September 2012

Praveen Chandrasekar - Program Manager, Telematics & Infotainment

“50 Years of Growth, Innovation & Leadership”

Connected Infotainment:

Advanced Technologies, Apps Paying Off for OEMs

Connected Infotainment: Advanced Technologies, Apps Paying Off for OEMs

Market Insight

© 2012 Frost & Sullivan Page 2

A couple of years ago no one would have figured out that the automotive industry will be

discussing technologies like HTML 5, multi-touch gesture recognition, EyesFree and so on. But

today the European and North American automotive markets are hinging on the very same

technologies to yield them that competitive advantage and increase vehicle sales. Ford clearly

proved with the SYNC and its app ready rollout that a tightly integrated, value added, non-

distracting system with a wide content choice will surely help improve vehicle sales numbers

and value. Several OEMs have followed suit and today only a very few are left who are still

sorting out their connected strategy and in other words are losing a share of the pie.

What to Offer – Getting Clearer and Clearer

It has become abundantly clear that the first step towards the connected infotainment

strategy is to offer support for entertainment and social networking apps either from an

embedded model or a tethered model with basic vehicle HMI support from the touch

screens, basic voice commands and steering wheel controls. The tethered model allows

drivers to keep a single data and voice bill and not pay for another one inside the car though

the amount of data that the driver can burn remains a key challenge. But clearly all OEMs who

have either been leaders or fast followers in this space ranging from Ford, BMW, GM, Daimler,

Toyota have all started with a portfolio or internet radio and social networking apps which

has now evolved to more specific mobility and vehicle related offerings. This first space has

also been the target of Tier 1 suppliers such as Harman which acquired Aha mobile to

integrate them into their low and high end offerings and also look at laggard OEMs to get

them to speed with the others.

First Generation is Over – What Next?

With the dust settling in terms of the first offerings many OEMs and the associated

ecosystem partners have started discussing and formulating the next generation offerings.

From a content and app perspective the evolution happening can be summarized as follows

Mobility related apps and content – examples being the Daimler Moovel which is an

integrated intermodal mobility related app and BMW’s initiative in San Francisco offering EV

related car sharing and mobile parking apps. Clearly there is a shift towards more driving

related apps and this is also an area where OEMs have higher chances of monetizing apps

rather than the first generation which was all about reusing popular third party content:

- Brand-specific content – Ford is taking a bold step in partnering with healthcare

companies and developing apps for diabetes patients and asthma patients. These are a

clear effort in taking up health wellness as a competitive differentiating theme and

build on the first mover advantage they already had.

- Other interesting themes such as augmented reality, ADAS, V2V communication are

also being explored from an app perspective by OEMs.

The more interesting part of the evolution story are the elements happening around the

driver distraction minimization and taking the HMI to an all new level. One example of this

which was hyped quite a lot was Apple’s partnership with 9 OEMs during the recent WWDC

event. What can change the game very fast however, is if Apple were to come up with its own

MirrorLink-type solution and then offer to OEMs a very compelling package. Mass market

manufacturers such as Chevrolet already announced Smartphone navigation apps for its small

car models such as Spark and Sonic considering the price sensitivity of customers. If Apple

can create its own Mirror Link and provide a cool interface to its navigation feature which

can be controlled by SIRI, then we are definitely talking about a market revolution. And given

the number of OEMs who have already partnered with Apple on the “Eyes Free” feature; it is

clear that Apple ownership is very high amidst these car brand owners. Frost & Sullivan

believes that the integration of SIRI at a phone level right now is purely a basic consumer

appeasing strategy and for Apple to become a force to reckon with in this market, we are at

least one automotive product cycle away.

Several OEMs like Cadillac on the CUE, Chrysler on the new Uconnect Access system bring

in conversational speech assistant in the car. Nuance on the other hand is also bringing in

new customers for it’s almost close to natural speech solution called Dragon Drive such as

BMW and so on. So clearly there are major innovations and developments happening in the

HMI space.

Final Word – Need for Technologies like HTML 5

Infotainment platforms, apps, basic content partnerships are all ready and set. But what’s

missing are a typical app store type environment with developers having access to SDK’s and

platforms without having to go through direct OEM interactions, UI innovations which can

allow OEMs to reuse the same app and infotainment platform in different models but still

make it look and feel different using technologies like HTML 5 and a real future vision for

making money from content. The revenue opportunity truly lies in the wealth of vehicle data

which OEMs are the only ones to have access to and depending on their comfort in opening

this up might open up a completely new service stream for them. Ford is again taking a lead

in this in its newly opened Silicon Valley lab by offering developers read only access to the

vehicle data and asking them to develop interesting apps. This is the key area along with safe

UI and reusable platforms which will make this not only a cool to have thing but also

something that’s a constant business stream.

Connected Infotainment: Advanced Technologies, Apps Paying Off for OEMs

Market Insight

© 2012 Frost & Sullivan Page 3

Connected Infotainment: Advanced Technologies, Apps Paying Off for OEMs

Market Insight

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