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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 Detroit 2014: Day Two

Susan Kuchinskas reports on day two of Telematics Detroit 2014, a two-day Telematics Update conference and exhibition in Novi, Mich.

Consumers may take months to research a new-car purchase, and the actual shopping and buying process can take additional time. But once the customer leaves the dealer lot with a new vehicle, he's often riding off into the sunset, as far as the vehicle's manufacturer is concerned.

OEMs firmly believe that connected-car services can help them sell cars. But can they also help them maintain a warm and fuzzy relationship with customers post-sale? This question set the tone for discussions on day two of Telematics Detroit 2014.

The answer? Maybe, someday. As far as speakers at the two-day Telematics Update conference and exhibition in Novi, Mich., were concerned, too many pieces were still missing:

·         The connected-car user experience remains shaky, confusing or underwhelming, with no clear value proposition.

·         Consumers in both Europe and the United States, reeling from revelations that the U.S. government spied on citizens at home and abroad, are more wary than ever of being tracked as they drive.

·         With changing demographics and a millennial boom, the industry can't be sure that the consumers’ love affair with cars will endure – or at least not in the same way it played out post-World War II.

User experience #Fail

SBD recently studied seven U.S. connected car systems from six top automotive brands, including Tesla Motors, Honda and Chrysler. And it grouped the many problems it found into four categories:

1. Split personality: 

In systems with both embedded navigation and apps, sometimes audio cues from different services overlapped. Another problem was that services weren't always where consumers expected them. For example, consumers expected search to be tied to navigation, but, in some cases, it was a separate app.

"Confusion leads to unsafe systems, and this situation will only get worse when we move to Google, [Apple] CarPlay and MirrorLink,” said Andrew Hart, head of advanced research, automotive, SBD. “All these systems will compete for the attention of the driver. The industry needs to find a way for them to talk to each other. Integrating apps doesn't mean creating a folder."

2. Apps in name only: 

Many apps did not perform as well as they do on mobile devices. In general, SBD found that while search results are delivered within 10 seconds on a mobile phone, they typically take two to three minutes to appear when accessed through in-car apps.

"When you see surveys showing that consumers want apps in their car, the subtext is: 'I want this app in my car as long as it is as fast, as easy and as supported as the app in my phone. Otherwise, I'll never use it,’” Hart said. “Usage is the number-one metric we should be using to determine success, not the number of apps."

3. Playing hard to get: 

SBD found that consumers were attracted to flashy displays. But when they started to use the systems, even for basic tasks, they struggled. In the worst-rated system, 100% of testers struggled with one or more basic tasks. But even in the best-rated system, 52% had difficulty with a basic task like calling a friend or finding a radio station.

4. Swiss Army knife when all you need is a spoon: 

SBD identified 173 different apps now being offered by OEMs in the United States. But consumers preferred just a few of them: Google Search, Pandora and Street View.

To conclude his presentation, Hart advised OEMs to set standards for usability along with every technological advance. "You can set very objective metrics for each of these,” he said. “You can't develop an app-enabled platform that causes it to take two minutes to load up."

Safety first

A recent survey of consumers by Strategy Analytics found that safety far outranked infotainment among U.S. and European car buyers. "Safety is a higher customer priority than you may think – and it's also a differentiator," said Roger Lanctot, associate director, automotive multimedia & communications service, Strategy Analytics.

A diverse panel of car owners could not agree more. Ranging in age from 26 to 65, each of the panelists spent approximately an hour in four different car models, attempting to do several tasks while driving. The tasks included calling a friend, finding a restaurant, setting two different destinations in the navigation and finding two different radio stations.

During the testing, three main problems emerged. It took multiple steps to achieve a task. Displays were mounted in places that took the eyes off the road for too long. And menus were too complex.

Pointing out that millions of Americans are over 65 years of age, Joseph (panelists were only identified by their first name) advised: "Make icons so people can read them – just a suggestion. You may be designing for the generation that's 25 to 50, but you've got millions of older people out there."

Said Megan: "When I drive, the biggest things I worry about are where I'm going and music. Other than that, I'm focused on driving. All this other stuff seems okay, but it's very distracting."

Added Mark: "When you develop something as fast as our phones or our iPads – which is what younger consumers expect – that's when everyone will be very impressed."

All three panelists saw greater benefits in smartphone integration. They singled out personalization, better functionality and the ability to keep the system up to date.

The generation app gap

Safety aside, it turns out there is also a bit of a generation gap when it comes to the desire for apps in the car – although not as big a one as it's often made to seem.

A Bloomberg survey presented at the conference showed that 44% of all respondents agreed with the following statement: "I wish I could easily and safely access every app I want to use on my smartphone while driving." But the percentage went up to 58% for 35- to 44-year-olds and 64% for 18- to 24-year-olds.

Another question in the Bloomberg survey considered the following statement: "I wish my car was better able to understand my preferences, predict what I need and guide me." Once again, agreement was the highest for 18- to 24-year-olds, of whom 79.6% agreed.

Bloomberg also found that the majority of consumers of all ages thought that mobile technology was more advanced than connected car tech, a conclusion that Bob Kennedy, vice president at LochBridge, disputed. "Mobile technology is really visible,” he said. “There is a lot of technology in the car that can be harnessed, but consumers take it for granted."

Cars of the future

With all these concerns in play, speakers on day two of Telematics Detroit 2014 also began to consider what role the connected car will play in the Internet of Things (IoT).

The car will become more like a person, with its own identity and ability to anticipate and execute actions, said David Miller, chief security officer at Covisint. "The view in Detroit is that the car is in the middle,” he said. “But what we have now, with the Internet of Things or the world of everything, the car will become just another thing that has to deal with the universe of all of my connected life.”

For this to happen, however, carmakers need to find a way of protecting the car's unique identity, according to Miller. While it would be excellent, for example, if a connected car knew the driver’s restaurant preferences and driving style, the driver may not want the car to communicate its identity to the traffic infrastructure it's speeding by, he said.

Automated driving and beyond

Still, that did not prevent speaker after speaker from painting colorful scenarios in which the car automatically configures itself to the driver's requirements while communicating the driver’s location and intentions to the world around it.

The most ambitious vision was presented by Dan Teeter, director of  vehicle connected services at Nissan North America, and it went as follows:

A driver named Pat drives to work in his autonomous car. His smart watch and seat belt sensor detect that his blood pressure and heart rate are elevated, so the car switches to soothing music and a back rub. Arriving at work, the car drops Pat off and proceeds on its own to a prepaid parking spot. It asks the home refrigerator to check for healthy food, and finding none, it places an order with a local health food store. When Pat decides to clock out early, the car alerts a connected thermostat to start cooling his house earlier than usual. The car figures out the best route home. It automatically pays tolls along the way. And it plays a comedy movie on Pat’s screen to help him relax.

When cars become part of the Internet of Things, they will deliver benefits for consumers and OEMs alike, said Alec Saunders, vice president, Cloud business, QNX Software Systems.

The IoT will, for example, allow consumers to take their radio pre-sets, paired phones and HMI settings from one car to another. Automakers, for their part, will be able to monitor a range of car components and keep an eye out for those that are more susceptible to breakdowns. This will not only help them optimize inventory and regional distribution of spare parts, but it will also reduce vehicle downtime and maintenance costs for consumers.

But "to enable this vision, we need something that operates at planetary scale, a secure, global, public platform," Saunders said. "There is a critical need to be able to aggregate data from multiple sources into a normalized database."

Acquiring the data is not a problem. The challenge is in understanding it, said Kevin Moore, vice president for automotive OEM sales at Telogis. "In the completely connected world, we have to rethink how we manage assets, and how we interact with drivers, customers, technicians and engineers,” he said. “They will all want access to this analytical data."

And the data platform needs to scale. Ford learned this the hard way when it began pulling data from its electric vehicles a year ago. Almost immediately, the system it had set up began to be overwhelmed. "IT dept needs to be ready with a scalable data platform,” said Dave McCreadie, Ford’s manager of electric vehicle infrastructure. "We were outgrowing some of the systems and processes we put in place. I was getting barraged by requests."

Ford plans to use the EV data it collects to determine whether battery life needs to be extended and how charging infrastructure relates to battery size.

Fighting the CE threat

With Google announcing that it will deliver its own autonomous vehicle, the threat from consumer electronics (CE) companies and Internet giants seems bigger than ever.

While most automakers have announced their own autonomous car initiatives, will they eventually lose to the titans of CE? In a live poll of the conference audience, 65% of respondents said they saw Google and Apple as collaborators, not threats.

"We're seeing an interesting race between the IT industry and car companies for ownership of Cloud data," said Dominikus Hierl, CEO at Telit Automotive Solutions.

In many ways, the recent multi-billion-dollar sales of Nest Labs and WhatsApp opened some eyes to the value of this data. 

Hierl noted that at previous Telematics Detroit conferences, the discussion was that while connectivity could be a valuable differentiator, it was not clear who would pay for it. Now, he said, "We finally understand the value of Cloud-sourced data is very high."

If Silicon Valley wins this, he added, industry profits will shift toward software and service-based business models, and cars will become just one among many commoditized devices.

Lanctot took a slightly different angle on the connected-car future. According to him, the elements of the telematics revolution are much simpler – and they're already on the market. "Our revolution will come from the smallest innovations form the smallest companies," Lanctot said. "It will not be found in a Google search or the Apple App Store."

The sources of revolutionary change he identified are:

·         Safety

·         Tires

·         OBD2 port

·         Cameras

·         Data from the car

·         Measurement of the car's state and activity

In fact, the most humble component of the connected car – its tires – could be the most important when it comes to maintaining the customer relationship and improving return on investment on the car.

"There's a big future for tires," Nissan's Teeter agreed, "for trying to get customers back into the service department."

Finally, Lanctot cautioned conference attendees not to get hung up on sexy technology for its own sake. He said everyone needs to consider “how much is technology making a delightful experience, and how much is it creating friction.”

“Making the technology disappear is our ultimate goal,” he said.

(For our coverage of the first day of the conference, see Telematics Detroit 2014: Day One.)

Susan Kuchinskas is a regular contributor to Telematics Update.

For all the latest telematics trends, check out Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, Insurance Telematics USA 2014 on Sept. 3-4 in Chicago, Telematics Japan 2014 in October in Tokyo, Telematics Munich 2014 on Nov. 10-11 in Munich, Germany, and The Open Mobile Summit on Nov. 10-11 in San Francisco. 

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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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