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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation

Telematics and BMW’s appetite for apps

Eckhard Steinmeier, head of BMW ConnectedDrive, talks to TU’s Jan Stojaspal about BMW’s increasing emphasis on in-car content

If you are a developer of that unique smartphone app that is a must-have for any self-respecting motorist, know this: BMW is eager to hear your pitch.

Eckhard Steinmeier, head of BMW ConnectedDrive, the carmaker’s suite of telematics services, expresses surprise over how much new content is still being acquired at his company’s request. He chalks up the lack of initiative to low awareness of the connected car market’s potential. After all, there are still not enough connected cars to make anybody rich, and the lack of common integration standards continues to make development for the car a costly, brand-by-brand, sometimes model-by-model proposition. (For more on standards, see Telematics and EVs: The need for common standards.)

Roger Lanctot, senior analyst, automotive multimedia and communications service, at Strategy Analytics, calls in-car app development “the path of least return on investment. The potential target user population is going to be in the tens or hundreds of thousands, if you are wildly fortunate, in the millions, not in the tens of millions or hundreds of millions if you are deploying on a wireless carrier,” he says.  “And the pay-off is very likely going to be one, two, three years away.”

Calling all content providers

Still there are reasons for content providers to start looking into working with BMW now, Steinmeier says. There is the prestige of being associated with BMW’s brand. There is opportunity to cross-sell one’s services on multiple platforms. Times to market for apps are some of the shortest in the industry; it takes as little as two months to introduce a new third-party app, according to Steinmeier. And the market is not that small; a million BMW drivers around the world already subscribe to ConnectedDrive.

Though business models will take time to mature, there is, depending on the content’s popularity, even money to be made, whether as part of profit-sharing agreements that BMW has signed with some providers or from the sale of apps and premium services.

BMW, for its part, is contentwith income from ConnectedDrive, which in Germany costs 250 euros per year, after an initial free period of three years for the BMW Professional navigation system and six months for its cheaper Business variety. As the number of apps grows, BMW expects other income opportunities to emerge as well.

“In the future, you cannot offer 500 apps and every app will be for free; that’s impossible,” Steinmeier says. “At the moment, we have only a few apps. [But] in the future, we have to think about the business model. Some apps will be free; some apps will cost some euros or dollars; and sometimes we will get the money by [selling them as part of an] option.”

Appetite for content

BMWhas been a pioneer of connected infotainment for over 10 years. In 2001, it became the first car company in the world to launch an Internet-based information portal for use in the vehicle. In 2007, it was the first to integrate Google services. And in 2009, at the Frankfurt Motor Show, it was the first carmaker to showcase a concept for an automotive app store.

Today, ConnectedDrive encompasses more than 50 features, ranging from Parking Assistant to Internet radio. Its appetite for content for its two infotainment platforms, BMW Online and BMW Apps, has never been bigger.

BMW Online is a cloud-based information service that comes with a subscription to ConnectedDrive. It communicates via an embedded modem and SIM card and provides users with news and weather updates, stock quotes, hotel and restaurant information, and access to Wiki Local and Qype, the local reviews site, among others. It can also locate the nearest post office or doctor and synchronize with the driver’s online calendar and email. Another nice thing about BMW Online is that it comes with an unlimited data plan that is covered by a subscription to ConnectedDrive.

BMW Apps relies on the iPhone for connectivity and provides the driver with additional services, such as Internet radio, Facebook, Twitter and Last Mile Navigation. It is sold as a ConnectedDrive option for a one-time fee of 150 euros in Germanyand $250 in the US.

Acquisition of new content is guided, first and foremost, by its relevance to the vehicle, Steinmeier says: “There should be a connection to driving, using a car, including infotainment. With our information, we aim to make driving safer and more comfortable.” Long-term viability of the product is also important, but BMW is realistic in that there is no guarantee a start-up won’t vanish with little advance notice.

Local content welcome

Small developers targeting niche markets need not worry either. Despite being a global player, BMW welcomes local content. “For the biggest markets, it is our goal to have locally relevant content available in each market,” Steinmeier says. In fact, it recently established three AppCenters—in Munich, Shanghai and Mountain View, California—to coordinate app development and pursue a greater degree of localization of services.

The growing amount of content presents an ever-increasing challenge when it comes to managing it, according to Steinmeier.BMW Online alone has around 40 suppliers of content and connectivity at the moment. “You have to deal with the provider for the connectivity itself, then you have to deal with an eCall provider, a call center [that handles] our 24-hour concierge service, and then, of course, the real content,” he says. “There are weather reports, news. We have contact with Google. We have providers for parking garage information, stock information, travel guide information and many more. It’s real work to deal with these suppliers.”

But BMW is up to the job—and it’s looking for content providers ready to talk business.

Jan Stojaspal is a regular contributor to TU.

For more on apps and other in-car content, see Telematics: What’s next for apps and services, part I, Telematics: What’s next for apps and services, part II and Will ‘freemium’ work for telematics apps?.

For more all the latest telematics trends, visit Content & Apps for Automotive 2012 on April 18-19 in Germany and Telematics Detroit 2012 on June 6-7.

For exclusive telematics business analysis and insight, check out TU’s reports on In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation