Susan Kuchinskas looks at the market opportunities of brought-in devices versus installed screens for back-seat entertainment.
There's plenty of infotainment already being had back in coach class, thanks to handheld devices. Who needs a rear screen when you have an iPad?
The tablet market is hot, still fueled primarily by Apple's iPad. In-Stat forecasts the total semiconductor opportunity for tablet suppliers to reach $13.8 billion in 2015.
IHS iSuppli says that iPads hold strong potential for use as rear-seat entertainment solutions in automotive infotainment systems, especially because many app developers already have created auto-centric applications and services.
While these are pricey, even the iPad is cheaper than a rear-seat screen, and IHS predicts that competition will drive prices down soon.
The missing link is connectivity, to allow downloading on the go, as well as a broader variety of activities. While a persistent Internet connection for most vehicles is still a ways down the road, Internet-enabled tablets will become commonplace, thanks to greater selection and falling prices.
A survey by In-Stat found that more than 60 percent of future tablet purchasers plan to buy a tablet equipped with both Wi-Fi and 3G. The size of the combined WLAN-enabled CE markets will surpass 419 million units shipped by 2015, according to In-Stat.
While a rear screen is not part of the Audi Connect experience, it does provide connectivity for up to eight brought-in mobile devices. The service turns the vehicle into a secure mobile Wi-Fi hotspot, thanks to an agreement with T-Mobile.
"Our surveys have found that Wi-Fi is one of the most highly desired services in the vehicle," says Anupam Malhotra, Audi connect product manager and senior strategist, product management, Audi of America. “The way it's set up is perfect for use by passengers, whether in the passenger seat or the back seat.”
Through this broadband link, the car's MMI infotainment system will pull down Google Earth imagery, local search, points of interest information and Sirius Traffic, while allowing passengers to do everything from accessing work emails through a VPN to browsing the Web, listening to Internet radio or even streaming video.
"Instead of looking for a Starbucks when you need to return emails, why not just park the car and keep working?" Malhotra asks.
John Canali, senior analyst in the Strategy Analytics Automotive Multimedia and Communications practice, thinks that the ability to connect via 4G/LTE will further enhance the case for brought-in tablets.
"Consumers will bring in devices to the back seat, rather than paying for embedded rear seat displays,” he says. “I'd be more inclined to spend $500 or $600 on a device that's truly portable than on having a display embedded in my car.
Automakers and hardware manufacturers contend that an installed rear screen offers many advantages over a brought-in device, in terms of safety and convenience. (For more on back seats, see Telematics and infotainment: Designing rear-seat solutions.)
It's not just the initial hardware sale that has OEMs fixated on a fixed rear screen.
Woody Deguchi, vice president of sales for Rovi, sees the back seat as a big new opportunity for services and revenue.
To a consumer, paying a couple of thousand dollars for the ability to play DVDs that you have to pack along is not as compelling as having the ability to download movies, games, TV and other content on demand.
An installed rear-seat entertainment module could provide more elegant options for passengers, Deguchi says.
For example, they could listen to their own Pandora channels, instead of being stuck with the driver's choice; they might also enjoy access to enhanced metadata displayed with songs, including album covers, song titles and artist bios.
The greater cost of an installed unit is balanced by greater reliability, no need to worry about battery charge and no wire tangle.
There's also a potential safety issue, he thinks. "The last thing you want to have in the rear seat is your child's face in front of a piece of glass, which is what the tablet is," Deguchi says. "The tablet may not be as elegant or safe an experience as people would like."
Besides a higher retail price, there's another good reason for automakers to push rear-seat infotainment units: They could provide a lucrative recurring revenue stream.
Rovi provides a white-label video-on-demand service for Internet-connected televisions from Sears, K-Mart and Best Buy. Deguchi says Rovi is having a lot of meetings with auto manufacturers considering a branded VOD service for the rear seat.
Have it both ways
There's no reason that automakers can't take advantage of the iPad's cachet themselves, notes Roger Lanctot, a senior analyst at Strategy Analytics.
"Apple is actively seeking premium incentive opportunities in the automotive market," he says. "I don’t think it's that big of a leap to see some car makers offering a rear seat iPad bundle. It would be ideal for families with young students."
In the summer of 2010, Hyundai began giving buyers of its luxury model Equus an iPad in lieu of an owner's manual. The fully functional tablet comes loaded not only with an interactive manual but also an app that lets owners schedule service appointments.
There's more opportunity in the aftermarket, according to Lanctot: "Mercedes and BMW almost immediately introduced aftermarket mounts for the iPad when it became available. There are huge opportunities for dealers to sell those kind of mounting systems."
That opportunity isn't limited to dealers, either, he says. Consumer electronics retailers could also boost sales and jazz up their automotive audio departments by offering tablets and mounting devices.
"The question is, Will we have a universal mount, multiple mounts or sell the whole package [of mount and tablet]?" Lanctot asks. "Is it standard on some cars? Is this what people want?"
But don't forget to put this opportunity in context. Most experts estimate that 90 to 95 percent of all car trips in the US are made by a single person.
Says Lanctot, "Rear-seat entertainment is always a niche market. Any dealer or OEM has to look at how much of their business is coming from families."
Susan Kuchinskas is a regular contributor to TU.
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