mobile D-TV with Chrysler's launch of a Flo-TV aftermarket device available through Mopar. Mobile TV aftermarket supplier Winegard showed its CIO TV solution at CES, although it chose not to show its concept for the required antenna. Presumably the antenna will not be an issue as it was for satellite-based solutions such as ATT Cruisecast which failed late last year. To date, large antennas have been a major drawback to in-vehicle television delivery systems. OMVC identifies a variety of mobile device user populations in its own studies, including commuters: Study: http://www.omvc.org/_assets/docs/press-releases/2009/OMVC-Mobile-TV-Study-December-2009.pdf It is worth noting the variety of content types in which consumers express interest in connection to the variety of available content delivery modalities and types enabled by mobile DTV. Devices that enable Wi-Fi distribution of mobile DTV content have already been introduced in the market and the nacent introduction of Wi-Fi technology in vehicles is gaining momentum. The battle for non-driver eyeballs has begun. Perhaps this segment can be turned into something more than a niche.