Returning to Brazil for the first time in a few months I was struck at the paucity of technology in the taxi cabs. Having recently been at the Consumer Electronics Show in Las Vegas I was accustomed to everything from smartphones and GPS devices to cameras, sensors, backseat advertising displays, and payment terminals in cabs. Suddenly, in the land of the vehicle immobilization mandate (Contran 245) I was confronted cab after cab with nothing but a dispatcher and fare machine.

That is, until yesterday in my cab ride from Garulhos Airport in Sao Paulo.  According to the driver, the taxi that took me and my wife to our hotel was part of a 500-cab trial of a backseat tourist aid that was a real revelation and nothing I had seen anywhere before.

Put together by a local company, Comtecno, for the Brazilian Ministry of Tourism (and also available in Recife, where the World Cup with be contested), the device was a Samsung tablet computer equipped with cellular connectivity.  Comtecno calls the device the Multitoky Mobile and the company has as its goal deployment at 14 Brazilian airports for a total of 12,000 devices.

The tablet was unobtrusively strapped to the back of the cab driver’s seat, and I wouldn’t have noticed except for the fact that I am on the constant lookout for in-car tech.  The device charges while in the pouch and its use requires no assistance from the driver.

I immediately grabbed the device, figured how to open the browser and accessed a couple of email accounts.  Before long my wife and I were checking out local tourist attractions and restaurants and peppering the driver with questions.

“Do people like it?”

“Yes.”

“Do you ever use it yourself?”

“Yes.”

“How do passengers use it?”

“To help tell me their destination.”

“Do customers have any complaints?”

“The connection is slow.”

“Will it play video and audio?”

“Yes.”

With only 500 cabs as part of the test it was not surprising that the only overt advertising on the device appeared to be public service announcements warning tourists against sex tourism and people trafficking.  Coming in to Sao Paulo one could imagine a few more pointed warnings, but overall the device was a true joy to discover in the rear seat of our cab and a promise of future innovations to come.

Given the relatively high crime rate and the country’s position as have the third highest number of highway fatalities, one could argue for the implementation of cameras for anti-theft and fraud, along with sensors for maintaining vehicle distance in traffic.  But, generally speaking, the cab drivers are some of the best drivers in Brazil.  (A good contrast is China where there is little respect for lanes, let alone other vehicles.)

But if a Samsung tablet in the rear seat – tethered by a security link – is a first step on the path to vehicle connectivity in Brazilian taxi cabs, it is highly welcome.  It is far superior to the annoying embedded backseat advertising displays found in Las Vegas, New York City and Shanghai, among other cities. 

The rotating messages on these backseat screens are entirely without any merit as far as helping to educate either visitors or locals regarding popular local businesses or for providing informational traveler alerts.  Anyone who attended CES in Las Vegas is likely sick and tired of hearing Steve Wynn tout his gambling properties – a fact reflected in the reflexive tendency of most cab drivers to try to at least turn off the volume on the device even if they could not stop the video.

Kudos to Comtecno and the Brazilian Ministry of Tourism and the for conceiving a creative solution for connecting with tourists.  The next step will be to enable all types of transactions, including perhaps paying cab fares.  Of course, Brazilian cab drivers are still talking on their mobile phones too much and, occasionally, watching video both while parked and driving.  Oh, well, they can’t get everything right all at once.

Sometimes a company does something so wrong-headed it is impossible to ignore. The normally very clever executives at Scosche - pioneers in automotive infotainment system integration - have announced their plans to re-enter the car stereo market with a head unit that enables use of the mobile phone as a remote control, according to a report in the CEOutlook newsletter (http://bit.ly/RbDe4k - Scosche Debuts Car Radio at KnowledgeFest). Even worse, Sony has similar plans for 2013.

At a time when U.S. government regulators are threatening to disable the use of mobile phones in cars altogether to mitigate distracted driving, Scosche is launching a system that encourages the driver to use his or her mobile phones as a remote control for the car stereo. The whole objective of OEM automotive engineering efforts around integrating mobile phones in the car for the past eight years or more has been to shift control of the phone to the vehicle HMI.  The over-arching message to consumers: Don't touch your phone when you are driving.

Somehow, Scosche has seen fit to affect an industry U-turn to shift control back to the phone. Scosche has also somehow missed the tidal wave of headlines pronouncing the imminent arrival of Apple’s Siri voice interface for automotive aftermarket integration, along with competing solutions from Nuance, AT&T and others.  The goal, again, control the phone with the vehicle HMI - steering wheel controls, voice, head unit touch screen, hardware controller.

The only possible good news perceivable in this announcement is that it will shine a white hot light on aftermarket remote controls and, maybe, clarify the need for some industry soul searching as to the efficacy of these systems in a voice-enabled in-vehicle interface future. I have a lot of respect for Scosche and I am confident they will recognize their bungle and get a Siri or some other kind of voice-based interface in the box with their new systems before they launch.

"Those who cannot remember the past are condemned to repeat it." - George Santayana

I am happy to report watching with great amusement the Siri television advertisements featuring John Malkovich.  (See here on Youtube: http://huff.to/MYi4X7)  Very droll and certainly tantalizing from a speech recognition standpoint seeming to reflect, as claimed by Siri's parent Apple, that the Siri recognition engine is capable of learning the inclinations and preferences of each individual user.  As an automotive analyst, however, I've had to give those ads a harder second look.

Siri arrives in the marketplace at a time when government regulators in the U.S. - and in some geographies outside the U.S. - are focusing on driver distraction.  Siri appears to have been rapidly seized upon by multiple car makers as the ultimate solution to the distraction mitigation challenge.  The suitability of Siri to this task is posited by its alter ego brand name: EyesFree.  The promise of using Siri in the car is to achieve an EyesFree means of accessing features and functions on the iPhone.  Of course it is not quite hands-free because Apple is promoting the application with a steering wheel mounted trigger. 

(It is worth noting that engineers at Waze divined a way to use the proximity sensor as a trigger mechanism, but that is a separate story.)

Nevertheless, a tidal wave of what can only be called Siri hysteria ensued.  Apple, it seemed, had solved the automated voice recognition challenge singlehandedly.  It is at this point that I feel a word of caution is advised.  It wasn't so long ago, maybe six or seven years, that Bluetooth was embraced as the definitive answer to hands-free phone interfaces.  To be sure, Bluetooth has proven helpful, but it is far from a panacea, even after all these years of development and refinement.

The challenge for both Bluetooth and voice recognition is the fact that the implementers of these technologies continue to ask them to do more.  Bluetooth has not yet completely conquered HFI and the industry is already moving on to A2DP and SPP profile implementation.  AVR systems have not yet mastered one-shot destination entry and now car makers are introducing dictation and email and text message composition.  And Siri is more or less offering voice-based access to most iPhone functionality.

As you watch and chuckle over John Malkovich chatting with his iPhone remember that he is conducting his conversation in an utterly empty and quiet salon while relaxing in an arm chair.  This is nowhere near the operating environment of a noisy automobile cabin.

And to which organization should a car maker turn to solve its AVR challenges?  The maker of mobile devices held in the hand or to an organization built entirely around solving voice recognition challenges in a wide range of environments with a particular emphasis on automotive systems? 

Cloud-enhanced recognizers such as Apple's Siri may learn my inclinations and preferences and Google's Now AVR app may access Google's Knowledge Graph with 500 million entities and 3.5 billion relational facts, but neither of these organizations can offer car makers their undivided attention.  Robust voice-based solutions are to be found within the existing automotive eco-system and will reflect the priorities of the OEMs around quality of service.

Implications

Bluetooth is a powerful technology but it has caused many complaints while solving problems and enabling new forms of content and service delivery.  AVR technology is viewed as one of the key interface modes that will contribute to resolving distracted driving, but it is far from perfect or perfected. 

But the organizations that have taken AVR the furthest and are likely to continue to lead in the automotive market are already invested in the automotive market and present.  These organizations include Vlingo, Nuance (Dragon Go!), AT&T (Watson) and Microsoft (Tellme).  Car makers should take greater care before embracing a technology that may or may not satisfy customers, may or may not solve regulatory challenges, may or may not enable new features and functions - but will definitely generate customer confusion and aggravation.

The latest JD Power Iniitial Quality Study highlighted the fact that AVR systems are the leading cause of customer complaints.  This is significant given the fact that the study was conducted in the U.S. among a fairly homogeneous population of English speakers.  What happens to AVR technology outside the U.S. where dialiects are more numerous and more challenging.  Will it really be worth marring an existing HMI environment in the car with a steering wheel add on to accommodate a single phone maker.  Maybe, but as we take that risk let's do so with eyes wide open and with the intention of avoiding a repitition of past HMI blunders.

Because Siri was not conceived specifically for automotive use and because Apple does not provide for any distraction mitigation measures, the Siri proposition is an application free for all.  Siri enables all functions - maybe - instead of delivering a few very specific functions reliably and safely.  That, in the end, is the big difference between Siri and existing (or in development) automotive grade AVR systems.  Proceed with caution.

The National Highway Traffic Safety Administration was busy last week hosting three public comment sessions across the country on its driver distraction guidelines. The guidelines discussion were attended by auto makers, but NHTSA needs to reach out to a wider constituency including wireless carriers, handset makers and app developers.

These hearings follow, by two weeks, NHTSA’s announcement of delayed rule-making for a long-anticipated back-up camera mandate. The two issues are related since the back-up camera mandate will require a large center-stack display and the driver distraction agenda is intended to limit whatever else auto-makers may wish to do with that display. The back-up camera mandate came about as a result of a combination of legislation and extensive research by the agency. (NHTSA – Notice of Proposed Rule Making - http://1.usa.gov/g58Tyh) The rule-making is projected to save approximately 100 lives annually with an estimated cost to the automotive industry of $1.9B-$2.7B.

The link in the previous paragraph to the US Department of Transportation Website provides all of the relevant insight and analysis behind NHTSA’s back-up camera decision. Many observers of NHTSA attributed the rule-making delay to election year considerations in the U.S. – the potential negative political fallout associated with the cost of implementing the mandate.

Whether politics entered into the consideration of the delay is less important than what the back-up camera mandate implies for the newly-commenced distracted driving debate. But, first, it is important to understand where NHTSA stands in its distracted driving deliberations.

The hearings last week were largely inconclusive and pointless and have likely spurred NHTSA to turn up the temperature. The industry representatives who testified before NHTSA representatives were not in a position to answer the single most important question for NHTSA: What are the automotive industry’s long-term plans for enabling mobile device connectivity in the car?

Car makers find it difficult to answer this question for two reasons. First, for competitive reasons car makers are loathe to reveal elements of their long-term strategy. Second, as far as connecting to mobile devices is concerned, car makers have no long-term strategy.

In the absence of long-term automotive industry planning, NHTSA announced its own plan for developing guidelines to cope with driver distraction: http://1.usa.gov/GANj5q.

The three phase process defined by NHTSA includes:

Phase I: Set two goals for ensuring that vehicle systems and devices do not distract or interfere with the safe operation of the vehicle. First goal is to reduce the complexity and amount of time required to operate devices and systems. The second goal is to disable certain types of functionality – such as manual destination entry for a navigation system.

Phase II: Proposed guidelines for the use of brought in devices of all kinds.

Phase III: Proposed guidelines for voice-activated controls for line-fit and aftermarket systems.

While all three elements of NHTSA’s plan are so-far described as guidelines with the corresponding voluntary industry adoption that that implies, the specter of mandates and rule-making is looming over the entire process. Any executive or observer who attended the hearings last week left with no doubt regarding the seriousness of NHTSA’s commitment to reducing driver distraction.

In contrast to the estimated 292 lives lost to back-over accidents in 2011, NHTSA has put a preliminary estimate of 3,000 on the number of lives lost to distracted driving. The agency has not yet been able to narrow down what portion of that figure can be attributed to the use of mobile devices or complex on-board systems, but NHTSA is working toward creating such a metric.

It is clear, though, that if the saving of 100 lives is enough to justify rule making, as in the case of back-up cameras, there is ample motivation for the agency to take action to mitigate driver distraction. The best news remains the fact that NHTSA has taken the voluntary approach that it has.

Unfortunately, the issue at hand in driver distraction is an ambiguous one fraught with conflicting philosophies and perceptions regarding human-machine interfaces and driver behavior. While a substantial amount of research has already been done and NHTSA has at least two studies already in process, the range of conflicting findings and methodologies suggest a lengthy process of discovery ahead for the agency and the industry.

At the same time, the back-up camera mandate will guarantee a wider deployment of large center-stack screens in cars in the U.S. and, likely, around the world. NHTSA is arriving somewhat late to a standards and guidelines discussion that it has brought about with its own rule making.

Implications:

Distracted driving is a problem all over the world. It is a problem that has existed as long as cars have existed. The proliferation of mobile devices in cars has contributed to the problem and may be contributing to additional highway fatalities.

Large displays are also proliferating in cars. Large displays are also increasingly perceived as an added potential source of driver distraction, depending on what kinds of functionality are enabled. At the same time, car makers, handset makers, wireless carriers and app developers are looking to smartphone integration and connectivity to the larger in-vehicle display as a means to reduce distraction and limit, manage and control use of the mobile device in the car.

The auto industry is embarked on a journey to a new in-vehicle experience which will increasingly be defined by connectivity to off-board resources. This connectivity experience will encompass the integration of personal driver information – largely derived from the driver’s personal portable devices – vehicle sensor and map inputs and off-board resources such as weather or roadway information derived from other drivers.

Car makers and app developers are still working hard to determine how the output of this big data integration will manifest itself in the car to aid the driver and render the driving experience safer. Given the early stages of this application development, a light, guiding regulatory hand from NHTSA is what is most needed by the industry participants.

Hopefully, by its current efforts, NHTSA will establish a public policy framework for wireless carriers, application developers, wireless device manufacturers and auto makers to collaborate for the purpose of defining the nature of the driver distraction problem and agreeing on a solution. This means NHTSA needs to expand the scope of its current outreach and auto makers need to be more forthcoming about their plans.

As Hurricane Irene was making landfall in North Carolina, my son was preparing to leave our Northern Virginia home to drive back to Richmond, Va., where he is attending college It suddenly occurred to me that despite the 24/7 television coverage and Internet resources, I couldn’t give him any good advice as to whether it was a good idea from a weather or a traffic perspective to set out on such a journey with the storm closing in.

My son didn’t miss a beat.  He got on the Google Website and checked Google’s traffic data, showing me that the traffic flow was “green” all the way to Richmond.  All I could think was: Another opportunity for OnStar to stand out has come and gone.  Why is this?

In his book – “Detour: My Unexpected, Amazing, Life Changing Journey with OnStar” – former and original OnStar president Chet Huber talks about the service’s reaction during Katrina.  While Huber pats the organization on the back for enabling customers with expired OnStar subscriptions to freely access the service to better locate emergency services, evacuation routes and shelter, he also proudly touts the fact that OnStar did not take advantage of the crisis.

OnStar made no press statements or press releases during Katrina to let the country know that it had added to its existing subscribers’ personal minutes accounts and had also turned the service on for expired customers during the crisis.  In Huber’s words: “Again, our sense was that bad things like hurricanes shouldn’t necessarily equal more sales for us.” 

These are noble intentions, but OnStar seriously missed the boat during Katrina and is missing it again with Irene.  It may seem crass to treat a hurricane as a marketing opportunity, but it is foolish to miss the opportunity to save lives and aid emergency responders.

For 15 years OnStar has been silent during major crises.  Where Google has aided emergency responders in Haiti and during the Fukushima nuclear crisis in Japan, OnStar has yet to feature prominently in any U.S. crisis, in spite of the fact that the service connects 5.5M users in the U.S. to emergency contact centers.

But it’s not just the emergency call center access that is at issue, OnStar has the ability to provide information to public authorities and the press regarding the flow of traffic on evacuation routes and the volume and nature of calls it is receiving from the entire affected area.  OnStar representatives could provide a public face for the emergency response community, taking some of the pressure off of public officials, while providing valuable insight regarding real-time events during a crisis like Irene.

During Katrina OnStar did not simply decline to publicize its helping hand.  The company actually refused to announce its activities.  Writes Huber:

“I actually received a phone call from the attorney general of one of the affected states while (Katrina) was going on.  He’d read an article about an OnStar subscriber who got help because our system was able to connect during the storm… he wanted us to issue a press release to make a big deal out of (our downloading free minutes).  I think he wanted a few public examples of that kind of behavior in order to stimulate more of it from other companies.

“I apologized and told him that we weren’t going to put out a press release because we didn’t want to look like a company that was doing these things just to get attention. He said that if we wouldn’t do it, we needed to get him the facts because he was going to issue his own press release to draw attention to us and a couple of other companies he thought would be examples of the right kind of behaviors.”

In the end, the question was moot.  Huber never finds out whether any press release was issued.  Many crises have come and gone since without so much as a peep from OnStar.

The disinterest in publicity seems disingenuous to me given the active social networking efforts of both GM and OnStar.  OnStar has not been shy about promoting its For My Vehicle aftermarket mirror.  Why should it be shy when there is a legitimate opportunity to help both customers and non-customer?

This is an easy situation to fix.  OnStar executives need to recognize the resource that the system represents and share it.  The industry and the country needs OnStar, and hurricane reaction assistance is only the beginning. 

Some of the best research on safety systems and driver distraction has actually been done by OnStar executives using the boatloads of data produced over the years by this unique connected system.  Important decisions regarding back-up camera mandates, vehicle connectivity and crash avoidance technologies and distracted driving laws all represent opportunities for OnStar to influence strategic thinking and policy as the industry leader.

 

One of the best studies – “Real-World Personal Conversations Using a Hands-Free Embedded Wireless Device While Driving: Effect on Airbag-Deployment Crash Rates” – was co-authored by my Strategy Analytics colleague, Chris Schreiner, during his time at OnStar.  The study shows fewer accidents occurring while people are using their personal minutes.  Why haven’t we heard more about this study?  What else is in the archives?

 

Implications:

 

There are two issues at stake here.  The first issue is one of appearances.  The good people at OnStar do not want to appear to be publicity hogs or opportunists.  If they are providing legitimate assistance based on the existence of the service, then they will not be perceived in this manner.

 

Of course, if they want to provide assistance without taking too much credit, they could issue reports to and through public authorities.  People living in areas impacted by the storm clearly are looking for information about how bad the situation is from location to location and in relation to past storms.  OnStar is capable of providing valuable, cross-regional insights and analytics regarding the number of incoming calls and the nature of those calls. 

 

There is a bigger issue at stake, though, and that is OnStar’s potential role in rule making and regulatory matters.  No car maker in the world has nearly as much data regarding real world vehicle operation parameters.  Outgoing president Chris Preuss indicated shortly before his departure that OnStar executives intended to make its database a resource for that very purpose.

 

Let’s hope OnStar has opened or is opening up the data archives for students of vehicle safety around the world.  All drivers stand to benefit a little bit and GM stands to benefit the most.   And the next time Mother Nature dials up a hurricane let’s hope OnStar picks up the phone.

 

Additional insight:

 

http://bit.ly/n4f4Eg - State Farm, Hughes Giving OnStar a Wake-Up Call - Lanctot - blog - Strategy Analytics

http://bit.ly/qbSM0B - State Farm, Hughes Raise Usage-Based Insurance Bar - Insight - Lanctot - Automotive Multimedia & Communications

http://bit.ly/nS7zom - OnStar Family Link Could Break Location Taboo - Insight - Lanctot - Automotive Multimedia & Communications

http://bit.ly/qSA29m - OnStar: Time to Hit the Reset Button? - Insight - Lanctot - Automotive Multimedia & Communications

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:

 

 

 

 

 

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

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

My kingdom for a PZEV

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

·        TLEV – Transitional Low Emission Vehicle

·        LEV – Low Emission Vehicle

·        ULEV – Ultra-Low Emission Vehicle

·        SULEV – Super-Ultra Low Emission Vehicle

·        ZEV – Zero Emission Vehicle

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

·        ILEV – Inherently Low-Emission Vehicle

·        PZEV – Partial Zero Emission Vehicle

·        AT-PZEV – Advanced Technology Partial Zero Emission Vehicle

·        NLEV – National Low Emission Vehicle

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

EVs not EZ

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

·        HEV - Hybrid Electric Vehicles

·        BEV - Battery Electric Vehicles

·        EREV - Extended Range Electric Vehicles

·        Plug-in Hybrid Vehicles

·        Fuel Cell Electric Vehicles

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

When is a Volt not a Volt?

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

“I’ll ask my manager.”

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

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

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

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

After leading the industry into the world of MOST and Linux (Genivi), BMW is raising yet a new leadership banner – this time for the implementation of Ethernet in the car. BMW is certainly not the only car company looking at Ethernet transport for data and video, but the company has made powerful statements at two high profile industry events with a solution developed in partnership with Broadcom that will transform the industry. First tipped at the Ludwigsburg Fachkongress Elektronik last week. BMW’s solution brings a potentially lower cost, higher speed solution to the thorny challenge of transporting data and video in the car. At Freescale’s Technology Forum this week, the company made yet another presentation of its case for Internet along with a clever technology demonstration integrating a spoon within a twisted-pair connection to make its case for the robustness of the technology. This was hooked up to a dual-core Freescale gateway MCU to show that Ethernet can already be linked into the vehicle network structure. The case for Ethernet is powerful. BMW uses data from Strategy Analytics to make the case that data volume in the car is increasing rapidly driven by rearseat entertainment, in-car TV and camera-based parking aids. At the same time the average number of network nodes in the average car is also expanding rapidly. In fact, according to BMW, again sourcing SA data in part, the number of Ethernet ports to be shipped worldwide, nearly 800M, in 2010 is only a bit more than the 650M automotive ports shipped in the same period, counting broadband, safety bus, CAN, LIN, and SineBUS etc. BMW points out that Ethernet is proliferating in a wide range of industries including everything from aviation to industrial automation and telecommunications. That proliferation translates to lower cost – for hardware, software and development – vs. the main alternative, MOST. In spite of increasing support for MOST, the technology remains expensive as do the costs of development and for the engineers with appropriate knowhow. BMW has been pursuing automotive Ethernet implementation since at least 2005 when it developed Ethernet-based flash software updating for 2008 series vehicles. Also for 2008, BMW brought an Ethernet-based datalink to the market for rearseat entertainment. For model year 2013, the company intends to bring an Ethernet-based videolink to market for a park assist camera solution for the X5. The development comes from a cooperation with Broadcom – using a version of BroadR-Reach technology for enabling full-duplex operation over a single twisted pair. With BroadR-Reach, Ethernet and IP services can now be deployed at 100Mbps. The next challenge for BMW and its partner are to establish an industry standard and licensing scheme for the new solution. BMW has already made the first steps with IEEE to define a standard for its solution (http://bit.ly/dep3jw). To achieve its objective of broad industry adoption and correspondingly lowered costs, BMW will be working closely with Broadcom to open up the technology to licensees. BMW says it has already established a clearinghouse strategy and appears to have Broadcom’s support. BMW is already in talks with other auto makers to share the technology to spur its adoption. BMW is keen to avoid the disappointment that has come with the implementation of MOST technology which was not only expensive to develop and deploy but remains so years after wider industry adoption. BMW does not claim to be replacing MOST with Ethernet, but acknowledges that Ethernet is best suited to MOST-related applications. Additional insight: Global OE Automotive Multimedia and Communications Systems Forecast 2009-2017 - Joanne Blight - http://tinyurl.com/24n9nz5 Global Automotive OE Audio/Visual (A/V) Systems Forecast 2009-2017 - Joanne Blight - http://tinyurl.com/2g897ax

Cypress Semiconductor’s announcement of the availability of automotive qualified TrueTouch capacitive touchscreens and LIN capable CapSense touch-sensing controllers promises a sea change in automotive console designs. While designers and engineers around the world continue to debate the relative merits of touch screens vs. voice, steering wheel and other interfaces, the advance of touch screen technology is rapidly settling the issue in favor of touch.Strategy Analytics analysis of the automotive and mobile device markets shows a steady shift in favor of touchscreens in multiple geographies. The reason for the movement is obvious given Strategy Analytics consumer research showing clear user acceptance and preference for touch screen technology. The industry is responding, however slowly. Another rationale for touch screen implementation is the greater flexibility for accessing applications and allowing a wider range of features and functions within those applications. The importance of the Cypress announcement needs to be considered in view of recent console designs and demonstrations as well as longer term industry trends. The BMW i-Drive, Audi MMI and other controller-type interfaces take advantage of the natural positioning of the right arm and hand on the center console. These configurations are designed to allow the primary LCD display be located as high in the dashboard as possible – far from the driver and NOT touch enabled. Of course, these interfaces allow for a broad simplification of the dashboard HMI configuration – with many fewer buttons and switches. The trouble is that controller-style interfaces still require too much checking of the screen to make selections or to move through multi-level menus. While the positioning of the screen is intended to reduce the change in focal length for the driver, it is not mitigating the inherent distraction. Tesla Motors, for one, is moving the touch screen closer to the driver and increasing its size to 14 inches and using a portrait configuration. Johnson Controls and Delphi have taken similar approaches in demonstration systems. But Delphi went one step further at the recent SAE event by positioning the display more or less in the console beneath where the driver’s arm will rest. By positioning a touch screen display in the console, the system removes the need for the controller interface completely. Some car makers are even combining a touchpad device – as in the case of Audi’s recent introduction able to recognize drawn characters – with a second display in the dash thereby providing some redundancy and/or a means of previewing inputs before they are selected. Delphi takes the concept a step further still by having a completely different HMI for when the vehicle is at rest vs. when it is in motion. In other words, different functions are available in the two different modes. (Smartphone applications, for example, are accessible when the vehicle is at rest.) As more consumers become increasingly familiar and comfortable with touch screens – rapidly proliferating in the mobile device segment thanks to the iPhone and Android-based devices – auto makers are finding greater acceptance for these interfaces in cars. Console-mounted touch screens will also enable easier access to a wider range of vehicle functions as well as location aware applications. With a touch-enabled display in the console, the driver will no longer have to reach out for the center stack. All applications and content will be right at the finger tips – again, with a second display mounted in the dash as a reference prior to making selections. Cypress may be the first, but will not likely be the last to bring capacitive touch technology to the automotive market. The advantages of wider design options, reduced distraction, enhanced functionality and potential cost savings mean that – well, resistance is futile. Cypress says the TrueTouch controllers are the industry’s first automotive-qualified capacitive touchscreen solution. The CY8C2x345 CapSense controllers pair analog resources with automotive industry standard LIN communication support, making the devices the ideal system controllers to interface with analog and capacitive touch-sensor inputs, and to control backlight LEDs and haptic actuators while communicating over the LIN bus. Cypress also announced that Grace Semiconductor in Shanghai, China has been qualified to fabricate automotive-grade CY8C2x345 CapSense controllers that adhere to the AEC-Q100 standard, ISO/TS 16949 quality management standard and Cypress’s Zero Defect manufacturing system. Cypress says its solutions are available in single-touch, multi-touch gesture and multi-touch all-point offerings and provide the ability to track multiple fingers simultaneously. The TrueTouch solutions are able to control screen sizes up to nine inches. They are designed for use in control panels, GPS and infotainment displays. Cypress says CapSense proximity sensing offers a detection range up to 25 cm, saving power by activating an interface only when needed. The devices are ideal for interior automotive applications such as audio, navigation, AC control and lighting control, as well as exterior applications such as trunk release and passive keyless-entry buttons, according to the company. The newly qualified CY8CTMG120 multi-touch gesture and CY8CTMA120 multi-touch all-point controllers are available for sampling in 56-pin QFN packages. The newly qualified CapSense products include the LIN-capable CY8C2x345 devices, available for sampling in A grade (-40C to 85C) in 28-pin SSOP packages with the 48-pin SSOP packages planned in Q3 2010. All products are expected to be in full production in Q3 2010. http://bit.ly/c1Qhxz - Benchmarking the Premium In-Vehicle Experience - Chris Schreiner – Automotive Consumer Insights http://bit.ly/cRLVkz - Automotive HMI: Voice Technology and Touch Screens Have Significant Lead - John Canali – Automotive Multimedia and Communications Service http://bit.ly/a9aEgu - Chinese OEMs: Rapid Advance In Quality Bodes Well For Automotive Electronics - Kevin Mak - Automotive Electronics Service http://bit.ly/ceBUCY - Vehicle Entertainment and Navigation User Evaluation: 2010 Lexus LS460 - Chris Schreiner - Automotive Consumer Insights