Count Down to CTIA Wireless 2010

Las Vegas, March 23-25th

I N S I D E T H I S

I S S U E :

Countdown to CTIA 1

IntelliDrive Update 2

FEATURE

ARTICLE : The

Automotive Apps

Store is Coming

3

Telematics Update

Offers New Business

Intelligence Reports

5

Who is

AutoTechInsider

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A U T O T E C H I N S I D E R ,

L L C

M A R C H — A P R I L

I S S U E

AutoTechInsider Newsletter for client use

V O L U M E 2 , I S S U E 1

CTIA Wireless is the most comprehen-sive trade shows in the wireless industry - considered to be “the premier event to exchange ideas, create partnerships and collaborate to bring wireless to new heights.” The event includes exhibits from over 1200 companies representing dozens of industries, and draws more than 40,000 professionals from 125 countries. In the past, Autotechin-sider.com has talked about the Con-sumer Elecs. Show as the event to at-tend, but the “hand-held revolution” or “age of the smart-phone” means that CTIA is now the must attend event!!

AutoTechInsider LLC will be there and will issue a comprehensive report, in our “walk the show” style for only $199.

It will be available through our web site by 4-5-10.

CTIA Wireless 2010 will offer a variety of keynote sessions delivered by the leaders of companies like AT&T Mobility, Sprint, Clearwire, Cisco, and Samsung to name a few. It will also offer a host of focus areas and pavilions covering Smart Energy, Cloud Comput-ing, Social Networking, Wireless Health and a variety of other highly relevant topics. Many of these topics and related products were also addressed in one way or another at this year’s CES, but we expect an increased focus on the enabling wireless technologies at CTIA 2010.

Sources of Information about CTIA

AutoTechInsider LLC— www. autotechinsider.com CES, Ford SYNC and SEMA reports available

Apps World — www.ctiawireless.com/events/apps.cfm

CNET — www.reviews.cnet.com/ctia

Engadget— www.engaget.cm/tag/ctia

Gizmodo— www.gizmodo.com/tag/ctia CTIA Website— www.ctiawireless.org

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Count Down to CTIA Wireless 2010—continued from page 1 We are especially interested in the new Innovation Hall located in the North Hall section of the Las Vegas Conven-tion Center. The Innovation Hall is touted to house and highlight the latest innovations for the industry’s fastest

growing markets. We expect to see some of most exciting and promising technologies in this area and are espe-

cially excited about the Launch Pad Pavilion, which will provide an opportunity for start-ups to debut their products

and ideas. Other themes and pavilions we look forward to reviewing include:

• Smart Energy – Smarter Planet Pavilion

• Wireless Health – Wireless Health Pavilion • Intelligent Transportation – Safe Driving Solutions Pavilion

• Retail Solutions – Retail Zone, Accessories Pavilion

• mLearning – Wireless Education Technology (K-12) • Mobile CE – Mobile Applications for CE Environments

• Cloud Computing – Cloud Services and the Mobile Enterprise

• Mobile Applications – Apps World

• Mobile Marketing & Advertising – Engaging Customers, Monetizing Content, Mobile Marketing • Social Networking – Connecting to people, things & events, Mobile Web

• Mobile Money – Transferring money digitally, The Mobile Wallet

IntelliDrive Update (SM) – Strategic Plan Released, Key Projects Underway Our readers expressed interested in an update on IntelliDrive (SM), the promise that wireless technology will improve our highways. IntelliDrive applications according to the USDOT website (www.intellidriveusa.org) is to provide con-

nectivity:

• Among vehicles to enable crash prevention; • Between vehicles and the infrastructure to enable safety, mobility and environmental benefits; and

• Among vehicles, infrastructure, and wireless devices to provide continuous real-time connectivity to all system users.

Last year the USDOT sponsored several workshops to obtain private and public sector input. This effort resulted in the release of the comprehensive ITS Strategic Research Plan 2010-2014, funding significant projects to advance Intel-

lidrive:

• V2V safety applications, NHTSA will assess regulatory approaches in 2013 • Aftermarket installation opportunities for early deployment

• Scalable and secure Infrastructure for safety apps (e.g. curve speed warning)

Dedicated Short Range Communications (DSRC), 802.11p continues to be the cornerstone wireless approach for safety

applications. The rapid growth of 3G and future 4G networks supporting text, voice and video as found in today’s

smart phones, is embraced in the ITS Research Plan.

To implement the Research Plan, several key Request for Proposals (RFP) were issued at the end of last year (status):

• AASHTO IntelliDrive Deployment Analysis (Awarded)

• IntelliDrive System Engineering - recommendations for updates to standards used to define system elements (Selection underway)

• Michigan Test bed operation and maintenance (Finalists selected)

Expect these key projects to be formally announced by the ITS Annual Meeting in Houston in early May. A key take

away is that a clearer time line for IntelliDrive deployment has emerged. We have a yardstick to measure progress, the

timely funding of key projects and NHTSA’s active participation in assessing regulatory approaches in 2013.

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“Hand-held Revolution”: Smartphone Connectivity driving New App Software

Today, only about 20% of the population has powerful

phones. Smartphone owners are those of us that can af-

ford monthly data plans for constant Internet connec-

tions and the capability to download applications to their

phone. These are the people who are participating in the

―hand-held revolution‖ that is also increasingly captur-

ing the imagination of the driving public. As an owner

of a Droid on a Verizon 3G data plan, getting a new

application for my phone creates the same excitement as

going into a record store in the 1960-70’s to obtain the

latest new release. There is a sense of excitement and

discovery. More importantly downloading applications

is easy, quick and affordable, that is once you’ve bought

into the expense of the smart phone and its data plan. A

whole new world has opened up – applications to inform

you (e.g. Fox News widget), entertainment you (e.g.

YouTube), provide a useful tool (e. g. Bubble/plumb level) and delight you (e.g. BumpTM to swap content/info.). Many

have devices such as the Kindle and iPad have built in connectivity - 3G cellular, Wi-Fi and ever present Bluetooth.

The automotive manufacturers, notably Ford with SYNC, have announced the launch of their apps store with Pandora

(Internet) Radio, Facebook and Twitter as the cornerstone apps. A key infotainment auto supplier, Continental, has em-

braced the Android platform and is presently launching AutolinqTM as their approach to an open platform to develop

and make available apps . We are to expect smart phone penetration to reach about 40-50% in 2012, which will drive

the creation of automotive focused apps stores. Recognizing this growing trend several questions come to mind:

• Will Auto Application Stores (AAS) emerge as important revenue and customer satisfaction initiatives? What is exactly the busi-

ness model?

• What automotive applications will emerge and how will they be developed? What will be the partnership model between the vehi-

cle OEMs, auto elecs. Suppliers and new third part software developers from the Consumer Electronics (CE) community.

• Will applications be created by the vehicle manufacturers or third parties will they originate from a thriving developer commu-

nity??

• Will Android or Apple emerge as the software platform or will a new automotive software platform such as GENIVI , Microsoft

or QNX Car emerge.

Look to the Apple App Store for Answers

Phone-based applications have been with us for several years now. We need to look to Apple to understand and see how

the automotive application store might evolve. The first $500 iPhone was launched in June 2007 to a somewhat skeptical

world. Initial only a few select applications, about eleven, were available integrated as part of iPhone software. These

early basic apps were quickly followed in a few months by an application store, as we know it today. The rest is history!

Today, applications purchase is a big business: 30 new applications created each month, over 1 million are available and with a

revenue of about $200 million a month.

The Apple apps store has set the tone for other stores. Most Apple apps are being priced at less than a dollar, the cost

range being $.99 to $4.99. Entertainment apps cost more and the most popular. According to Gravity Tank, users spend

about $60-65 a year.

FEATURE: The Auto Application Store is Coming !!!

A U T O T E C H I N S I D E R

Recent research conducted by AutoTechInsider LLC through the LinkedIn (www.linkedin.com)

polling application is that most of us (over 138 responded) want free apps but are willing to con-

sider paying:

• 46% of respondents ONLY obtain FREE apps for their smart phone

• 15% of respondents PURCHASE apps, the vast majority paying less than $5 per month, only 1% willing to pay more than $5.

• $18% of the respondents are intrigued by the concept of an AUTOMOTVE APPS Store

The Automotive Application Store Business Model(s)

A key question is how will the AAS work exactly? How will automotive applications be encouraged, submitted, verified

and lastly how will payment be made? There is a balance between helping developers get to market quickly with a vi-

able revenue stream and overall customer satisfaction. Customers obviously prefer that applications are free. Our re-

search at Autotechinsider.com research has verified that most smart phone user are paying less than $5 month for appli-

cations and are predominately obtaining free applications, but considering paying for premium apps.

We expect that the two business models to emerge will be supported by the vehicle manufacturers, that is one that is ad-

vertizing or marketing based and the other largely user funded. I expect the initial model adopted by the vehicle manu-

facturers will be marketing based, that is the initial focus will be on providing an applications store as primarily a tool to

increase customer satisfaction. The app store in the marketing business model is an important tool to improve customer

satisfaction amongst the growing smart phone demographic and to create a fast-to-market environment for new features.

As Ford SYNC has indicated the smart phone generation is exactly the new customer the auto OEM wants to attract!

Potentially AAS sponsored by OEMs will have the additional benefit lower software development costs. Premium appli-

cations that require user fees will follow, most likely as enhancements to basic free applications. Applications that re-

quire on-going subscription costs due to hosting costs are a possibility, but this author envisions that most likely these

applications could be advertising funded. Ford has set the tone by providing Traffic, Directions and Information (TDI)

for the first three years with out a monthly fee.

Even though Ford has teamed with MapQuest and Google Inc. to bring street directions and other information to SYNC

owners, other valuable data base, such as weather data and Points-of-Interest data for niche applications - sight seeing,

etc. In summary, it is difficult to project a large market of paying customers for premium apps. As several people who

we surveyed stated, ―my requirements are largely met by free apps‖.

What Applications will we find on the Auto App Store?

A key questions is what are the applications that most interest the automotive customer. At the 2009 Consumer Electron-

ics Show (CES), Ford announced the suite of new off-board navigation and information base applications working

through a voice portal. At the 2010 CES, the concept of an application store with addition Internet radio based applica-

tions, news services, Twitter and Facebook were added - stream

Pandora and tweet hands-free. More importantly, Ford announced

support for third-party applications and will provide a SDK to de-

veloper. At CES there was a line of potential developers at the

Ford both in North Hall asking for the SDK. As we detailed in

our 2010 CES Report (see www.autotechinsider.com for report

availability and pricing), Ford has created an intriguing new devel-

oper community and alliance. The engagement with the University

of Michigan, as led by Ford Researchers has evaluated the 100,000

or so iPhone applications to determine what should be a ―short

list‖ for introduction on SYNC. A new project called ―American

Journey 2.0‖ is underway . As expected social networking, navi-

gation and mobility information are important to the new genera-

tion of highly connected drivers.

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A U T O T E C H I N S I D E R

What are the new, or rather not yet announced, applications that we should expect to be targeted

towards the automotive customers.

• The majority of applications will be enhancements to existing mobile applications:

created for the smart phone by the consumer electronics development community that are ―enhanced‖ adapted to work in

the vehicle in a safe and effective manner, i.e. automotive user interface creation.

Ford SYNC in providing an SDK (API) allows developers to map cell phone (buttons) to the Ford Instrument panel controls

(hard buttons and voice interface)

• Other applications will be cell phone based portals, using voice technology as a significant new user interface. An example is Aha

Radio.

3G/4G connectivity enables the phone to become a useful portal with powerful search capabilities to:

home, office and other cars

Traffic, weather and location based services

a remote control device to home, office and vehicle for customization, security, energy efficiency, etc.

New home connectivity standards emerging

Machine-to-Machine interfaces (M2M), new applications that will be context aware and able to configure your vehicle

and home accordingly

• More entertainment apps - new video and mobile TV applications with new search applications. We have seen at CES

the introduction of powerful new widgets that streamline search and integrate new Internet applications with video (e.g.

my sport scores, my news, etc.). Companies such as Gracenote are working on enabling these new entertainment apps by

providing technology that allows powerful search capabilities. Continued page 6.

P A G E 5

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Telematics Update Offers New Business Intelligence Reports Report on “The Automotive User Interface the Key Brand Differentiator”

A U T O T E C H I N S I D E R

The Automotive Apps Store Must be Better

The AAS will be different than smart phone focused app stores – more robust apps and a focus on ease of use. As a recent

CNET article indicates we should remember ―the next time your PC crashes, consider yourself lucky that the same flaky

PC operating system is not controlling your car.‖ For example, new middleware from QNX, called QNX car and the

GENIVI Infotainment referenced platform (www.genivi.org/) based on Linux were designed with these competing and

challenging objectives in mind. Automotive infotainment needs to sync with the clock speed of the PC or consumer elec-

tronics world– the ability to quickly upgrade and experience new applications, but not the ―flaky‖ part. The vehicle’s in-

strument panel and infotainment system increasingly have more and more in common with a PC and our smart phone, the

ability to quickly add compelling new applications, but in a safe and non distracting manner. I would suggest that the ma-

jority of apps will reside on your smart phone, but that there will be several auto focused apps that will reside solely on

your infotainment system that takes advantage of the car’s built-in user interface. QNX articulates this vision well.

In conclusion, what is in it for the vehicle manufacturers to create and maintain an AAS? We doubt it is the revenue stream

from selling applications alone, but rather a marketing business model targeted at improving overall customer satisfaction.

In contrast, the goals of Google and Apple are clear. Google wants users to be web based through a browser connected to a

Google server. The more we use the Web, the more Google's generates revenue. Apple wants to get users to be customers

of iTunes and its App Store that requires us to purchase hardware like Macs, iPhone and now the iPad. Vehicle manufac-

tures will want us to visit their apps stores for reasons more similar to Apple. We will be more likely to buy the vehicles

that are platforms to safely and quickly obtain compelling new apps. Our Linkedin survey provided us with insights into

the concerns and questions of current and potential auto apps store users, excerpts modified to protect the responder’s iden-

tity are listed below:

―I have many free apps now and used to it…I MAY pay for auto apps through my smart phone..‖ Note: several comments

about ―free apps only‖

―I would like to just walk into a store and have someone just show me how these applications work… I learned more from

testing the product ―

―New apps are researched then I download …‖. ―The cost of a smart phone data plan for my family approaches a car pay-

ment‖

―GPS works well, but I would like to have elevation, waypoints, compass, trails, coastal markers in addition to street direc-

tions and maps‖

―.. the premium apps I’m interested are around LBS, like weather… another auto app is to allow customization of my vehicle ,

such as displays for easier use…‖

―A car will require a different set of apps that are safe and easy to use‖ ― Auto apps need to be non-distracting, since auto

manufacturers need to be concerned about litigation.‖

One important take away is that those who are not participating in this important new convergence of consumer electronics

technology with automotive electronics will be left behind – to participate means to learn and guide the direction of the

business model. This comment applies to the manufacturers, suppliers and consumers – join the ―hand-held revolution‖!!

The automobile industry is profoundly affected by adjacent industries that

produce the technologies that are involved, directly or indirectly, in the

production of a vehicle. Since the percentage of a given vehicle's cost re-

lated to elecs, software, networking solutions, and related services contin-

ues to grow, we are most interested in these technology areas. Based own

our extensive experience in the automotive industry, we cover major

events and produce insightful reports on the technologies, the companies,

and the trends that we believe will have a significant impact in the near

future.

Disclaimers—All information gathering was done in compliance with the ethical

standards of the Society of Competitive Intelligence Professionals and within the

provisions of the US Economic Espionage Act of 1996.

AUTOTECHINSIDER LLC

Visit us at www.autotechinsider.com The Authors:

Dave McNamara, MTS LLC

dmcnamara@autotechinsider.com

Craig Simonds, AutoTechInsider LLC csimonds@autotechinsider.com

Insights for the Auto Industry

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