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Telematics Brazil & LATAM 2014

24/09/2014 - 25/09/2014, Hotel Tivoli, São Paulo, Brazil

Increased Collaboration, Advanced Services and New Customer Segments Accelerate Telematics Adoption

Content and Apps for Automotive Europe 2014: Day Two

Apple and Google continued to feature prominently on the second conference day as discussion turned to advancing the value of the connected car post-purchase, how to work with third-party developers, how to provide standout connected services and the future of DAB in Europe. Jan Stojaspal reports.

Apple and Google continued to feature prominently in discussions on day two of Content and Apps for Automotive Europe 2014, so much so that Martin Kristensson, head of content acquisition at Volvo Car Corporation, asked during a mid-afternoon panel discussion called “The Internet of Cars” whether it was even possible to have a single session without mentioning the tech giants.

His fellow-panelists, Ian Digman, general manager for product planning at Nissan, and Jörg Lützner, director – online services, interior division, Continental Automotive, did their best, and, needless to say, they failed, with Lützner, at one point, resorting to jokingly calling Apple and Google “certain partners we don’t want to mention.”

But it was obvious that Apple’s and Google’s recent launches of screen duplication solutions for the connected car – CarPlay and Projected Mode, respectively – were no joke for a traditional industry, which struggles mightily with rising consumer expectations for faster development cycles and ubiquitous connectivity. Still, contrary to day one, when some speakers sounded almost defeatist when confronted with the possibility of becoming mere spokes in Apple’s and Google’s money-making machines, day two was a lot more about qualifying that possibility and fleshing out defensive strategies.

Also discussed were preserving and advancing the value of the car post-purchase, how to work with third-party developers, how to provide standout connected services and whether DAB digital radio would become the go-to information provider in Europe.

Apple's and Google's recipe for success

Mark Pendergrast, director of product management at INRIX, took the lead on the Apple and Google front by slicing and dicing what made the companies so successful in their respective fields and what lessons were applicable to the connected car industry.

In a presentation aptly named “Apple & Google in the Car: Catalyst for Innovation or Trojan Horse?” he reviewed Apple’s foray into online music sales, Google’s success in online advertising, and Apple’s and Samsung’s domination of the mobile handset industry, where they command roughly half of all handset sales and 98% of profits.

Although there were clear differences in strategy, the following themes tied Apple and Google together: continuous innovation, customer ownership, good user experience and a solid network effect, which enhanced the value of their products to other people.

According to Pendergrast, there is a number of reasons for working with the tech giants. Both have massive, smartphone-happy user bases. Both have brand recognition and marketing appeal in the field of connectivity, which could help carmakers sell connected services. “Those guys have a lot more brand equity than INRIX certainly does or even some of the branded OEM features and services,” he said. “Clearly we should take an advantage of the fact that Apple and Google have that great recognition. They can bring customers into the dealers and help sell the car.”

What’s more, both Apple and Google offer turnkey infotainment solutions, which potentially minimize the need to invest on the part of the OEM. And both leverage platform benefits, which include technology, customers and app ecosystems, thus reducing the need for independent efforts.

Still, there is a number of risks and challenges in working with Apple and Google, Pendergrast said.

They include Apple dictating revenue share terms and which apps get into CarPlay, risk of losing customer ownership to Apple and Google ecosystems, loss of control of the product, reduced flexibility of products and services, uncertain costs when deploying CarPlay and Projected Mode, and uncertainty over liability should something go wrong. “There is no one or two suppliers that can provide all needs required by the market,” Pendergrast said. “Market needs are diverse.”

Circling the wagons

But to hold its own against Apple and Google, the connected car industry needs to change, Pendergrast stressed.

It needs to invest in agile product development and frequent update cycles. It needs to do its best to own the customer and embrace Big Data. It needs to focus obsessively on user experience by doing additional testing, paying close attention to customer feedback and modifying product and processes over time. And it needs to start collaborating more as an industry to get the desired network effect. “One of the ways you can bring standout driver services is by collaborating with partners and bringing the best of the OEM and the best of your suppliers together,” he said.

Tesla Motors is living proof that it can be done, Pendergrast went on to explain.

“They have a modular update cycle. They are able to push down updates … and [to] do that quickly to address issues. That’s a huge advantage they have over traditional OEMs. They also have developed new products at Google and Facebook speed. They can bring a product from concept to market within two to three years, as opposed to many OEMs that are still in their seven- to eight-year cycles.

"They also have a very interesting way of taking ownership of the channel. It’s causing quite a bit of controversy in the United States, where they are going up against the traditional dealer associations saying, ‘We don’t want to do an affiliate model; we want to own the dealerships ourselves through our own model.’ Now, that’s doing something very innovative, very different. But they are retaining that connection with the customer and controlling that experience.

"And, lastly, they have an extreme focus on data and software.” Pendergrast said.  According to him, Tesla has around 50% of its engineering focused on software. “I don’t know if there are too many OEMs in this room that has that much proportion of developers and engineers focused on software, as opposed to traditional mechanical things,” he said. “They know the power of data, they know the power of software, and they are doubling down on those resources inside their company.”

So are Apple and Google a catalyst for innovation or Trojan Horse? “The answer I hope you can realize is both,” he Pendergrast said. “It really depends on what we make of it here in the automotive space.”

More doubts over CarPlay and Projected Mode

Roger Lanctot, associate director for automotive multimedia & communications service, Strategy Analytics, seconded Pendergrast’s views. Although not a big fan of Apple’s CarPlay, Lanctot saw the following positives: promotion and adoption of natural speech recognition, integration of smartphone apps via smartphone and increased attention to smartphone-car connections. “This is good. We want people to connect the phone in the car because those connections will basically disable the phone, which is what we want,” he said. “We don’t want people touching or looking at the phone.”

But just like Pendergrast, he raised a number of negatives. They included fragmentation of in-vehicle connections, loss of OEM control of customer ecosystem, loss of differentiation, loss of user interface homogeneity and use of non-automotive-grade speech recognition. “If you are using CarPlay, you are going to have Siri,” he said. “But chances are you’ll also have the carmaker’s speech recognition. And I would not want to be running customer service for that carmaker when the customer calls to complain. ‘Well, which one were you using? Which function were you trying to use? And what did you say? And did you follow the instructions?’ It’s a nightmare, and Siri will never be Siri for the car, it won’t be Nuance Dragon Drive.”

According to Lanctot, regional regulatory issues, such as the U.S. Department of Transportation guidelines for driver distraction, also need to be addressed when it came to CarPlay. “If you just have one platform globally, how is that going to work?” he asked.

He was even harsher on Google, particularly when it came to car safety. “I don’t believe in Google’s commitment to anything that we really care about and hold dear in the automotive industry,” he said. “It’s a bit of auto OEM driver distraction. [Senior leadership at car companies] are distracted by the shiny Apple and Google objects, but they’ll get back to the core, I believe, when they recognize that it’s undermining more fundamental issues about safety.”

Enhancing the post-purchase value

On the subject of advancing the value of the car post-purchase, Lactot held up Tesla and its ability to do over-the-air updates. “A very key part of Tesla’s message is your vehicle will improve in value after you take possession of it,” he said. “They have shown that they can deliver added value and function.”

According to him, they, for example, did this by adding the creep factor via a software download. And he was equally impressed by Tesla's response to a car fire in Tennessee. "They did a software download within a week or two that caused the car to ride higher at highway speed,” he said. “They fixed the problem with a software update. It’s really an amazing proposition.”

According to Lanctot, adding value post-sale is a radical concept. “We all know that when we buy a new car and drive off the lot, the value has just fallen off the table, we have just lost thousands of Euros in the value of the vehicle. We are going to change that with vehicle connectivity. A connected car will be always fresh.”

Ways to work with third-party developers

On the subject of how to work with third-party developers, Scott Lyons, business development, connected services organization, Ford, stressed three simple steps.

Step 1: Offer a simple platform that is easy to develop for. This includes giving developers as much access into the vehicle’s head unit and instrument cluster as possible, and support for product development cycles that are counted in months, not years, he said.

Step 2: Work hand-in hand to develop use cases and interfaces that and are easy to use. According to Lyons, this will encourage developers to go beyond the most common in-vehicle apps, such as parking. This approach, for example, led to the concept of a “Stay Awake” assistant that came from a hackathon participant in China and addressed the participant’s concern that she will fall asleep while driving long distances.

The assistant would help her stay awake by checking up on her every so often. “I really do feel that there are lots more opportunities here for applications and experiences that are specifically made for the vehicle,” he said.

Step 3: Offer low-cost testing and equipment to help in the development process. “We actually give our developers what we call a TDK, which is a black-box unit, and we also take care of the testing,” he said. “So what we are trying to do is kind of smooth the process through.”

Standing out in connected services

Interestingly enough, a panel on how to provide standout connected services showed that product differentiation was only one part of standing out when it comes to connected services. Building awareness of the services turned out to be equally important.

For Derek Williams, general manager for telematics and multimedia product planning at Toyota Motor Europe, product differentiation boiled down to making something appear “different and interesting and, in the context of multimedia, modern and attractive,” and establishing the solution’s apparent value as compared to low-cost alternatives, such as smartphones and PNDs. Hence, Toyota’s choice of Google Street View, whose strong visuals help set it apart  from portable devices.

But there is no standing out without awareness, Williams was quick to add. “To be honest, within our sales network and within consumers, they are not really aware of these connected services, which means that although we get many, many complaints from our network and from customers on things that don’t work and things that work differently from how they expected, I have yet to receive a single e-mail or call saying, ‘Why don’t we have this connected service in the car,’” he said.

Nissan's Digman said one can differentiate on user friendliness, ease of use, visual appeal, and something that is more intrinsically linked to the vehicle. But he urged caution when integrating new, unique apps and features, calling Jaguar Land Rover’s recent decision to integrate Winston, a voice-activated personal assistant, “potentially quite risky in that, within the app world, things come and go very, very quickly.” “If something is standout today and has good marketing value today, in six months’ time maybe not so good,” he said.

Like Williams, Digman favored solutions that provided a strong marketing proposition “to say, ‘Look at us, we are Nissan, we have a system.’” “And then, once the user actually is in the car, the standout is: Is this easy to use? Is this better than the Toyota HMI? Is this better than the Ford HMI?” he said. “That’s how, longer-term, people are going to connect with the vehicle, with the brand, and say, ‘OK, these guys are good at doing connected services, these guys are not as good.’”

According to Siegfried Schuler, sales director at Harman/Becker Automotive Systems, the end user will be the ultimate judge. “We can measure it by the usage rate, and I think we all agreed this is not great up to now,” he said, pointing to a day-one presentation by SBD that ranked simplicity and safety of user interface as the most important criteria for consumers when choosing a connected platform. Reliability, value vs. cost, richness of content and apps, and easy upgradability followed. “If we can meet this wish list as best as we can, then we have a standout service,” he said. 

According to Digman, standout services will most likely result from a collaboration between OEMs and suppliers. “Standout services are when the two parts of the system start talking together,” he said. “We heard AUPEO! talking about how we can use data from X to supplement Y. We have heard about how BMW have all of these connected ECUs within the car. The standout connected service is when people start collaborating together. … If a supplier were to come to me and say, ‘Look, I’ve got this idea, but I need ESP sensor data to enhance it further,’ that then becomes standout because … it’s X plus Y equals Z.”

The potential of DAB as the go-to information provider

Day two closed on an unexpectedly spirited discussion of the future of DAB broadcasting in Europe, pitting Toyota’s Williams, who maintained that DAB does not meet his company’s criteria for a Europe-wide roll-out of receivers, against Thomas Kusche, senior editor at Westdeutscher Rundfunk and president of the Traveller Information Services Association (TISA), and Christian Vogg, head of radio at the European Broadcasting Union (EBU), who both argued that DAB is ready and that, more or less, the carmakers were the bottleneck.

“DAB is promising but not rolled out enough yet,” Williams said. “I’d like to have a pan-European supply, which we currently can do via IP. If we could do this via DAB, it would be interesting. But I don’t know when I can start talking about that.”

Vogg countered: “Derek, you said DAB was promising, but it’s not rolled out enough in Europe, which is not true. The problem is we don’t have many devices in the market. But we do broadcast hundreds and hundreds of stations in DAB quality throughout Europe. U.K., all the Scandinavians, Poland, Germany, Italy. France is starting now in DAB and DAB+. So, there is a lot of broadcast in the air. The problem is the end consumer. They don’t buy that much these little devices in their cars because car manufacturers don’t offer it too much, except for additional cost, which is a problem. … In my view, the real connected car has broadcast and broadband. And I think there are a lot of opportunities for software companies, for car industry, for OEMs to come with really user-friendly front-ends.”

The significance of DAB (Digital Audio Broadcasting) is in greatly enhanced sound quality, rich traffic data and other information services, such as news updates and album art, delivered free of charge to enabled receivers and a near-ubiquitous coverage (98% digital radio coverage of the trans-European road network in Germany vs. a 64% to 76% cellular coverage of the A7 motorway between Hamburg and Hannover). In 2017, Norway will become the first country in Europe to switch off FM broadcasting and rely exclusively on DAB broadcasting.

According to Williams, Toyota implemented traffic over DAB in the United Kingdom on the expectation that the service would be available in more countries in Europe. “But at the moment, we are not accelerating that because there isn’t enough DAB in enough countries, and we have an alternative: IP over the GSM networks," he said. "So, for the moment, we are taking that route. I am not against DAB in principle, but it’s the practice of how I am going to make one development that will cover the whole  of Europe. The only answer to that is GSM.”

According to Williams, a reliable roadmap for DAB rollout would help, and so would more convincing that the cost would actually be lower to the carmaker. “You can’t really compare apple to apple, but the TMC cost ... is not so much cheaper, or not necessarily cheaper than the traffic price we brought for IP because, at the moment, the cost is taken by the consumer in the tethered data plan.”

At the end of the day, Kusche believes road safety will dictate DAB and GSM to coexist. “I can see that we have good coverage, that we have done our homework well in Germany, and, therefore, I think we have to find, at the end of the day, new ways for cooperation between broadcasters and mobile networks and the mobile internet,” he said. “I am really convinced that the most reasonable thing in the car will be a hybrid device, which offers the opportunity to have most of the content in most of the places in best quality. And that’s not really a big step.”

(For our coverage of day one, see Content and Apps for Automotive Europe 2014: Day One.)

Jan Stojaspal is the executive editor of Telematics Update.

For all the latest telematics trends, check out Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, Insurance Telematics USA 2014 on Sept. 3-4 in Chicago, and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Insurance Telematics Report 2014Connected Fleet Report 2014The Automotive HMI Report 2013 and Telematics Connectivity Strategies Report 2013.

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Telematics Brazil & LATAM 2014

24/09/2014 - 25/09/2014, Hotel Tivoli, São Paulo, Brazil

Increased Collaboration, Advanced Services and New Customer Segments Accelerate Telematics Adoption