Automotive Megatrends Magazine – Pilot issue / Q3 2012 by Automotive World

megatrends AUTOMOTIVE

Issue 1: July 2012

M A G A Z I N E

Wireless network evolution

Embedded solutions

Cloud connection

Mobile device integration

The connected vehicle issue Navigation

Software and apps

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megatrends AUTOMOTIVE

M A G A Z I N E

Editor's welcome Although connectivity has been of interest to the automotive industry for some time, it is only in the last few years that the concept has gained real momentum.This has been driven by events in the consumer electronics industry and the growing desire of car users to remain ‘networked’ and interactive with important elements of their daily lifestyle, whether they be professional or personal.

n an industry typically characterised by relatively long development and model cycles, automotive OEMs and suppliers have been challenged to speed up thinking and to anticipate and cater for trends where progress and innovation is measured in weeks and months rather than years.The growing importance of the IT industry and the arrival of new players into the automotive supply chain has added an additional dimension to what has become a dynamic landscape, the precise contours of which continue to evolve at a rapid pace. This connectivity issue of Automotive Megatrends focuses on aspects of this trend towards greater connectivity and draws on a number of interviews with key stakeholders who are now actively involved in driving the future of the subject and defining the boundaries of its growth. It is clear at this point that, despite an increasingly robust technological infrastructure, no single, well-defined business model prevails. Rather, a set of ‘solutions’ has evolved for individual players striving to stay ahead of consumer aspirations while simultaneously searching for both competitive advantage and a commercially-viable answer (i.e. revenue streams) to the challenges being presented. It is unclear which of these solutions will dominate in the longer term.What is clear is that vehicle owners, drivers and other users, keen to remain networked in the car described by some as the last frontier for the internet - will be the determining factor in both

the direction and speed of developments, whether this relates to the efficiency of mobility (telematics) or the need to stay connected with the business or social world.

Contents Introduction

As outlined in a number of the interviews, the challenges to the traditional automotive value chain, where roles have been clearly defined for many years, cannot be over-estimated.The value chain appears, at least in the context of connectivity, to be evolving into a value network, where former boundaries between players and their respective roles are becoming at best fuzzy and at worst non-existent, forming an open ecosystem driven by software, rather than hardware, experts. Promising new strategic partnerships encompassing traditional and new players have already been formed and further similar developments, in what is a very dynamic and fluid environment, seem assured.

Wolfgang Bernhart & Thomas Schlick Roland Berger

Helmut Matschi Interior Divison Continental

Jim Buczkowski Electrical & Electronics Systems Ford Research & Innovation

Nick Pudar Planning and Business Development OnStar

It is also clear that the overall safety of new connectivity solutions, particularly in the HMI field, is increasingly exercising the minds of legislators keen to ensure that road safety is not compromised in the rush to remain networked while driving. Fortunately, the Automotive Industry has a long history of mutual cooperation on a host of safety issues with national legislative bodies and there must be some optimism that the real issue of driver distraction can be tackled successfully without the heavy hand of legislation resulting in disharmony.

Ralf Lamberti Telematics, Infotainment and Cabin Electrics/Electronics Daimler AG

Rick Kreifeldt Research & Innovation Harman International

Mikael Gustavsson Connectivity Hub Volvo Cars

Jim Nardulli Americas & Global Telematics NNG Kft

The following features thus present a flavour of how a number of major players see automotive connectivity evolving and how the challenges driven by this evolution are being confronted.

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4HERE ARE MANY METHODS OF ENSURING THE SECURITY OF A CONNECTED VEHICLE

How safe is your approach? Wireless network evolution

Cloud connection

Embedded solutions Automotive Megatrends magazine ISSN 2047-9840

To learn more about our solution, visit us our booth at Automotive Megatrends USA 2012.

Publisher: Automotive World Ltd 1-3 Washington Buildings Stanwell Road, Penarth CF64 2AD, UK www.AutomotiveWorld.com T: +44 (0) 2920 709 302 info@automotiveworld.com

Mobile device integration

Registered number: 04242884 VAT number: GB 815 2201 Chief Executive: Gareth Davies

Engage owners, manage identities and security to and from the vehicle through a single platform.

Editor: Colin Whitbread

Our Connected Vehicle Engagement Platform:

Sub-Editor: Ruth Dawson

s s s s s

0REVENTS UNAUTHORIZED VEHICLE INTRUSION 0ROMOTES AN EASIER AND FASTER IN VEHICLE SOFTWARE UPDATE PROCESS )MPROVES USER EXPERIENCE WHILE ACCESSING MULTIPLE CLOUD BASED SERVICES FROM THE VEHICLE (ELPS AUTOMOTIVE MANUFACTURERS TO AVOID PROVISIONING COMPLICATIONS 0ROVIDES THE CONSUMER WITH THE mEXIBILITY OF THE WEB

Analyst: Martin Kahl

The connected vehicle issue Navigation

Production Manager: Michael Franklin Subscriptions and Advertising: Gavin Dobson gavin.dobson@automotiveworld.com +44(0)2920 709 323 John Cumpston john.cumpston@automotiveworld.com +44(0)2920 709 348

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connecting the car Interview: Wolfgang Bernhart and Thomas Schlick Partners at Roland Berger Strategy Consultants

Connectivity is not a new theme for the automotive industry. Back in the late 1990s, everyone was talking about "telematics". Automotive engineers were busy working on ways of connecting cars and drivers with the world around them – bringing together telecommunication and informatics. But there was little to show for all the new visions. Before long, vehicle manufacturers had largely pulled out of vehicle connectivity.Yet more recently, consumers have come to appreciate the power of being online while mobile. So our cars can be no exception.This is why technologies and business models that initially failed are once again high on the automotive agenda.This time round, however, it is players in the IT sector who are driving full connectivity rather than the automotive engineers. New players are redefining the boundaries of the car as the value chain morphs into a value network.With novel business models emerging, automotive OEMs and suppliers face a whole new set of challenges.

The connectivity breakthrough

s the last millennium drew to a close, the automotive industry was investing heavily in systems to connect vehicles with the outside world. One of the main motivations for introducing "telematics" was to enhance mobility.The driver could be told in real time about road accidents and traffic jams. But there was little to show for all the hype.Various factors prevented the initial advance of telematics. For one thing, the technology was simply too expensive at that time and networks were not available in all areas. Moreover, the industry could not find a viable business model.And on the demand side, customers were not yet ready to embrace the new technology. Car buyers balked at the additional costs.What’s more, the IT sector was struggling with an economic downturn and unwilling to invest long-term in telematics. How things have changed! Almost every activity in today's world is networked in some way. Smartphones enable us to live online.We can be connected anywhere at any time. And the Googles and Facebooks of the web have created new and successful business models rooted in the value of data.The path to full vehicle connectivity is now wide open.

New technologies commercially available such as LTE will enable the breakthrough of connected vehicle solutions Drivers that support the development of connectivity Limiting factors in the past

2000

Drivers for breakthrough now

•

Wifi

•

Existing technology base • Increased bandwidth 100mbit/s -1Gbit/s • High mobility communication (cars, trains, …) enabled • Cloud computing/ mobile data standards

•

Wide applications portfolio • for the automotive industry/market • for mobile platforms • for different platforms integration

Location based serv

•

Success stories in other areas (e.g. mobile applications)

LTE (4G)

•

Datamining able to access and process large databases

•

Lack of technological maturity • Standards • Mobile/ wireless coverage and bandwidth

iPod Wimax

Lack of applications (software) • Existing applications were standalone or webpage based

iPhone

•

No precedent success stories in other areas

Cloud computing

•

Lack of investment appetite • Most investments and development efforts where halted for some years at the internet burst of early 2000

iPad

2010

2015

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connecting the car Vehicle connectivity: the key drivers With the right technological framework now in place, vehicle connectivity is set to grow very rapidly. And the pull of growing customer demand makes it inevitable. Specifically, we have identified six key factors driving car connectivity: 1. Policies and regulations An enabling environment at national and international level is encouraging vehicle connectivity initiatives. Plans to upgrade vehicle safety, for instance, include the introduction of the automatic eCall service in all new cars by the end of 2014. And Secure Intelligent Mobility (SIM-TD) and other research programmes are advancing car-to-X communication, which will give drivers real-time warnings of hazards on the road ahead or traffic disruptions. 2. Customers More and more drivers now expect full connectivity.They want to be networked 24/7 from any location. Indeed, smartphone use at the wheel shows how many are prepared to take risks and break the law in order to keep in touch. Since this is particularly important for younger drivers, connectivity will undoubtedly be a major selling point in automobile marketing going forward.

3.Technologies The latest data gathering, processing and recording technologies enable unlimited car connectivity.Thanks to cloud computing, huge amounts of data can be handled centrally. L… T… E… (LTE) technology offers high-speed data transmission and ensures safe, stable connections between a vehicle and the wider environment. LTE systems are planned in some countries and already being deployed in others.

networked world – with its Googles and Facebooks – the commercial potential of networks lies in the users.The consumer is both a provider and consumer of data. As valuable data is generated, services can be paid out of revenue streams. So drivers may not have to pay anything if companies exploiting customer data can offer end-users free basic in-vehicle connectivity, possibly with chargeable add-ons.

5. Mobility solutions The future holds a plethora of novel mobility arrangements and user options across all transport modes. Some ideas are about flexibility, others about green choices. Smart systems for car sharing or multimodal travel demand that users and their vehicles be fully interconnected.

Connectivity: global with local differences Few now question the shift taking place; vehicle connectivity will one day be the international norm. But the pace of change and the features first introduced will vary from country to country. Connected vehicles will initially break into markets with the highest level of technological development.While LTE is already being rolled out in the US, this type of technology is only now being fitted in automobiles on EU roads. One key aspect of connectivity is the "car-to-X" communication designed to enhance vehicle safety. In this field, Russia has plans to use its own satellite system for eCalls and tracking stolen vehicles.

6. Unlocking value in electronic data Going forward, the automotive sector will increasingly adopt business models based on data recording, processing and evaluation. In our

Vehicle connectivity has already become available in certain markets, especially for cars in the premium segment.There are still some question marks concerning the viability of

4. E-mobility Electromobility also needs greater connectivity. In particular, e-car drivers must know where the next charging point is when they are on the road.They also want to book themselves in and pay for charging online.

The idea of the connected vehicle is driving all major automotive markets and Japan and Korea are leading the way International trends in the connected vehicle sector – Main differences Trends

Europe

USA

Japan & Korea

China

Technology (LTE)

Available in some countries, being rolled out

LTE networks in urban areas, being rolled out in less dense areas

Technology leaders

Adoption of LTE expected

Regulation

eCall recommendation adoption for 2015

Questions on data protection have to be answered, especially on OEM level; want to limit accidents caused by using mobile devices in car

ITS system - support export of system into Asian developing countries (e.g. India, Malaysia)

Telematic as national level program Encourage ETC, GPS, … Special gov. incentives

Customer

Entertainment on board for some high-end brands

Entertainment and mobile internet is one of the biggest traffic accident causes

Technology savvy Preference for realistic 3D - illustrations

Entertainment Work/information Traffic information

E-mobility

OEMs and infrastructure providers enforcing EVs

Over 17,000 Chevrolet Volt/Nissan Leaf sold in 2011 - strong national/regional incentives

Toyota and Honda are leaders in hybrid technology; rollout of xEVs expected before 2014

262K EV and 385K PHEV in China 2015 25 pilot cities

Development of mobility solutions especially carsharing services in large cities

Highest car sharing penetration rate Pushing the EV topic, especially for cities and urban areas

Trend to smaller and smart vehicles for overcrowded cities Demotorisation trend

Motorisation trend

Mobility solution

business models, however. Over six million users have already subscribed to OnStar in the United States as a safety and assistance solution. Europe has so far had a stronger focus on wider access to information and entertainment services, but with help features for an emergency. Japan and Korea are definitely the trendsetters: vehicle connectivity systems are highly successful and include added-value services for intelligent traffic management.

As opposed to the current vehicle ecosystem, the connected vehicle one will be open and new business models are required for this arena Closed Ecosystem 2012

Cloud services

Politics

The ecosystem for connectivity

OEM

Vehicle connectivity is widening the boundaries of the current ecosystem.The ecosystem generating the necessary technologies at present will open up and bring in new ground rules, new players and fresh business models. The current ecosystem has clear roles and traditional processes. Basically, automotive suppliers develop and deliver both hardware and software to the OEM in a context of close cooperation.Value is added along this chain. In future, the ecosystem will be open. Data exchange and IT innovations will explode the system boundaries and turn the value chain into a value network. As new players push into the market, novel business models will emerge, this time based on data. But the new system will bring both opportunities and risks. Players in an open ecosystem will not care about the old rules.They will leverage their innovations and business models to attack the established and closed ecosystem, benefitting from the shift of value from hardware to software.

Open Ecosystem 2020

OEM

Customer

Communications providers Current system boundaries

• •

Clearly defined tasks and responsibilities Clear processes and structures Long established business models and rules

Customer

Supplier

•

Energy suppliers

Data providers

Mobility services

Future system boundaries • •

New players - closer interaction of players from different industries New business models and revenue streams

Connecting vehicles to a wider system Vehicles will be connected to their external environment at four levels: data communication, multimedia hardware, communication interfaces and added-value applications. Providers of connected mobility solutions must get their business model right.They must ask themselves not what services customers are willing to pay for, but who will buy what data.To start with, however, there must be clarity about the kind of data that may be sold to third parties. And they need to know the long-term value of that data.They must also look at how the data originates and whether the dominant market players already have this data or control access to it. Take, for instance, navigation services.The added value clearly goes to drivers. But car drivers have become less and less willing to pay for navigation data, since they can get something similar for free from Google Maps or other apps. And Google, for example, can offer additional benefits to business users by enabling them to produce their own maps or linking information from other services. So businesses

“Vehicles will be connected to their external environment at four levels: data communication, multimedia hardware, communication interfaces and added-value applications.”

megatrends Information, Convenience and Protection. Three passengers that no driver should be without.

connecting the car A ‘systems view’ needs to be applied - different layers become relevant APP-lications

• Vehicle and driver guidance/assistance data • Use of external data/ information for driver • Use of driver data/ information for external systems/services

Personalised cloud data (not vehicle related)

• Vehicle and environment/driving assistance data • Use of external data/ information for vehicle • Use of vehicle data/ information for external systems/services

Vehicle health status data (not driver related)

Billing service HMI / MMI (incl. "translation")

Human input

Runtime environment (HW / SW)

Mobile devices

Aftermarket devices

Factory installed devices

Communication / "Connection" (HW /SW)

PAN Data transfer with mobile devices: Wifi, Bluetooth

WAN Data transfer outside vehicle: LTE, UMTS

LAN Data transfer inside vehicle: CAN, MOST, TCP/IP

can pay for the service through their advertising and allow Google or others to give end-users a basic map service for free.This trend will sink the existing business model employed by navigation suppliers. An option for OEMs is to safeguard their business by avoiding the at-risk simple systems and offering high-value preinstalled navigation systems offering greater sophistication.

Opportunities and risks

At Delphi, we’re helping to make sure drivers are accompanied by the latest in-vehicle solutions. Like our integrated driver interface which helps manage the high-content, complex environment of today’s vehicles by

Companies should be thinking in terms of scenarios.This is the best path to assessing the opportunities and risks associated with connected mobility.Take the bleak scenario of non-safety critical functions leaving the vehicle entirely due to high-speed data transfer capabilities. Billions in component sales are at stake here.

putting as much information in front of drivers as possible. This helps them to focus within a 20-degree field of view, keeping their eyes on the road and their hands on the wheel. And with convenient controls that adapt to drivers’ preferences, they will be more informed, more in control and safer all at once. To learn more, go to: delphi.com/infoconnect

Another plausible scenario is for internet companies like Google and Facebook to begin subsidising the hardware used to access their services, following the telecom suppliers' current model of subsidised smartphones.This would obviously impact heavily on hardware suppliers. On the other hand, in-car internet access also presents suppliers with new business opportunities.

Big potential for in-car Internet and eCall With high-speed networks like LTE widely available in a number of urban regions across America, in-car internet services currently have

Human output

Measuring elements (Sensors)

the biggest growth potential in the United States. In-car internet solutions could be found in 30% of the new US automobile fleet by 2015. Europe will take somewhat longer as the necessary technology gradually establishes itself in future vehicle generations. One in ten new vehicles is expected to have internet access by 2015. The United States is also set to be the major growth market for vehicle tracking and eCall. Solutions such as GM's OnStar, Ford Sync and Toyota's GBook already generate considerable sales, while Chrysler is also expected to launch new technology. Analysts expect penetration to reach over 60% by 2015.There will also be an eCall surge in Europe, where new safety legislation is anticipated and insurers are offering novel service and pricing arrangements. In-vehicle wireless connection for smartphones and tablets is also bound to expand rapidly. Most Europeans already want Bluetooth functionalities in new cars, and this preference has extended to the volume market. In the US, Volkswagen offers connectivity via Bluetooth as standard in a number of models, including Eos, Passat,Tiguan and Golf. And uptake is also expected to accelerate in countries such as China, where the use of cell phones at the wheel is forbidden. Businesses are also aligning themselves to a potentially strong aftermarket from 2015 for audio streaming (12 million units), hands-free calling (17 million), vehicle tracking and eCall (6 million) and vehicles with integrated Internet access (7 million).

Controls (Actuators)

Myths about automotive apps OEMs are now very interested in automotive applications. But the vehicle manufacturers will have to interface closely with both customers and developers if these apps are to succeed. Open innovation is the way forward. In alliance with T-Systems, BMW and Continental have collaborated to launch innovation competitions aimed at finding great apps that will work.The goal is to develop many thousands of apps that can be rolled out in small numbers, selling for less than €10 each within an appropriate business model. A slightly different business model is used for Apple's iTunes store and the open Android system, but it is equally promising.With independent developers working in their thousands on all sorts of apps, the aim is to sell millions of them for less than €5 each.The idea is that the sheer volume on offer makes the platform a must for customers and highly attractive for independent developers. These are exciting times and automotive OEMs and their suppliers will ignore these developments in mobility and connectivity at their peril.They must now think outside the box and enter into new alliances to come up with winning solutions. Part of this is a question of envisaging the future. Scenarios will be important in spotting opportunities and identifying risks. And for automotive companies, future growth will also depend on their ability to build innovative strategic partnerships.

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intelligence in the car Interview: Helmut Matschi How can you combine life, technology and low costs into a user-friendly interface? Continental thinks it has the answer with its new AutoLinQ system. Helmut Matschi, Member of the Executive Board, Interior Division at Continental discusses technological innovation with Automotive World Connectivity is a broad ranging subject and Continental is clearly active in a number of areas, but focusing primarily on infotainment, could you first share with us some thoughts on current connectivity trends and the interface between the auto and consumer electronics industry. When we look at what’s happening in the industry we see a change in the trend towards perceived intelligence in the car.This is something that we see very concretely and we see the way the car is connected will determine if a new car model is fascinating for younger buyers. How this can be reached is what we call the secret of success for us. If it is simple and intuitive so that things appear to work almost by magic, then this will drive things forward.This trend towards perceived intelligence is something that is very important for us as we see demand coming not just in high end vehicles but through all other car classes as well. It certainly looks as if there are a couple of key trends at work here and it would be interesting to know which one you think is the most important. It seems to be that this is being driven by consumer demand and particularly consumer demand from the younger age group but at the same time, vehicle manufacturers very much regard this as a product differentiation focus as well. They feel it gives them a competitive advantage to have the most sophisticated system in their vehicles. Am I right in thinking that they are the two key drivers for this? Maybe the availability of technology is another factor? 12

What we see is that there are different kinds of solutions depending on what the objective is, and this is also coming back to the question you asked before.The most obvious way to achieve connectivity in the car is to use an existing smartphone device that a user already has, and to use the terminal mode (MirrorLink) interface. That way you have your mobile device and you mirror it into the vehicle - you use the HMI elements in the car but the full functionality is running on the mobile device.When we looked at this at Conti, we developed with Nokia a terminal mode system and demonstrated it by directional link in a French test car based on a touch screen version. So this is the terminal mode way and is the easiest way to do it. Then you can look for a next higher level and this would be when you might only use your phone as a connection device.Then you do the complete HMI and operate features directly in the vehicle.What is the advantage in that? It means that the phone is the connection device and then you don’t need a SIM card in your vehicle because you are using the internet connectivity directly from the phone but that you can also define everything in the vehicle directly.This is what we in Continental call the AutoLinQ solution, which we are doing with another strong partner, in this case Deutsche Telecom.With that close partnership, we underline our proximity to the consumer electronics business.We have launched, with Deutsche Telecom as a back end provider, an internet connection via speech in a Chinese vehicle.This is really showing our best practice example of how we are going forward towards this vision of “always on”. At one level higher again, someone can also use a complete telematics unit, something that has been around for a long time with services such as GM’s

OnStar. I think more than 20 million such units are already on the road and therefore, we have gained a lot of experience there.These three levels are all about connectivity. Adding on all the other features of infotainment gives a complete connected head unit as exists in embedded systems in higher end vehicles.This is the full range of connectivity that can provide an answer to the need for differentiated products for OEMs. With the MirrorLink system that you were outlining, do you think that’s just an interim phase and then things will move on? Are there any active systems available at the moment that use the system? I know one or two manufacturers are working on that, but are there any applications at the moment?

Helmut Matschi

Member of the Executive Board, Interior Division, Continental

The MirrorLink system is not in series production Do you think that will go into series production though or will that be a stage that’s missed and we’ll just go onto the next one? There is the consumer/automotive group CE4A (Consumer Electronics for Automotive) working on it.This is the group which is developing it and in the end it will be for the OEMs to decide what to do with it. It would be simple to do it but we focus our work a lot in what we call this magic human machine interface. Here we believe that the secret of success is when it is most simple, most intuitive and working as if by magic.The MirrorLink is the solution which is technically the easiest one but the question is whether it is also the simplest and the most intuitive one.That’s open to debate.When going forward to the second level, what we call AutoLinQ, then we take care that the driver can focus on his or her prime task, which is driving.We want to ensure that drivers are concentrating on driving and do not need to fiddle around.When you just have the

Haptic feedback controls

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intelligence in the car mirror of the mobile device in the vehicle, then certainly you are used to that from your mobile device, but the question remains whether that is necessarily already a perfect automotive HMI. This is the reason why Continental goes for AutoLinQ. That’s interesting, we’ve spoken to one or two OEMs and they seem to suggest that the best system is one that does actually replicate the front of your smart phone on the dashboard because you’re used to the layout of all your apps and everything else but maybe that’s not the most efficient way of looking at it.As far as your AutoLinQ system is concerned, could you just update us as to how that system has developed to date? Where are you in terms of commercialisation? As you know we showed it at the 2011 CES in Las Vegas and we also launched it last year, in 2011, for the first time with a Chinese OEM. You can see from this that this is really very global - it hasn’t been launched for the first time in Europe or in the US, but in China.We do the internet connection via speech and we believe this form of HMI is preferable when driving as it avoids fiddling around on your mobile device, something that we definitely cannot recommend. So you believe that voice control is really the way forward on all of this? That also seems to be the general consensus. Voice control is one solution but you need to differentiate between different driving conditions, because there is no HMI which is

best per se. It has to be the best possible solution for the conditions in which you are driving.Whilst driving, it’s best to keep your hands on the wheel and your eyes on the road, but whilst stationary it can be that other commands, e.g. via haptic inputs, can be an advantage. Depending on the driving situation this is exactly what we are providing. At the 2012 CES show we highlighted the work we have done with the integration of haptic feedback into touch-sensitive surfaces. By this means, the driver is able to sense directly whether he or she has actually activated a ‘touch element’ after touching it.We have the first series orders for this technology. You mentioned one or who of the partners that you’ve been working with, like Deutsche Telecom and Nokia, but presumably you also work with other specialists, for example with suppliers such as Nuance for the voice recognition/control system?

There is a traditional interface between suppliers and OEMs that dictates what they want to do themselves in-house and what they allow their suppliers to do, but how is that shaping up at the moment in this area? At the moment there seem to be one or two companies, like Ford for example, that really want to retain a lot of this in-house, whereas other OEMs probably seem more willing to hand over more of the responsibility for being a systems integrator to suppliers like yourselves. How is the landscape looking at the moment? Traditionally there are defined roles from the OEM through the supply chain - from the tier one, to tier two, to tier three suppliers, but that can change and evolve, especially in this area, because we do not only have pure embedded products but also this link to the outside world. Therefore there are many different elements being put on the table and what we see always is, of course, different strategies being tried. But

you always realise you need someone who knows automotive requirements very well and Conti does. Also someone who knows consumer electronics very well and again Conti does.You also need someone who is on top of all these fast changes and can embrace and integrate the lifecycles of the automotive and consumer industries, which Conti does.This positions us in a role which we view as a sweet spot - we feel very comfortable in that arena. One thing that also has to be acknowledged is that there are several aspects of all this which are non-differentiating.There are some things that the final user doesn’t get to see, such as operating systems and drivers which are therefore non-differentiating, but nonetheless very important.This is where standards are important, otherwise there would be such a huge amount of R&D necessary to get the various things done.This investment in R&D would be comparatively higher than we find with other product areas within automotive and this is the reason why we push a lot for nondifferentiating aspects to be standardised.

Can I just clarify, with your AutoLinQ system, does the consumer take a smartphone into the car and use that as the connection to the outside world? Exactly.You take the smartphone and then it’s just connected either through a wired or wireless connection - that is how the link with the internet is achieved.You can then access required applications like, for example, the weather forecast, stock market information, traffic congestion updates etc. In this case, you connect through speech, you actually ask for the application and information is then downloaded via the internet.This means that the mobile device is working like a modem. AutoLinQ is the umbrella product name for Continental where we have different solutions from a very basic embedded solution up to a full scale head unit also providing the AutoLinQ solution functionality we have shown already, for example with Deutsche Telekom during CEBIT. So there is the road map from the entry system up to the high end system.

You mentioned one very well known specialist there and of course, we have deep relationships with these kinds of companies because we view ourselves as being in the role of a systems integrator. So this means that with the many activities which are coming up, what we are always looking for are those companies out there who already can do those things the best. So when speech is a key element, then we will go to companies like Nuance and work together with them to integrate their software solutions into the product in order to have this system integration in place.This is how we understand our roles.There are different demands in the connectivity area and bringing together core partners who are already in the relevant business is always the best way to realise cost effective and compelling solutions. As a systems integrator, what do you bring to the table? Obviously your integration expertise is there but in terms of physical hardware and software, what does Continental actually contribute? First, we are bringing the product hardware and second, certain portions of the software and preparation of the overall architecture.We provide the electric and electronic architecture in order to have, at the end, a whole integrated product.We have to be pretty flexible.Why? Because we have this large product portfolio it’s not only the infotainment head unit we are delivering - therefore the relevant software available for the different products.This helps us support the car manufacturers and really help them develop attractive, cost efficient and nice cars.

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intelligence in the car We had to look to all these needs and what we developed was an intelligent antenna module. This module combines and receives all these different frequencies and then transfers them onto a computer base via a wireless or wired network below the roof.Then we have everything digitised. So based on this, we bring all these external radio frequencies on a digital basis into the vehicle. There is clearly an important cost element in all this because you’re talking very sophisticated technology here. It must be a relatively expensive thing to put together and sell to consumers. But I get the sense that Conti is very keen to make sure than this is affordable technology, so how do you do that? How do you keep the cost of this equipment to a realistic level, particularly if you’re aiming it towards small and compact vehicles, which I guess are the target group for the younger customers who particularly value connectivity? I can understand how it can be fitted into a BMW 7 Series or an Audi A8 because cost is probably not so much of an issue, but how do you engineer it in such a way that you could also get it into the BMW 1 Series or the Audi A1 and similar vehicles at reasonable cost?

“Driving within cities, especially within mega cities, might need solutions different to those say, when driving across the country.”

The potential weak link in this is obviously the link to the internet. I know you’ve worked very closely with Deutsche Telekom on this but are you 100% certain at the moment that these links are robust enough as you travel round, particularly as you mentioned with the Chinese vehicle? Is the infrastructure in terms of internet connection robust enough to be able to support this connectivity in the car as you’re driving along all the time? We see continuous changes. Users will always seek a more stable and a more high-speed connection than that available today.With 4G/LTE we can already see that this will be the next level of demand but the human machine interface and different driving conditions are also relevant. Driving within cities, especially within mega cities, might need solutions different to those say, when driving across the country.We want to use in the future, all the different possibilities, like a wi-fi connection while we are close to stations or close to hotspots, enabling downloads of information. Driving across the country might not offer the same connection possibilities as in the city. These preparations for the whole network need know-how and experience and this will be our main development work for the future. What we must remember is that there are a lot of radio frequency elements that need to be taken care of - telephoning, GPS, television etc.

This is especially where our strategy kicks in, when we say that we inform you well, we connect and all at lower cost. So we address already the ‘we inform you wel’” with the major human machine interface.We address the ’we connect’ and we are exactly at the third point of the strategy - ’all at lower cost’. Remember we talked about the four different solutions and the first two already are kicking in: MirrorLink and AutoLinQ.Why? Because you already have your mobile device and applications on it, like navigation, and this is exactly why AutolinQ is such an attractive scenario - you have these features already. So it is just the connection into the vehicle and this is per se the minimum effort someone can make in order to bring all these things that are already there together on the mobile device into the vehicle. And when someone is prepared to make some sacrifice with regard to the HMI, then the MirrorLink is by far the cheapest solution. Legislation can also be important - for example concerning E-call in Russia and Europe.We’ve only talked about infotainment applications but safety is also an important aspect. E-call has been discussed for a long period of time but in Russia there are discussions to introduce the emergency call system in 2013, even though it hasn’t been decided on in the parliament.This requires vehicles to be installed with a GPS system. Once you have that hardware installed, it is exactly the same hardware and

infrastructure that you need for all the other functionalities that we've been discussing, along with applications like remote diagnosis and other things.This could also be a development which boosts connectivity because there would also be a legal demand for it going forward. Once you have it already in those cars which are produced in, or exported to, Russia then it is not so big a deal to have it in vehicles in other countries. One thing is also clear today; people are already using their mobile devices in the vehicle to meet demands and needs so this is a subject which cannot be neglected.We have to make sure that this is done in a responsible way. The E-call system is being looked at across Europe now isn't it? Hasn't there been some sort of implementation target suggested for 2015 right across Europe, not just Russia? There are different memorandums of understanding but the memorandum of understanding does not automatically mean binding.

If we did get the E-call system for example, across Europe, what you're saying there is that every car would have to have hardware which had an embedded modem of some sort in it? You need to have a very safe solution.You cannot guarantee that with connection just through a smartphone, which you might forget and leave at home.That’s the reason that with an E-call system you would need an embedded telematics unit and once you have that, the main hardware requirements are satisfied. So we could have a situation in a few years time where cars have got an embedded modem/embedded telematics systems in them and are also driving along with smartphones connected to the AutoLinQ system. In effect you've got almost a dual system in the car. Which also could help for diversity purposes and in that way also fulfil demand for the things

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intelligence in the car we talked about before such as accuracy, constant availability and bandwith.You could use the various solutions in the best manner. Can I just go back to AutoLinQ and your Chinese customer. It's a little bit unusual, as you mentioned, to first have a customer in China for a system like this, rather than a customer in Germany, in Europe or in the US. Could you outline why a Chinese customer would go for it first and give a perspective as to when or if you expect to get some customers from Europe and the US. When is broader commercialisation of this in prospect? Let us look to the China approach first. China is not only interested in low-cost solutions but also in very innovative, high end functionality. This is exactly how these two things are coming together. In China things move very fast so it's not so big a surprise that a Chinese company was the first. For me that's just a logical consequence of all the attributes that we have right now. Looking forward, what is going on globally is, as we said, that perceived intelligence in the vehicle is becoming more and more important. And as we also said, it is quite clear that these kinds of products and solutions will be there for the future, so it is just a question of when, rather than if, they come to the market. We are seeing a lot of interest and at the 2011 Frankfurt motor show we had many, many customer meetings and they were all interested in the solutions Continental was showing. It was very open, very transparent, very innovative and very professional and we have been very much encouraged and remain convinced that this is the right way to be going forward.We continued with this at the consumer electronics show (CES) in January 2012 and we were there again in Las Vegas to demonstrate the next steps.Year by year we've been able to demonstrate at the CES constant improvements to solutions and improved attractiveness.

One final question and just to extend a little further than we have already. Other divisions within Conti have relevant equipment here and I was just interested in terms of things such as carto-car communication, and predictive driving and so on, how your area of responsibility is interfacing on a cross divisional basis with other parts of Conti? We have a very strong communications link for information management between the divisions. When we look, for example, at powertrain, then we see clearly, especially for hybrid and electric vehicles, that information management and user friendliness are additional key factors which are vital in determining their success. When we are using a hybrid vehicle we immediately want to show a range of particular information, the battery versus combustion engine, etc. Similarly, when we look to chassis and safety and, for example, zero accidents, then it is quite clear that within the Contiguard system we look at all the aspects of safety. Active safety and advanced driver assistance systems are using a telematics unit as an additional sensor to look further ahead than the

first 100 metres in front of the car.We can provide those links and so that's very interesting for us. I think it was in early September 2011 that we won the ÖkoGlobe award for being the most innovative supplier and we got that for combining the Electronic Horizon software concept with the Accelerator Force Feedback pedal.You can see from this combination how the cross divisional aspects are working and this is something which we work on a lot within Conti because the cross divisional approaches do definitely add value - one and one adds to more than two. Tyre pressure monitoring is another relevant area.We have developed a sensor for tyre pressure motoring which is not mounted to the wheel rim, it is mounted directly to the tyre itself.With that there is the possibility to see the footprint with every rotation and by that we have a direct link to the pressure of the tyre. We can say how much the tyre is already worn and under which driving conditions and which temperatures.We can also know whether the tyre’s location has changed on the vehicle or whether it has been used on more than one. These are things that we at the Interior Division work together on, via information management, with all the other divisions.

There is only one division which we have not mentioned so far and that is ContiTech. ContiTech is doing the slush foils for the cockpit and the majority of our products are mounted to this in the cockpit, requiring collaboration. Looking at more innovative things - we can also consider whether outer surfaces can also be used for electrical functionality.That’s where ContiTech and the Interior Division come together. So we regard ourselves as the networker within Continental. So it really gives you the potential for a competitive portfolio of products across the different divisions. It certainly does, yes.

“We have brought in a lot of support to combat driver distraction.“

We have brought in a lot of support to combat driver distraction.This is the reason why we focus a lot of resources towards the human machine interface – in order to be very responsible. How can we do that? Because of the fact that for more than 100 years, we've been working on instrument clusters.This is something that is helping us a lot.

Haptic control and black-panel technology

Antenna system

Jim Buczkowski

megatrends

vehicle connectivity Launched in 2007, Ford’s SYNC was by no means the first connectivity system on the scene, but, when this a collaboration with Microsoft was announced, the industry press was clamouring for attention. Now, five years later,Automotive World catches up with Jim Buczkowski, Henry Ford Technical Fellow and Director of Electrical and Electronics Systems, Ford Research and Innovation, to discuss Ford’s current and continuing vehicle connectivity plans

Interview: Jim Buczkowski Henry Ford Technical Fellow and Director of Electrical and Electronics Systems, Ford Research and Innovation

“We asked ourselves how we could create a better experience for folks that were bringing these devices, both phone and media players, into the vehicle.”

Could you first of all outline your definition of vehicle connectivity and Ford’s strategy based on that definition?

definition is very broad when it comes to connectivity and how the vehicle interfaces and connects with its environment.

Our strategy refers to the portion that's built into vehicles, including smartphones, the connecting device, and then beamed in connecting through that device to the cloud and the internet and services, and so on. Our

Does it embrace safety-related things as well, such as accident prevention systems, lane departure warning systems, rear-view cameras etc? Some forms of connectivity include safety related systems. For example, some of the advanced work that we've talked about in our public news releases includes vehicle-to-vehicle and vehicle-to-infrastructure communication and these services can include safety features, that we would consider part of connectivity technologies. Any time the vehicle is connecting electronically to something external, we refer to that as part of our connectivity strategy, brought in devices are one way we connect to the external environment. Maybe we can initially focus on just the in-vehicle connectivity area. One thing I’m quite interested in is getting a bit of colour on the background to Ford’s involvement in this. I believe SYNC was introduced in 2007 in North America and some background to its introduction would be useful. Presumably it all came together some years before the launch? Well, it really begins with people bringing in music to their vehicles. In the past, prior to 2007, back in the days of eight tracks and cassettes and CDs, brought in meant bringing those media into the vehicle.They were also obviously receiving AM and FM broadcasts and so on too, but in that timeframe, in 2005/2006,

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vehicle connectivity

Was there an element here of product differentiation as well? Did you see it at the time as a way to take one step ahead of the competition?

we also started to see the emergence of digital media - MP3. People could store media files on devices, not only on their computer but on portable devices like iPods and other MP3 media players, and so rather than having to bring cassettes and CDs into the car, they could bring in a single device, or simply a memory stick containing a lot of music. So we saw folks wanting to connect these devices/media players to the vehicle to be able to enjoy the music and play personal collections through the audio system in the vehicle. Likewise on the telephone side, it was clear that people really found that making phone calls, staying in contact with their friends/family/business acquaintances and doing business while they're in vehicles was becoming very popular as well.That's really where our strategy originated.We asked ourselves how we could create a better experience for folks that were bringing these devices, both phone and media players, into the vehicle. But those devices are not designed to be used in a vehicle, they are designed to have your focus of attention while you are making a personal call or selecting a piece of music, so that's where SYNC really came from. How could we provide a better kind of user interface and better experience that is more appropriate in the vehicle? Using voice recognition, with the support of Microsoft and Nuance to achieve that, that's the real essence of where SYNC came from.The other thing that was important to us at the time was that we knew that these devices would be rapidly changing.We were watching the consumer 22

electronics business very closely and knew it would continue to change very quickly in the future. So therefore, rather than choose one specific device and dictate that if you want to be able to use music in the car you've got to use that device, we wanted a platform that could interface with not only iPods, but other music players as well, as well as simply memory sticks, and apply a platform that could interface not only with the phones back then, but also could move along with and stay competitive with the latest phones that are being produced and that seem to come out every six months or so. So that really was the essence of where SYNC came from.The voice recognition is obviously very important for inter-operability with different phones and different media players, as is being a platform that is built into the vehicle that interfaces with the brought-in devices, and then further allows a connection through the brought-in device to external services. So it was really a reflection of consumer trends at the time and also, I guess, the coming together of the consumer electronics industry and the automotive industry? Yes. Which is a pretty difficult thing to achieve because of the product lifecycle differences between the two? Exactly. In developing it we knew that, obviously the consumer electronics business moves very, very quickly and our automotive business,

because of the complexity of our vehicles, takes a little bit more time to develop.We needed something that would be able to match the speed, or at least adapt the speed in the vehicle to the speed of the consumer electronics business and, therefore SYNC was a platform or interface that allowed this slower cycle time process for automotive development to match the faster development time of consumer electronics. Has this platform evolved then in the last few years? In fact yes. One thing about software and platforms like this is you can provide upgrades. We added features to it like Emergency 911 Assist here in North America.We added a Vehicle Health Report.We added a set of services called Traffic Directions and Information which allows you to connect to off-board services and get real-time traffic information, weather, sports, news and so on. And then we did a major upgrade, launched in 2010 called MyFord Touch in the US here and MyLincoln Touch for Lincoln vehicles, and what we did there was to take Sync to the next level.The way it was originally launched was kind of like a peripheral to the radio, it allowed things to connect into the radio system.We’ve now brought SYNC more front and centre to be an entire experience in the vehicle with an eightinch touch screen, centre stack display and two 4.2 inch LCD displays in the instrument cluster. We made it a more immersive experience involving more of the features of the vehicle navigation and climate control as well as all the audio sources and the phone sources.

Well, in fact I would say we took a different strategy than our competitors because many of them had chosen to build a modem into the vehicle, and that involved subscription fees as well as the problem of technology obsolescence.We embarked on a strategy that relied on the brought-in device, making the assumption that if the brought-in device was going to change with technology we could continue to be compatible with it.We would not have an issue with the fast technology cycle time change with 2.5G/3G/4G and so on for connectivity and not have a fee, a monthly fee, since we're relying on the owner’s own phone. We just used the consumer’s standard plan, with their carrier of choice. So that was the fundamental difference in our strategy - to rely on the consumer's device - and that meant that SYNC, other than just initially offering it at US$395, now it is US$295, would incur no further monthly costs, unlike competitor products. I do want to say that as a result of our strategy, we think it has resonated really well with customers.They appreciate the fact that it is compatible with their devices. I think the truth is that our devices today, especially our phones, are really a focal point of our lives, carrying a lot of very important information, so relying or using that as a focal point for connectivity seems to a make a lot of sense now and going forward as well. What stage are we at now? Is the system compatible with BlackBerry, Android and iPhone devices? Yes.We continue to work with all of them - all the carriers as well as all the handset manufacturers. As new versions of the phones are developed, as they upgrade their operating systems and so on, we continue to test phones. We have the ability to download upgrades over Syncmyride.com; you can use a memory stick, if there is an upgrade required for a particular phone, to upgrade SYNC. What coverage is there now on the Ford model range in North America? Is it universal and if not when will that be achieved? We offer SYNC on nearly every vehicle line in North America from the Ford Fiesta to the Lincoln MKS including our F-series trucks.We are launching in Europe in 2012 and expanding globally as well. It’s a little unusual for important new technology to be introduced in North America four years ahead of Europe. Why the gap? Was it for technical reasons or did you just want to prove the system first in North America?

Well, I think part of the reason is that the original development work was done here in North America working closely with Microsoft and quickly launching it on North American models. Simultaneously, over the last couple of years as part of the One Ford Plan, we have really globalised Ford into one company. Prior to that we had different strategies in different regions, and so the compatibility was not universal across all of them.We launched our North American product, which had a certain architecture and the European architecture was a bit different. So we were unable to launch products at the same time using different architectures. As we've moved more to global engineering, and to a global organisation, our architectures have come together globally which makes it much easier to then launch a common system.

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vehicle connectivity If the One Ford programme had been in place a few years earlier, there could have been a simultaneous push of SYNC throughout the US and Europe?

You mentioned Microsoft as the obvious key development partner, but did you also involve any other suppliers in the development process?

Correct.

Sure. From a technology partner point of view we've had some very important partners. For our voice recognition a very important partner was Nuance, and they continue to be a very important partner for us going forward.Voice recognition is very important for this product in order to reduce driver distraction, and so on, and Nuance have been a great partner in helping us deliver the system.There have been additional partners as we've launched MyFord Touch for navigation:Telenav is an example. For our services portion of the business a company called Airbiquity has helped us enable sending data-over-voice.We have traffic information in North America that comes from a company called INRIX. Many partners have provided technology that supports how the system works.

Have any details of the launch in Europe been decided yet in terms of models, countries etc? We announced at the Mobile World Congress in Barcelona in late February 2012 that the new B-MAX heralds the European introduction of SYNC.The B-MAX with SYNC features Emergency Assistance as standard, placing a call direct to emergency services in the event of a crash.We also confirmed that we expect to have over 3.5 million SYNC-enabled vehicles on roads in Europe by 2015. What about applications beyond Europe and North America? Is that something in the pipeline? Yes. I don't think we have announced specific timing for South America and Asia, China as well.What is different, of course, is that we've got to make sure we have the languages and navigation map information to support those regions as well. B-MAX heralds European launch of SYNC

Do there have to be many regionspecific changes made? For example, do higher speeds in Germany require specific navigation system upgrades? Well, there are some differences in road systems and types of connectors, so the navigation system has to adapt to those differences, but that's not unique to SYNC by any means, it's a navigation-specific requirement. There are some unique features in China, for example the road system and labelling of roads, buildings and addresses, and so on, but that's true in Europe as well. So those are more fundamental changes for a navigation system. We’ve launched navigation in all regions of the world as well so we've had to go through those and make the required changes.

“We just have to find a way to help them be able to use those devices better, and voice recognition works really well at keeping your hands on the wheel and your eyes focused on the road.”

What about the actual physical hardware equipment - the centre stack for instance? Did the actual touch screens etc involve working with some of the more traditional automotive supplier partners? Well, for our first generation SYNC introduced in 2007, Continental and Flextronics were our hardware manufacturers. It is a design that we call a ‘Build Print Design’ that is a little different than in the past.We flattened out what would have been a typical supply chain.Typically in automotive, you'd work with a Tier One that would take care of everything beyond the Tier One. In this particular case because we are directly involved with Microsoft and directly involved with Nuance, the supply chain was a bit flatter.The other side of it is that we wanted to have a very consistent design and so we have a platform design that we built. It will be a global design as well too, once we launch in Europe and the rest of the world.That design is produced for our first generation of SYNC with Continental and Flextronics, and for our second generation - which is the MyFord Touch/MyLincoln Touch - Flextronics and Continental are also the manufacturers of the hardware. Sharp is also an important partner providing us with LCD displays, and JCI is an important partner for clusters, but there are more in the system as well.

You mentioned there the word distraction.There have obviously been criticisms of your MyFord Touch system and other systems as well.Are you comfortable with this at the moment in terms of this possible trade-off between what is feasible technically and the whole issue of safety, driver distraction and so on? Well, a couple of things. First of all, we do a lot of research in this particular area to understand distraction and what we really need to focus the driver on. For the most part the research tells us that we need to keep the driver's eyes on the road and hands on the wheel. Of course quick glances up and down to mirrors as well as down to the radio head unit, and other places, are normal as long as we keep those to quick glances.Voice recognition therefore plays an extremely important role.The second thing I'd say is that people are using these devices; their phones, their media players and so on, in their vehicles anyway.We think the best way is to find a better way to use those devices because they are finding great value in what the devices can deliver.We just have to find a way to help them be able to use those devices better, and voice recognition works really well at keeping your hands on the wheel and your eyes focused on the road. So we will continue to do research to improve the system and further reduce distraction. For example, with navigation we have some features that are blocked while the vehicle is in motion.You cannot manually enter in an address through the touch screen, while the vehicle is in motion. However, you can enter in an address using the voice recognition system while the vehicle is in motion.There are a number of other areas where we feel a task is going to take the driver's attention away from the road for any extended period of time, and so we make that task unavailable while the vehicle is in motion and, in many cases, provide an alternate way using voice recognition.

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vehicle connectivity Do you think there will be a legislative framework in the future, albeit one that has probably been agreed by parties including OEMs and the DoT, or do you think it will remain unregulated? Well, we actually support the ban on handheld use, and given that we have a solution with voice recognition, and so on, there is a way to address the issue and not be texting while driving or trying to manipulate a handheld device while driving. But even with laws, there is the concern about people still trying to use a handheld device, by hiding it; that is a concern with legislation, but we will continue to support it because we want to encourage the use of hands-free solutions like SYNC. Just one thing on the AppLink – could you just walk through how far it has evolved to date because it seems an interesting area.

Do you fear the heavy hand of legislation in this area because it seems the sort of thing that politicians and safety experts might want to influence going forward? Is that something that’s on your radar screen, especially in North America? Well, we're working closely with the Department of Transportation.This is an area of great concern for them.Their objective of course, and ours as well, is to improve safety on our highways.This is a very new area and really involves more research, collecting more information, really understanding the problem and understanding how we can use technology to solve the problem. So again, we're working very closely with the Department of Transportation on better understanding of what is ‘distraction’ and better ways to manage it and limit it and provide better solutions for customers.They are dealing with the same issues as well too - people want to use these devices in their vehicles, and it's very difficult to just create laws that say you can't. In fact, in some cases, there is the concern that banning handheld device use hasn't really helped much because now people are trying to hide them while they are using them. It is probably even more distracting. So we spend a lot of time working with the Department of Transportation and we will continue to work with them on research in this area. It's an issue that we think is resolvable or manageable through the use of the right kind of technologies. 26

Yes, in fact it's another area that shows how we are trying to extend the platform. AppLink basically is a set of APIs - Application Programme Interfaces - that can get incorporated into apps that are being developed for smartphones. I guess, the best example is Pandora, where the use of the Pandora music service on smartphones has grown pretty dramatically in the US.The issue again is that trying to use it on a smartphone, on a handheld device, is not the safest thing that you can be doing while you are driving.What AppLink does is provide a set of interfaces between Sync and the smartphone so that you can use the voice recognition and steering wheel buttons, in the vehicle to control an application like Pandora that is running on the

smartphone. Our intent with App Link is to provide those APIs to a select group of folks that have apps which they're developing for smartphones that make sense to use in the vehicle. In addition to Pandora, we are supporting Stitcher right now and OpenBeak with their Twitter application.We offer a TDK (Technology Development Kit) that allows app developers to incorporate the APIs into their apps. Developers can apply to be part of the SYNC developer community and received the TDK.We screen through the ones that would make sense for the vehicle, and we work with them to enable their applications to be used with AppLink and interface with Sync. Has involving external application developers been pretty successful so far? It has grown and is continuing to grow rapidly. The number of apps that are out there allows a lot of personalisation for people. So rather than try to incorporate everything everybody wants into the vehicle itself, it's an opportunity to leverage developments that are done on consumer electronic devices. What particular application types are you seeing the most work going into at the moment? Well, there’s a combination. I think certainly there’s a focus on music and entertainment related services - being able to connect to

music servicers or podcasts, news and information, and so on.There are services that are related to navigation and location-based kinds of features that make sense, and obviously social networking-related items.The appropriate ways to use those social networking items in the vehicle are again things that we're looking at.There’s a lot of different streaming media, and there are other services that we are considering as well.The objective is to take the average time that people spend in their cars and put it to use with things that help them be more productive, but doing it in a safer way. There’s been quite a bit of media interest about consumers not being entirely happy with the way the MyFord Touch system has worked.Are you comfortable now that those issues have been resolved, or is there further work to be done in terms of educating users, etc? Well, we've put a lot of effort into improving the support we provided customers, whether it's through the dealership or online, so they can understand the system better and faster. We're also continuing to refine the system, improve its performance, improve the look and feel, and so on. I think what customers can expect is what they expect in consumer devices as well today.They will see us continually evolving and improving MyFord Touch based on what we learn.

In 2010 we launched MyFord Touch, and its significant upgrade to the user interface and people love it. People love the technology, but people also have given us a lot of opportunities and suggestions, and ways to improve it and, of course, we are responding.We recently released our first software upgrade owners can perform themselves. It has a modified look and feel and improves system response. I think the important thing is that with connectivity we're changing the ways cars work in terms of how they evolve over time. It's not just something that you buy once and it never evolves. Just like phones get a download occasionally for a new upgrade or your PC gets a download for an upgrade, customers can expect to see continuous improvements for their in-car connectivity systems.

together with Toyota to look at those things that the customer really doesn't directly experience.Things like standards, including communication standards, such as Wi-Fi and Bluetooth and chipsets and some of the driver distraction-related standards, and so on, that we would both have to invest in separately, but would not be things that differentiate a Toyota from a Ford. By working together on those items, by sharing the work, we can devote more of our attention to things that do differentiate our companies and products. So there are a lot of the behind the scenes things that customers really don't see directly including cloud services and back office service structures, and so on. That’s where the focus is.

Can you just outline your recently announced relationship with Toyota in this area? Sure. In reality there are plenty of things that are behind the scenes, which the customer doesn't necessarily experience.These systems require Automotive OEMs to require investment in areas the customer never sees. Ford as well as Toyota have to invest, in those kinds of behind the scenes enablers, in addition to the things that the customers do see, the experiences that make a Toyota a Toyota, and a Ford a Ford. In this particular area we've come

Evos concept car

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vehicle connectivity There was a lot of publicity surrounding the Evos concept car that was at the 2011 Frankfurt auto show. I wonder if you could talk through that concept because it seems to be regarded as a pointer to how SYNC might evolve further in the future, especially with regard to a greater use of the cloud. Is that a fair representation of what the concept is all about? Yes, I think that Evos being a concept car really tries to emphasise the experiences that we're trying to create, and those experiences allow the vehicle to better interface with your world as the owner/driver and so on. Using the cloud to store information and access information just makes the experience more seamless for the customer. As you move from one environment to another, as you move from your home into your car and into your office and so on, it is a much more seamless experience.The Evos concept car gives you a picture of the future we'd like to create; the future experiences we want to create that we think are going to make

for a better integration of the vehicle to a person's life. The Evos obviously increases the personalisation of infotainment systems, but also introduces driving dynamics and powertrain management into the equation as well, which is a whole new area. Yes, absolutely. Again, as we leverage the cloud side of the business we can store more information about a user and use that information to tune all sorts of things about the vehicle to the specific driver that is using it.That applies whether it's information around routes that they take and meshing it, with real time information or schedule information.We can schedule a route, or suggest an alternate route given traffic conditions or given more time available provide a more leisurely route, and so on. Again, a lot of what the internet provides us is the ability to take information from many different sources and then optimise it for the user. So in this particular case what Evos is really 28

trying to show us is that through the cloud services, through knowing a bit of information about the driver and then mashing it together with real time information, or just information in general, it can provide a service that is more optimised or better tailored for the driver. In a situation like that do you move away from a connection via a smartphone? Would the car be almost permanently connected directly to the internet? How does that work? Well, we still continue to look at the brought-in device because I think it’s going to be essential to your life when you're not in your car as well. So if you think about those experiences that we talked about with Evos, there are versions of those experiences that exist outside the car as well too and you are going to need some kind of connectivity outside of your car.That’s obviously, or most likely, going to be the phone that you carry around. It’s going to be central to buying things, it's going to be central to your calendar, it's going to be central to

communication, it is going to have privileges and identity for you as well. So to us it’s still going to make a lot of sense to keep the phone, the brought in device, as the central connectivity point of the vehicle.That could change though. There are instances where you may want to access your vehicle when you're not in it.We're also looking at alternatives - Wi-Fi connectivity is becoming prevalent just about everywhere, and there can be other sources of connectivity to the vehicle. I don't think you can ever replace the brought-in device. It’s always going to have to be connected because it serves such a big purpose outside the vehicle, it will always be there.The question is whether we need an additional connectivity device in the vehicle, and we're thinking today based on what we see and what we project that there are other connectivity measures, or connectivity paths like the Wi-Fi, and so on that may work. Again, we continue to re-visit ‘built in’- it's an important question. However, the issue still remains that technology continues to change.What's after 4G and LTE,

and what is it going to do to any 4G or LTE modem that is built into the vehicle? The cost as well, too, those issues still remain. If we can find a way to continue to leverage the phone, that’s good because it’s going to continue to be central in people’s lives. As we see in all markets, not just in North America and Europe, but Asia, especially in Asia these days, people have phones.They may not have PCs or laptops, so they access the internet through the phone; they pay bills through the phone, and so on, so the phone continues to be the central device. It's going to be an important central device in the vehicle.We are evaluating the connectivity strategy based on experiences that customers value.We look at experiences when you're in your vehicle, and it‘s usually safe to say that when you're in your vehicle you are going to have your phone with you. However we recognise that when you're not in your vehicle there may be a few experiences that are important as well. It’s a difficult question to be objective about I know, but there seems to be a perception that Ford was an early leader in the area of connectivity but that competition is now heating up and the gap with competitors is closing. How do you feel? Do you still feel comfortable that you’re ahead of the competition and will stay ahead, or do you see this as becoming something like a commodity area in the future? Well, I guess you never want to be comfortable because you have to keep focusing on the future. I think that's what it’s all about.When we started on this path, we knew that it wasn't really about exclusivity and things like that. Even our legal arrangements weren’t centred around

exclusivity. It was about being there first, and then working on the next thing. So our objective is always to be working on the next thing.What’s the next thing to be coming out? When something works well and resonates with customers, everybody is going to want to do it and you are going to attract the competition and you can spend a lot of time and effort, and money trying to keep the competition out. I think we feel the best way to compete is to be working on the next thing. Let the competition be focused on catching up with us where we are today. If we are working on where we're going to be tomorrow and in two/three years from now, that is really where the focus needs to be. I worry more about making sure that we're reading the future correctly, that we've got access to the right technologies and we're all working on the next thing. Presumably Ford has a pretty big group of dedicated people permanently looking at exactly these kind of issues? Yes, we actually have a forward model group that works on vehicles that are going into production in the near term, and there are two parts of that.There is the part that is in the vehicle, that is designed into the vehicle, and then the connected services group, which is where we are working on the services or ’beamed in’ experiences. Looking much further out into the future, is our research and innovation activities and that's where I am.We have a team here that is looking at what is the future.What will our next generation of experiences need to be, and sorting through those.The research and innovation group

obviously works very closely with the forward model activities, but the difference is that we are looking further out into the future.They're focused on getting experiences to production in the next couple years.

So although there’s a revenue stream from subscription services, it’s a minor consideration?

How does this all operate as a business model? It seems the actual cost of this is relatively modest for consumers, which I guess is a good thing, but is there money to be made in this from an OEM’s standpoint? It never seems quite clear who is actually going to make money out of all this.

How do you see the future role of suppliers in all this? A number have independently developed similar systems to yours – Continental and Delphi spring to mind – and will be looking to sell them to OEMs. Do you see a future switch to more outsourcing in this area, for example for cost reasons, or is it the kind of expertise that OEMs will always want to retain inhouse for competitive reasons?

Well, our focus is really to differentiate our vehicles, to create experiences in our vehicles that result in people wanting to purchase Ford vehicles.We make our money selling cars, and so creating great experiences attracts people to buy Ford vehicles and that's fundamentally our primary focus.We do have services that do generate some revenue, and so on.We've got to cover the cost of those services, we've got to create great experiences, but our number one focus is providing differentiating experiences so people want to buy Ford vehicles. Sync has really helped us with differentiation as well. As you recognised, we've been very fortunate with the success of SYNC. It’s attracted people to our showrooms. It has attracted people to be very inquisitive about SYNC, etc. It helps them make decisions. Even the folks that aren't traditionally Ford buyers come to Ford dealers as do customers returning because they want to continue with the same connectivity.

Right.

Well, I'd say that we've been very fortunate with Sync in that it has become a differentiator for Ford, and as long as the technology delivers great experiences the resulting differentiator is going to be very strategic for us. Even if the basic connectivity gets commoditised, creating the Evos-type personalised experience allows the differentiation to continue. Although we'll continue to leverage the capabilities of suppliers, I think we are going to continue with our focus on connectivity as strategic to Ford. As long as we can create experiences that differentiate us, then we are going to have to be very, very actively involved in the product design and innovation and cannot just source an entire system with capabilities equivalent to our competitors. I think suppliers will continue to focus on how to customise their systems for customers, but we think that in the current environment, and in the foreseeable future, this is what's going to differentiate our vehicles from others and so we need to continue to play a very active role in design and development. 29

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Keeping the customer in the driving seat has become an increasingly difficult task as the nature of mobility has developed. But OnStar has a “powerfully-simple” solution, says Nick Pudar,Vice President of Planning and Business Development at OnStar It seems that there is increased blurring between traditional products in the telematics field and what is arriving in the infotainment field. Is that a fair perspective?

Interview: Nick Pudar Vice President of Planning and Business Development, OnStar

Yes, absolutely.The way I've always described it is with this traditional, very safe, peace-of-mindcentric view of telematics and the entertainment side that is growing alongside with its connectivity capability, there has always been an overlap.That overlap is continuing to grow. Blur is a good word as well because there are many different ways in which you can execute a particular service, feature or outcome for a customer.The range of technologies and the range of connectivity options that people have make it blurry for them as to what's the best way forward for them. So, the challenge for all the participants in this connected space is how to take a particular need that a customer has and to make it very accessible in a user-intuitive way.With some of the technologies, the manuals are actually fundamentally bigger and heftier than the product itself. I suppose this is really being driven by what customers want, although it seems to be evolving all the time and is difficult to determine accurately. Some of it is also probably OEM-driven, for product differentiation reasons, but primarily it’s the customer in the driving seat for these trends.

telematics & infotainment “Hey, your vehicle is doing fine; everything is good, everything is in tip-top shape.Your engine oil life is still healthy.Your tyre pressures are all good to go.You don't have any routine maintenance schedule requirements. Everything is great” 30

Absolutely, the customer is in the driving seat, and in our automotive environment it couldn't be more true. So the way in which we design the services to meet those needs is important. A lot of these needs have really not changed over the years; the need is for people to get from point A to point B with confidence. People are spending more time in their vehicles, so there is a need to get other things done, to be more efficient with their time, to be more effective in getting their own personal agenda co-ordinated. So a lot of the services are evolving and emerging to help people do the things they've always wanted to do.They're just more time stressed, they're dealing with more congestion on the roads, they're dealing with having to solve fuel efficiency issues. It used to be where is the nearest gas station, then where is the cheapest gas station, then what's the most effective route to get home from an energy efficiency standpoint. So, similar questions, different nuances, different overlaying motivations.

What seems to be happening is that the layers of complexity are growing, but there have been some comments from OnStar executives very much stressing the attraction of the simplicity of your service. It performs a function that consumers want, but it doesn’t involve a host of centre stack, head unit operations etc. Is that relative simplicity something you are highlighting as this complexity grows? Simplicity has been one of the key tenets of our business ever since we started operations 16 years ago.The way in which we come at this is to say, look, the technology is very powerful but the vast majority of customers don't care how it works; they just want to make sure and be confident that it does work and they don't want to have to read manuals.They don't want to have to remember a whole series of complicated commands to speak. So one of the ways in which we talk about this, internally here and externally is to say that we have a powerfully-simple system. In other words, there's a lot of stuff in the background between the robustness and the complexity of the hardware and how it does its task to get that secure connection back to the OnStar back office.Then our back office has to be able to cut through the clutter of complexity concerning issues with the telecommunications, with the GPS, with everything that goes on in the world. The customer doesn't have to worry about that 31

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telematics & infotainment

“The customer doesn't have to think about it; just be confident that it's going to work.“ Access via RemoteLink app

because they know that it'll work. Just as an aside, we hear of many, many situations where there are hurricanes or wildfires or other natural disasters, where there are massive power outages, and where people's cell phone batteries die or that the cell sites themselves are out of power.Yet the vehicle OnStar call system still works because of a higher-exposure, higher-power system that's able to reach neighbouring counties and maintain that connectivity. In many emergencies it’s a lifeline to stay connected with loved ones. So the approach to building, designing, delivering and executing the system is one where that complexity, that power behind the system, is hidden from the customer.The customer doesn't have to think about it; just be confident that it's going to work. More and more vehicles these days have navigation systems built into them, and there are going to be a wide array of solutions that are coming out there. One of the nuisances of navigation systems is that, at least here in the US, you have to pull over and put your vehicle in park; you cannot be moving to interact with the navigation system and enter your destination. It's a nuisance but you put up with it.With OnStar you press the button, you talk 32

to a live person and they can actually download the destination to your navigation system while you're driving, and you don't have to worry about it. In fact, you may not even know specifically where you're headed.They can find out the most appropriate destination based upon your needs and do that human intervention, that human interpretation and then download the perfect hotel details because you're too tired to keep driving. Or that perfect Italian restaurant that you weren't aware of. It's the intermingling of human touch and appropriately-designed technology that can deliver services to drivers in ways that are relevant and easy to digest for humans. Do the operators use just a static database when giving navigation advice or directions or do they have access to real-time traffic information which can be used to offer an optimum route at a particular time? It's partial at the moment, with more to come in the future. One of the things about traffic information is that it's not complete and it's not perfect. So we might route you to avoid bad traffic that we are aware of, but we might then inadvertently route you to a worse situation that we're not aware of.When you think about

the risk and reward of making decisions based upon data, there are several different layers of traffic information. I can turn on my AM radio station and listen to a traffic report that is broadcast every ten minutes. I can personally decide whether or not I believe them and whether or not I believe that it will actually substantively affect my drive for me to take a different route. If I actually make that decision to take a different route and it turns out to be worse than what I would've done that's all my fault and I blame myself. But I'm not too disappointed - I'm just inconvenienced. If an automated system, or even a paid premium service with human intervention, gives you information based upon incomplete or lessthan-perfect information, it's an entirely different expectation of precision.Today, that data and completeness aren't sufficient for us to be confident to actually send you a different way. As I understand it, your system is only offered in North America on an OE basis with General Motors and was also previously fitted on Saabs. Is that correct? It was on Saab as well, yes. It's in GM cars and then also we provide the service in Canada and China.We've been in China now for about a year and a half.

We’re starting to see new systems in Chevrolets (MyLink) and Buicks (IntelliLink) that actually integrate the infotainment and your OnStar system: is that something that will develop more and more over time? Yes, that's right; the systems and the services are becoming more seamless and more integrated. These new systems have the notion of the app. So in the very first version, the Chevy MyLink system is going to have a Pandora application and a Stitcher application. Over time there will be more applications that will find their way to be downloaded into the vehicle.You can very easily imagine that there will be OnStar apps that become available as well. Will the OnStar part of that service operate in the same way as it does at the moment, with the button system? Initially yes, and over time we are going to make the integration of OnStar capabilities as intuitively obvious and as seamless as possible into the vehicle.

Do you have any data concerning the number of subscribers in North America and the number of models on which OnStar is available? Yes, we are in over 50 models.We have six million subscribers and have answered over one million emergency calls in North America, responded to over 179,000 crashes and given over 86 million turn-by-turn route details.There have been over 405 million cumulative service interactions. The subscriber numbers are interesting. As I understand it, when you buy your new GM car in North America and it has OnStar fitted, you get the service for free for a certain period of time but then you transition to a subscription on a voluntary basis? That's right.You get a trial; depending upon the vehicle you get it for six months or 12 months and then after that trial period then customers can transition into a subscription basis.

What is the transition rate across the model ranges of people moving on to subscriptions? It is north of 50% of the people who have the trial. Once the customer is a paying subscriber, it's around 80% continuation beyond that on an annual basis. You can pay monthly or you can renew annually; we operate both ways. But I would say that if you were to do a conversion to only an annual view, it's about 80% retention of paying subscribers.Then of course a lot of our customers churn out of the service because they actually turn in their vehicle and get a different vehicle. So we have a very, very stringent look at how we measure churn. There's a whole other part of the business, which is how do you acquire second-owner vehicles and how do you make those owners aware that their vehicle has this capability and service?

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telematics & infotainment In terms of regional coverage, at the moment it’s just the US, Canada and China.Your absence from Europe seems a bit surprising given GM’s presence in the region. Is there a specific reason for staying out of Europe? Well, there are lots of reasons over the years, but no single specific thing; it was really just more a matter of timing and opportunity and priorities. The potential in Europe seems particularly interesting, especially as we seem to have a real intent on the part of the European Union to start talking about the compulsory fitment of the ECall system from 2015.This surely has to be a potential positive for you?

Yes, absolutely, it clearly causes the OEM base to look more seriously at telematics capabilities. The other interesting aspect is the suggestion that it could be extended to play the role of a catalyst for the deployment of other types of service such as navigation, roadside assistance or hands-free calling, making it more akin to a broader telematics service rather than just an emergency call function. That's good, that’s interesting. It is how participants in the industry are looking at it because it's very difficult to deploy just a pure eCall function. A much broader business around telematics is what would be required to make it work, effectively and economically.

Looking at China now - you’ve been there since December 2009 and you have just opened a second call centre there.What was the thinking behind launching in China? Was it just purely because of the sheer scale of the market there? Yes, it's a very large market, as you know, and it's growing rapidly.The Chinese consumer is very anxious and hungry for leading capabilities and technologies and services.There is a unique aspect of driving in China in that it is the first time for the vast majority.The roadways are sprawling and everything is brand new, and all the roads are not necessarily marked well, so driving can be a very humbling experience there.The notion of being one button press away from a knowledgeable, experienced, trusted human to help you through that is something that our customers are finding absolutely invaluable.We're seeing that our customers, our Chinese subscribers, interact with OnStar at a rate of about two, three or four times as often as our North American customers. I attribute that again to this notion of it's the first time they've owned a vehicle, it's the first time they've driven a vehicle.The city is complex and it's good to have some help now and again.

The service is available right across China but you’re doing this in tandem with GM itself and also SAIC is that correct? Yes, and SAIC is GM's joint-venture partner both for building vehicles and also for delivering the OnStar service in China; it's called Shanghai OnStar. The other key development for you appears to be the FMV, where you’re quite significantly extending the potential for the system by aftermarket fitment on other brands of vehicles? When was that introduced? Yes, we launched in August 2011.There are a lot of customers that have over the years said to us:“I wish I had OnStar but I can't afford a new vehicle; is there some way that you can make it available in the aftermarket?”We've always had a desire to do that.With the reality of the cost of the technology, the size of the technology and the economies of scale that we've built up with the business, now is the time where it all can work. So not only can we deliver a product now like this in the aftermarket with a relatively straightforward installation process but the technology can all fit in a single mirror; it's a replacement mirror. So the GPS chipset, the cellular components, the microphone, the speaker, the Bluetooth, the power electronics, the mirror itself, all of the OnStar components are built into this, and an accelerometer to be able to detect crashes and the ability to do the turn-by-turn routing. All of the capabilities that you'd expect are all built into a mirror. You’re acting as a systems integrator then? I believe QNX is the software provider for the mirror system and I guess the mirror hardware is being provided by a traditional mirror supplier? Yes, one of our mirror suppliers is doing the mirror assembly for us.We are the systems integrator; we do specify and we have specced out the design of the entire system including the components, the software, everything, basically.Then we handle the branding and the distribution arrangements and the service provisioning. If we put our brand on it, we're going to do it seriously.

“Yes, it's a very large market, as you know, and it's growing rapidly.” 34

But the OnStar service being offered is not 100% identical to that available at the OE level if I understand it right? It's not 100% the same.The portion that is different is that this is not integrated into the

electrical architecture of the vehicle.We're looking at and targeting older vehicles. So if we look at the broad range of used vehicles, the degree of sophistication of electrical architectures are all over the map. So we wanted to focus in on some of the core things, which were the emergency services, the stolen vehicle recovery, the ability to provide turn-byturn navigation for people in a very low-cost way and then also the hands-free calling service as well as the Bluetooth integration.There's a very healthy range of capabilities that we bring for the customer, and we're getting a lot of good reaction and good response on it. So a customer can just go into a retail store and just buy this? What about fitting – do they pay extra for that? Yes, there's a nominal charge for that.The installers, the fitting entity set that pricing. Can it be fitted to all brands and to all ages of vehicle? Yes, it'll go back to many, many old cars.The oldest vehicle application we have is 1981.We have a tool that is on our website where you can go in and put in the specs of your vehicle; make, model and trim level to see if FMV is compatible. It's compatible with the majority of vehicles on the road today.

Is it too early to judge how successful this has been? Yes, it's too early to judge; we're still filling pipelines, we're still building awareness in the marketplace and so there are several steps in the process. First, are you aware of the product? Number two, do you assess it’s the time to buy it and is it right for me? Then the third is to go and actually get it and have it installed.We're fine-tuning that whole process.We're absolutely thrilled that we now have this capability and this product to meet the broader range of customers in the marketplace. On a broader corporate level – did GM’s recent problems have a negative impact on OnStar at all? Were there any problems securing sufficient investment which hindered your growth or did you remain insulated from the broader financial problems? It has felt separate because of the way we've been operating and the way we have a mandate to meet the needs of our customers. So even through the proceedings we were still servicing customers, a couple of hundred thousand calls a day.That didn't change, that didn't stop and the ability to continue to fuel the business wasn't harmed in any way.

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Are there cons as well as pros in terms of being owned by a vehicle manufacturer? You obviously have a strong potential market with GM vehicles but if you were independent of OEM ownership would you have been able to grow the OE business more broadly? When we first started, we actually were available on many OEM applications. In the early years of the business we were available as a private-label product on Lexus.We were OnStar-branded on Acura, on Isuzu, Subaru, Audi, and VW.What happened along the way was the Federal Communication Commission (FCC) no longer required their cellular carriers to carry the analogue network and so upon hearing that information we quickly transitioned our hardware base to a digital platform. So many of the OEMs basically couldn't keep up with that pace of consumer electronic change in their vehicles and so a lot of them dropped out and didn't want to pursue digital hardware. In 2006, we introduced the vehicle diagnostic email.This is where the vehicle collects 1,600 different diagnostic codes on a monthly basis and the data are sent to our back office, such as tyre pressure and odometer readings.Then we convert the raw data, which are just basically a bunch of numbers and symbols, into meaningful information and knowledge and deliver it to the customer in an email from their vehicle that is simple to understand. 99% of the customers get a message that says:“Hey, your vehicle is doing fine; everything is good, everything is in tip-top shape.Your engine oil life is still healthy.Your tyre pressures are all good to go.You don't have any routine maintenance schedule requirements. Everything is great'. Some customers might get a low tyre pressure reading on one of their tyres. As a matter of fact, I just got one myself on my wife's vehicle where the tyre was perfectly fine and safe to drive on but the pressure was just a little lower than it should be and therefore I'm getting greater tyre wear and I'm also losing some fuel economy. It's a good thing to top up that tyre pressure. Every so often there might be a diagnostic code on a small number of vehicles that needs attention. So you can click on that email and get further information. So this we called the vehicle diagnostic email and it became something that our customers really, really liked because it just gave them that additional monthly peace of mind reminder that everything is in good shape.

What happened is the automotive OEMs started paying attention to this and said:‘We need those data on our own vehicles, too’. Everybody wanted to do their own thing in this space. So we saw a greater emphasis over the years on companies all building their own systems and building their own solutions. Many of them were driving after the diagnostic information for quality purposes and many of them were discovering that it's costly to do so. Customers were walking into dealerships and saying: ’Hey, which of your vehicles has OnStar?’ A lot of them concluded they could offer a similar service at some point, so we've seen that transition. Is that something you’d call possible or probable? Probable. Is it right that you’ve transitioned from Motorola to LG Electronics as you’ve evolved? Was that part of the switch from analogue to digital? Yes we did. No it wasn’t, Motorola became Continental - the Motorola automotive unit was sold to Continental.We've worked with many component manufacturers - Continental, Delphi and LG - and we're always very conscious of capabilities and cost. It's a moving space. But the digital/analogue issue wasn't a factor in that process; it was just it was one of the realities of delivering a service. Steve Girsky has talked recently about GM Ventures investing in businesses that are compatible with the infotainment area and the OnStar business. Does OnStar have acquisitions on its radar as a way of taking the business forward in the future? Well, we've done a couple of these things in prior years where we've either acquired whollyowned licenses to technologies or we've taken over parts of other companies' businesses that meet our service needs. But in the context of GM Ventures, GM Ventures looks at a broad range of emerging technologies and emerging business growth opportunities.We find in a lot of instances that there are unique connectivity aspects to those services where OnStar could help more aggressively deploy in vehicles. In other cases, we lower the cost of deploying those capabilities and so there are very complementary opportunities that we look at as needed on a one-off basis.

The cost of connectivity is coming down significantly and the expectation of connectivity is increasing, and many people have growing comfort and trust that location-based services delivered by reputable entities can be valued. There are many new services that you'll be seeing over the coming years in pilots and launches. But there's going to be a greater level of creativity with services that will delight and intrigue customers. So I'll just give you one little simple example of something. Although it's actually quite minor in one sense, whenever I tell this story, I get a lot of laughs and delight because it's like: 'Wow, I want this!' So when we first developed the Volt vehicle and we developed the mobile application for the iPhone, BlackBerry and android for that original Volt vehicle, one of the sub-features of the application was that you can set the time that the vehicle checks to see whether it's plugged in at night. So if it's 10pm on my phone and the car is not plugged in, it sends me a text message from the vehicle saying 'Hey, I'm not plugged in'. I was telling my wife this at one point and she said, 'Well, I don't have a Volt but what I do have is a need, when my car gets to a quarter tank of gasoline/petrol, I want the car to send you a text message so that you can take care of that for me'.The notion of a vehicle intervening on your behalf when it's relevant to you, that's something that is going to be very interesting.

“So this connectivity that I mentioned earlier continues to permeate, continues to become more expansive in our lives, and it's going to be a fun ride.“

Nick Pudar

telematics & infotainment

So what does that mean? That means that in order for some services up in the cloud to be able to infer what your needs are, and to be able to deliver to you what's relevant for you, there has to be some persistent connectivity necessary. I expect to see in the future that vehicles will continuously stream data about their situation on a regular basis while the car is always on. In the background up in the cloud there are going to be these services that are operating on this virtual basis, monitoring and using vehicle data, and then rendering new services, new road information, etc to you in a safe, effective manner. I also expect to see a whole lot more innovation in this space and things that customers just haven't even conceived of before becoming second nature. So this connectivity that I mentioned earlier continues to permeate, continues to become more expansive in our lives, and it's going to

megatrends

interactive life in the car Interview: Ralf Lamberti Director Telematics, Infotainment and Cabin Electric/Electronics, Group Research and Advanced Engineering at Daimler AG By Martin Kahl Ralf Lamberti talks to Martin Kahl about Daimler’s investments in the connected world and its telematics development plans

Mercedes-Benz F 125!

Can you please outline Daimler’s approach to connected vehicles, and explain the importance of vehicle connectivity?

How can you ensure that users will have high-speed internet access in their vehicles?

Vehicle connectivity is important because more and more customers want their car to support the internet. At the moment the car is more or less the last internet white spot. Internet and smart services can be accessed everywhere, and as one customer said in a consumer study, they want to continue their life in the car, so the car needs to be connected. From our point of view, the internet provides many sensible services, including accurate traffic information, navigation map updates, streaming radio and personalised settings. If you are connected, then you can use the cloud and the internet for greater functionality, not only in terms of entertainment, but also security and information.That’s one of the reasons why we feel it will be a very useful feature in the future.

At the moment, the connection is made using the user’s smart phone. If the user has the latest technology and the fastest provider, they will get the fastest access in that region. Of course, access will only be as fast as it is possible for a carrier to deliver in a certain region, like on any phone.We think this will evolve over time.We don’t know if it will take two or three years before there is full coverage with LTE [Long Term Evolution], but when we have LTE coverage, performance will really improve.With LTE we really get transfer rates which are comparable with the speeds you have at home today when the car is in standstill, and which are still very good when the car is in motion, because you have different reception quality when the car is moving, especially at high speed.

What role exists for the Mercedes-Benz COMAND system? How does the current COMAND platform differ from the original?

What is the relevance of the cloud for vehicle connectivity?

Ralf Lamberti

Of course the platform has evolved over time, with new graphic processors and hardware. On the surface it still looks similar, but it’s now connected to the internet.We call it COMAND Online, and it was released at the beginning of 2011.We released the COMAND Online system with the new C-Class and in the SLK in spring, and now it’s also available in the E-Class, CLS, the new M-class and the B-Class. If you order COMAND, it’s always COMAND Online, which means that we have a back-end server system where we run different applications that are accessible in internetconnected cars.You will be able to browse the internet when the car is stationary, and you will be allowed to use Mercedes apps whilst driving.These apps are tested against all automotive guidelines and security requirements for when the car is moving.These services include, for the first generation, a weather service, Google Local Search and another service which enables you to configure your whole route, including different way-points tagged on Google Maps, and send the complete route to the car; when back in the car, you can use this route on your navigation system. It’s the first step of pre-configuring what you are doing in the car, in a more relaxed atmosphere at home. And we will add new services to COMAND Online - we offer Facebook with the B-Class, as well as Google Street View and Google Panoramio. It’s available in the B-Class and in all cars already on the market with the COMAND Online system, because the system and the content reside on the back-end server, and are delivered to the car through the internet.We can now make changes and deliver another generation of services every year, so we will de-couple our innovation cycles for internetrelated offerings from the very long innovation cycles that you normally have in the automotive industry, where you usually talk about four to five year cycles.We will be able to do that as often as we want. It might not make sense to deliver a new app every week, but we will be able to deliver much more in the future.

With COMAND Online, the in-car applications reside in the cloud.You could call it a back-end server, the more conservative way to refer to it, or you could call it the cloud.We will rely on that much more in the future.The F 125! concept car that we showed at the 2011 Frankfurt IAA incorporates a very strong vision of where we want to go with telematics and infotainment. In the future we will call it @yourCOMAND, with “@” standing for connectivity,“COMAND” standing for the good heritage we have with the COMAND system and “your” standing for the use case that you as

a customer have.The system is “at your command”, and this relies on four major pillars: one is connectivity - all the applications and all your content are connected to the cloud and come from the cloud. The second is natural handling: the greater the functionality, the more you might need different means of handling it in the future.We will rely much more on speech, which means the speech recognition software also resides on the internet.We use speech recognition software from Google, Nuance or other partners, so you send the voice stream to the internet, and you use the computing power of the internet to return the result.That will empower us to deliver much more natural speech interaction. In future, for example, and we already have this in the F 125!, you will be able to say “play me something slow from ABBA” instead of having to scroll through music, artist, ABBA and then select a specific track.We will also get more touch-related interaction, something else which is available in the F 125! concept. And we are also thinking about gesture control. In the F 125! you can open the doors with a gesture - it has a sensor on the side enabling you to open the doors with a sweep of your hand.We will also have gesture control for passenger in-car entertainment, for example.

Mercedes-Benz COMAND system

The third pillar is sensory perfection; that means that everything we deliver, whether it is sound or graphics in the car, needs to be perfect and perfectly designed.We will have several screens in the car, including a large screen for the entertainment system and a large screen for the instrument cluster. As this is the one thing the

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customer will always look at, how we deliver on these screens will be very important in the future. Graphic design, HMI, animations and how the content changes on the screens will be the key factor in how the car overall is perceived. The fourth pillar is what we call remote configuration.We think that when you have so much functionality and connection to the internet in the cloud and in the car, you need to have a digital representation of your car so that you can interact with your car remotely. Whatever you use - an iPhone, a BlackBerry, an iPad or your desktop PC - you have a representation of your car, and you can configure settings such as air conditioning, seat settings, entertainment and the applications you want to run in the car, and send them through to the car.When you return to your car, the music you want is already there.To do this, you have to be connected to the cloud. But it’s very important from our point of view that you can do it remotely. These four pillars make up @yourCOMAND, and it’s not just a case of adding more and more features into the car - you need to deal with all these different aspects.That’s our vision for @yourCOMAND, and how we see the future of telematics and infotainment. Can you provide some time scales for any or all of those applications? The F 125! concept car takes a big step forward, so from our point of view, a complete fulfilment of this @yourCOMAND vision could be possible in 2020. But we will see different aspects of the F 125! in the cars that we launch between now and then. Do you have a corporate strategy on driver distraction? Of course, there are different guidelines out there for driver distraction, such as the American Automotive Manufacturers (AAM) guidelines, and we have committed ourselves to always fulfilling these guidelines. And that’s what we do with all our telematics and infotainment products. For example, if we deliver a new Mercedes app, like the Facebook app in the BClass, this app runs through the same

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certification process as any other system which is driver distraction-related.We have a dedicated Daimler-owned group in Sindelfingen that tests whether or not these systems distract, and whether they fulfil the guidelines.This is a separate group which does not report to me and which is mandated to say yes or no. If we come up with a very complicated installation for a connected service, this group may approve some of the functionalities according to the guidelines, but it may say that other functionalities need to be disabled while driving. For example, if you do a Google search while driving, you will only be able to choose from a list of pre-defined searches like restaurants or parking lots, but you will not be able to enter a long complicated search tag whilst driving.You will get pre-defined searches, and you will have access to your last searches; if you entered a complicated string of words whilst the car was at a standstill, this will be accessible on the log so you can call it up whilst driving, but you will not be able to exceed 25 letters, for example.The same goes for the Facebook application - you will be able to post some pre-defined Facebook messages, for example “I’m just driving to...”, and the destination will be provided by the destination in the navigation system; but you will not be able to compose any message freely, until we can do this with speech. It might take some time before you can define a message with voice control. Are you developing all of this in-house or are you working with partners? We do this with partners. For example, with the back-end infrastructure, where the COMAND Online apps reside, the whole software architecture and the security architecture were done mainly in-house, but the execution is controlled by a partner. And of course we partner with a lot of content providers. If you want Google search in the car, you have to partner with Google; to have a Facebook application, you have to partner with Facebook.We use their APIs (Application Programming Interfaces) and build on that.We partner very closely with Apple - there are a lot of companies in the Valley that we work close together with; I have a dedicated group that reports to me in the Valley so I have engineers

working in Sindelfingen as well as Palo Alto in Silicon Valley, close to Google, Facebook and Apple.There we also do a lot of the connectivity stuff, software integration and so on.

With so much connectivity and reliance on the cloud, what security can you guarantee to the drivers that they’re not going to be ‘car-hacked’, for example, or have their data stolen?

You mentioned Apple and BlackBerry. Can any smart phone work with COMAND Online and @yourCOMAND?

Information security is a very important point. At the moment we are using a Bluetooth connection through a so-called VPN connection. This is a Virtual Private Network, which normally cannot be penetrated.We own the whole service structure, and we have dedicated firewalls from the servers down to the car. At the moment, we think everything that is possible in terms of security is very well taken into account.We also have a dedicated group which is doing nothing but security.The group is made up of experts who build up different scenarios of what might or could happen, what a hacker might do, and they develop firewalls and infrastructure against these possible scenarios.This is a dedicated group doing nothing else. It’s very important, as much for genuine security as for peace of mind for the driver.

Currently, the connectivity is done through the smart phone, and it needs a certain implementation of the Bluetooth protocol. At the moment, COMAND Online works with BlackBerry, some Android phones, and some Nokia phones.There are other Bluetooth implementations. For example, Apple has another Bluetooth implementation, and we’re working with Apple and with our own series development department to be able during 2012 to deliver an implementation of this Bluetooth protocol. By some point in 2012 we will be able to talk to nearly all phones.We will also build some smart phone-based entertainment and telematics systems in the future. And there we see three main so-called ecosystems that we have to support: Apple’s IOS, Android and Windows Mobile Phone. Digital natives - people who use smart phones for their personal life - are much less involved with the BlackBerry implementation. BlackBerry is losing ground in this private sector, so we think these other three platforms will be of major importance, and we will have to support these platforms in the future.We are also working on an iPhone application, due to be released sometime next year with some of the compact class cars - you plug in an interface in the car, and the application runs on the iPhone but delivers the screen content of the application to the bigger screen in the car.You can then control it over COMAND control and operate everything on the iPhone.This iPhone app will also contain Twitter, Facebook, Google, personal music and streamed music - it will offer a suite of connected features that you bring in to the car on your iPhone.You will have to buy certain kit for the video connection, and the application will be downloaded from the iTunes app store.

What role can vehicle connectivity play for driver and pedestrian safety?

At the moment, COMAND Online works with BlackBerry, some Android phones, and some Nokia phones.

In terms of making sure that somebody can get into one of your cars and use the connected technology, are you working with other vehicle manufacturers to ensure that there’s some kind of standardisation? In consumer electronics (CE), there are usually two approaches. One way sees many companies willing to work together under standards; the other way is the Apple way most of the time, Apple does its own implementation. A lot of other CE device and smart phone vendors are working together with the automotive industry in the so-called CE4A (Consumer Electronics for Automotive) consortium, to develop a connection between the smart phone and the car, called terminal mode.The smart phone acts like a terminal, and an app runs the smart phone and also does the same thing as the iPhone - it sends a signal and receives commands to control the app. In this consortium, we are working together with

other German and international manufacturers as well as Nokia, HTC and other handset manufacturers.That will be a kind of standard for the future. Of course, it would be good to have one general standard, but we don’t see that happening, because there are always CE device manufactures which go their own way, and then you have to co-operate directly with these manufacturers. As much as we can, we will push for terminal mode standards. Is eCall something that’s already in your vehicles or is that coming, and will that run through COMAND or through a separate system? It is in vehicles in the US, where it’s mandatory. There we call it 'mbrace'. In Europe, eCall is not yet mandatory.There are guidelines, but the deadlines have shifted and moved.We have not published any introduction date.When it becomes mandatory, we will have it integrated, probably somewhere in the COMAND system .

This is what we call car-to-car, or car-to-X, which is car-to-infrastructure.The cloud, or back-end infrastructure, and the connectivity of cars to each other, will play a major role in delivering information in the traffic grid. Every car has information about its current status and everything that surrounds it.We also have some other big projects running under the umbrella of car-to-X.This is not for infotainment and telematics - it is about safety. So that comes under the safety division’s responsibility? Yes, we separated that from telematics and entertainment several years ago. Of course, technology-wise there’s close interaction, because we’re using the same network and the same technology to connect the cars to the infrastructure and to the back-end, but the applications and the use cases are more or less safety-driven.That’s the reason why we separated it out. It’s very important, and there are some big pilot projects running, including one in Germany called simTD. 41

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Interview: Rick Kreifeldt Vice President Research and Innovation, Harman International

connectivity landscaping

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Harman International supplies connectivity systems to leading OEMs worldwide. In this exclusive interview, Rick Kreifeldt,Vice President Research and Innovation, talks connectivity development with Automotive World To start with, could you just run through an overview of the connectivity landscape as you see it? I've been with Harman now for close to 18 years and I've worked in different areas within Harman, notably on the audio side.The one thing that makes Harman unique is we have experience and presence in the automotive, consumer and professional sectors.This means I have a cross-company role with involvement in technologies and the opportunities being developed in all three. In addition, I've been responsible for automotive research too. As regards connectivity we think there are three main issues.We have the type of technology, we have the big themes that are really driving growth and driving new opportunities for us and finally, what are our customers and the industry in general talking about? We think there are essentially three main areas and they are actually interdependent: connected, green and safe.There’s a lot of buzz around connectivity, a lot of interesting new ideas in ‘green’ and these become particularly interesting when they get linked. Safety, without question is always a primary concern and will continue to be so. Now when we look at a technology or say if we are developing something new, we link these themes: is there a green angle? What is the connectivity impact? How is this safe? We push ourselves to keep those in mind as we're developing our technologies.Technology is developing so quickly at present but by considering its impact within these three areas, our implementations will be more effective.

And on the connected side specifically? First, we have to understand what engineers or consumers really mean about being connected. My favourite line is when third party developers say ’We can help you with connectivity’. I ask them: ’What are you trying to do?’They simply reply ’connectivity’. But what is that exactly? So stepping back from that, if you're really trying to tap into the customers’ needs, it is worth noting that they don't actually care about any one piece of technology.They care about what they can do with it and what it will do for them.That's where it gets very interesting for us. Harman has some great examples concerning connecting people to their work, including one we showed at the Frankfurt Auto Show.You get in the car in the morning; the car provides you with your morning commute world.What's my traffic like along the way I normally drive? What's happening in my calendar today? When's my first meeting and do I need to prepare for it? There is also information such as SMS and email that connects you safely to your work. If you're on a long drive for work and you receive an SMS from the office, now you can get it read out to you which obviously has a safety aspect to it too. Now you're not reaching for the phone, which is what many people do if they get an SMS.Then you consider the opportunities to connect to your family and friends.That's really thinking about social networking and some of those worlds. Harman is looking closely at how we bring social networking safely into the car. Connectivity offers so much. In the old days it was focussed on POIs, but really re-imagine what POIs do if you're connected.This last point links neatly into our Aha activity.

I’m familiar with Aha and I was going to ask a little about it. Maybe you could outline it here.That was an acquisition if I remember correctly? That was an acquisition, yes. First, Aha is about giving people the content they want – Internet Radio, Social Networking, Podcasts, and other location services – and delivering it in a very safe manner. Everything is formatted as a radio station, so you don’t need to read anything, you just select the Aha-delivered radio station that you want.The best part is that new stations are being regularly added into the Aha cloud platform, and they are instantly enabled for the customers with no changes to the code of the head unit.The customer simply selects the new station they want to listen to from their smartphone configuration app and that station is instantly available the next time they start their car. I think one of the biggest issues that has to be solved in infotainment today is the idea of upgradeability. A car is like a ten-year durable item, but consumers would like something new. The question is how can you have that? A lot of our discussion right now with OEMs is around the concept of upgradeability. How can people purchase this car and keep it a little bit fresh? Of course, the OEMs don't mind the idea of people replacing their car just to get new infotainment! But they also don't want unhappy customers - you have this expensive car and you want it to remain compatible and relevant. Just to illustrate how stark the problem is, I’ll give an example.We are working on our RFQs now with 2014-2016 timeframes and I suggested we go back five years and look at what was hot then. Five years ago, the number

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connectivity landscaping one social network was MySpace. Facebook wasn't even in the running. It was a distant third, maybe even fourth and in some regions, fifth. The top selling smartphone in the US was the Palm Pre.The iPhone didn't even exist.You think about trying to specify something and you know you’re going to have to take years to develop it. How do you work through that? That's the problem. So we have a strategy where different applications can be brought into different areas in the vehicle and in various ways.This is based on two things: one is how fast is it changing and the second one is are there regional differences? Does it need to be localised for language or are there licensing and other things that we need, reflecting geographical differences? So those are the two big issues, how fast it's changing and is it regionalised? Correct.You start off at the basic level, just building something all the way in, initially ignoring the whole connectivity hardware for a second.This is looking at what can you do. As an example, for email you can embed it into a car and we have an exchange client and a POP3 client built into the vehicle.This is written as a native app in the code because it's stable, international and you can have that installed in every vehicle and it's not a problem.Then, you start going beyond this.We've done considerable work with smartphone integration and the result is we have made our new software platform look more like a smartphone platform. Now you've got a section that is purely a car application and you've got a section that's a specific whole user space.You can download apps, offer updates and this enables you to offer focus for a region for instance.This is what you see now rolling out in Europe. Harman recently launched the Touch and Go product with Toyota.The Touch and Go is the second product announced with Toyota using our new framework.We supply Toyota Europe and Toyota US with a different application set based on the localised content.We also have several other OEMs who've adopted this approach now. This is EnTune in the US and Touch and Go in Europe? En Tune and Touch and Go, exactly. It can be tailored more to the market by developing and loading different applications.These apps can be updated by either a USB stick or by other ways. Crucially, they're totally safe, just like an app is on your phone. So if there are any problems, they don't interfere with the main core of the device.Then you start considering smartphone

integration.You go from an app on the car itself, the head unit, to now controlling an app on a smartphone. It is easier to push updates to a phone, so we do a lot of app control. Over the years we've done a lot of work, mostly with Apple. Harman has long been a happy Apple partner and we’ve been at the forefront of working with them. It’s also why we were really excited to see the recent announcement on Android and OAP. I saw it, yes, but I didn’t probably understand the true significance of it. The significance is actually really simple.With Apple iPhones there is a very standard way.This has grown up from their accessory world that we were also involved in from the start when it was all about iPod docking both in the car and with our consumer products.This produced a great protocol that's been extended from the accessory side.To all the phone developers, cars are just another accessory, like your speaker dock is, so you're actually dealing with the accessory engineers. From there, you can now control the phone and the possibilities that now offers are exciting.They’ve developed a very rich set in Apple, essentially a good ecosystem system they’ve put together. Until now with Android it’s been a really mixed bag with a lot of different things out there. Harman has been doing a lot of custom work in Android, because we want that to be one of our major phone platforms. By releasing this OAP, it gave us a really good ‘plumbing set’ that we knew we'd have for all Android phones allowing the lowlevel plumbing to connect up and control an application. A lot of what we were doing on a custom basis we now can do over OAP.This takes care of a lot of our connectivity, the real low-level connectivity to the phone. It also gives us the same kind of rich features set that we've been used to having on iPhones; that's very exciting. It's definitely an ‘engineer nerd’ thing, but what it means to the end customer is you can have this very rich environment and integration, so that you can get data back.The key really is getting the data. My favourite example is the Starbucks app, I love that app. All you do is you hit one button and it tells you the closest Starbucks. And you think about what does that really do? I could pull up Google Maps, I could enter in a Starbucks near me and I could push the zero key to centre it. I can do all that, or I can just hit the Starbucks app.Think about this in the same context from a car. If you have the same app on your phone you want your car to talk to it and then send the details to your sat nav. Because now you're not walking around looking at your phone, you're in London or in New York and you're actually driving. So it's one thing just to see it on the phone, it's

another one to say, yes, put that data into the navigation system.You can only do that with this kind of integration with apps. If we move one more step, we go to the cloud to take care of the really fast moving data. If a new social network such as Google+ pops up, we can do the integration in Aha. So Aha Mobile, now branded Aha Radio, is a cloud platform that allows us to deliver content safely to the car. Using the radio metaphor, in the same way you change radio stations you can change your content streams. If we look at Facebook, we wouldn’t enable writing replies because of the safety angle. Often when I get on Facebook it's like reading the news, in a way. You just get on it and see what's happening with your family and friends, and its private news.You're still connected. It feels like a radio station, you could have a Facebook radio station.You can have podcasts, which are brilliant.You get all these podcasts that are available and you download them by simply going to the radio station and listening to the Sunday Post or Financial Times or whatever. So this is a proprietary system to Harman and allows you to differentiate yourself from others? Good question. From the Harman side, we saw it as the only way to deal with fast-moving content - the Google+ launches, the fact that Twitter changes its API often. So the only way to deal with that was to go to a cloud-based solution. Aha was a start-up but was very experienced and had this technology, so it was a natural acquisition for us. But like we've done in the past with other things from Harman, this is not a Harman-only solution. Aha runs as a standalone business unit. So that's how they're able to do the work with companies such as Pioneer. So, yes, they're allowed to work with other tier 1s, but it is part of the overall Harman strategy of having a cloud play. What does Harman bring to the table in terms of distinct competitiveness? Is it your decades of experience supplying top-end audio systems etc? Well I'd say right now in this area, it's really about having a cohesive connectivity strategy. I haven't heard anyone else really talk through that with a defined plan in each area.

I guess it’s true to say that Harman has always been viewed as a supplier of ‘premium’ audio systems for the automotive industry. Are you having to rethink this with infotainment systems and pitch down to the non-premium market? Was launching Touch and Go on the Toyota Yaris an example of this strategy? Yes, exactly.This is part of another larger strategy that you've correctly identified. Here, there are two key areas.We've got the audio system and the infotainment. In the infotainment area, for years we focussed mainly on premium systems.We already supply to BMW and Mercedes but often it was only their premium car line applications. Historically with Mercedes, we wouldn't have had fitments across the range, nothing in its Sprinters for example, only in the cars. It's something that our CTO really set out to change.This is why the Toyota announcement was significant for us; we've really pushed right across the platform and not just the luxury models.We now essentially offer three levels: an entry system that's a very competitively priced system that delivers connectivity, much more so than most Bluetooth radio.Then we have a mid-system and a premium system. Previously we only did premium and that was it. For a given carmaker, that mid-system might be their premium system in their carline. For an OEM such as Mercedes, that might be the entry system in some of its carlines.You have to put it in their context first - it's much more about their needs and that's been a big change for us. I go back to it but that's why the Toyota win is significant. It's our first win with the new midsystem. It was initially designed with no customer on-board and we made a significant investment. Some customers may fear it’s not going to hit cost targets but that is because they’ve never even seen it. So, we did our own investment without a customer and actually put this together. That’s an important point. How do you hit cost targets on something like that, especially as commercial applications remain small scale? How do you engineer it so you meet cost targets? The key was we had the capabilities all along; it was more a matter of focus.We said,‘Well look, we know what it takes to do this, let's go and simplify this’.We worked very tightly with our supplier partners and we hit the price targets very aggressively. It's definitely working because that's the foundation that has led to the other wins we've announced.

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connectivity landscaping What’s the commercial status of the business with Toyota? How did Toyota eventually come on board with this? With EnTune in North America, right now it is beating expectations, so that's a good place to be. We had never developed infotainment for Toyota before and they've had other suppliers that are very good. But we showed them what we could do at that price point and it was a different approach from what others were offering.Toyota said that’s interesting, let's do it. So is the EnTune system in North America much more complex and expensive than the Touch and Go for the European market? No, they are fairly similar.

And you mentioned other applications in the pipeline for other OEMs.

Is that going to be the case in the future though?

Yes, we've got several other OEMs in the pipeline that will be announced in the next six months.There is a lot of work ongoing to develop this platform.

The future's the future, so it's hard to say what will happen there, but we felt that it was important from the Harman side to make sure our needs and our customer needs are reflected in the work of the GENIVI Alliance. Should that solution come to real fruition, it'll meet our requirements and our customer requirements. It makes sense to be involved.

You’ve got a very close relationship with QNX which I guess dates back to when you owned the company. Is that going to be the case going forward? I understand you’re also active in the GENIVI Alliance. Could you explain what your philosophy is in this area? TThat's a more complicated one for sure. First, on the QNX side, obviously there’s been a long history with a good relationship and, for us, it's a company we can trust.We feel really happy with what we've been doing there and every system launched and announced uses a QNX system.

Would any change like that be driven by OEM customers then? It varies by OEM. Some OEMs are happy for us to make that decision, trusting Harman’s opinion. Others have a very passionate interest in this field and will make the decision themselves. You previously mentioned upgradeability and that’s obviously really key at the moment. How is that achieved in practice? This is where I was going with the idea of a framework where you can develop applications like you would for a phone and add those onto a device.You also have this idea of getting your

new feature from a smartphone app. But even better to us is getting a new feature from the cloud. Consider how Aha can work; we've recently announced the integration with Slacker - now that can be available on the head unit. You can have a new podcast. If they create a Google+ integration, you just have a new channel - Google+ - and it starts working. You've had no change in the head unit, all the changes were done in the cloud.We move this interface, a single interface, from the head unit to the cloud and so that the head unit always stays the same, so we don't need head unit code changes. So if I buy a Toyota Yaris in the next few months with the Touch and Go system in it, the hardware will always remain the same in future but it can be upgraded continuously throughout my ownership and beyond? Yes.That's exactly the idea, in that case there will be new apps and features developed for it over time. It will also bring in the Aha solution and then that gives you additional freedom. What’s the thrust of your development in the HMI and safety areas? Is it focused on voice activation? I noticed you did something at the 2011 Frankfurt show that was called ‘situational HMI’ - could you spend a few moments outlining where you are on that? HMI is actually very significant for us.We have specific designers and user interface experts who work purely on this.The key issue is to try to get people away from reading and being distracted. So we're spending a lot of time considering interactivity, how interactive is it? If a car speaks to me in an appropriate way I will interact with it in a natural way. So voice is a good medium, touch is also good in certain situations. It's really about trying to get to the relevant information you want as quickly and easily as possible without searching through menus and looking at the overall interactivity. I won’t tell you what my current car is, but it's not our infotainment system. But, let me tell you, if you use the voice on that car you'll never use voice again. I'm now convinced it's less work to read phone contacts; it's just so poor but it has nothing to do with the voice recognition. It recognises my voice but it's what we call a speech dialogue system and it’s the interactivity that lets it down. It's designed so poorly.

The other things that stood out at Frankfurt were the augmented navigation and park assistant, both of which use camera systems. Is that something new for Harman - to be integrating cameras? That's been going on for some time, but we're now starting to promote it publicly.We have received a lot of interest from OEMs and we are starting to see these technologies showing up on RFQs as the awareness grows. Harman is now deeply involved in camera-based technologies and again, this forms part of our safety activity. I think augmented navigation is just fantastic. If you're hitting a tricky roundabout and you get an instruction from your navigation say, take the third exit, you end up being focussed on counting the exits. It's just too complicated and it’s so much easier if you overlay an arrow and say, it's this one. Even if you just glance at this you're seeing what's right in front of your car, you're not missing it. So, to me, that's a much safer way to deal with challenging intersections than anything else available today. Does Harman have the camera technology in-house? We're focusing on the image processing and the algorithms.We have shown applications with the algorithms you saw that are running directly on the head unit, or on a secondary piece/ECU. Harman is really focusing on the image processing itself. Camera hardware is supplied by an outside company. You’ve also made an announcement with Stolman regarding NFC technology.Where is that right now? It seems a potentially interesting development for Harman - what sort of applications have you in mind? IIn the application of NFC we look at this from a few different angles.The first one is what we call Touch and Connect and this is really going to affect people.You would be shocked at just how few people actually connect their Bluetooth phone to their car.The rates are extremely low. Now we're putting in Wi-Fi, which we did first for Audi as well as other OEMs who are offering these rolling hotspots. Enabling people to connect a phone by just touching it to the head unit of the car is fantastic.We also have features for personalisation; the idea is that although my wife and I might swap keys once in a while, maybe accidentally, maybe on purpose, we don't swap phones.The whole concept is that your phone becomes a proxy for your

personality as opposed to your key.You have the key now and you can unlock the door, your car seat moves to where you like it, and everything is where you like it, your preferred radio stations, etc.That's all fine, but your phone is an even better proxy for that because you don't swap those.The next piece of technology is what we call Touch and Confirm, it's a total app download for purchases that are going to come directly over the air.We think that's a good way to use your NFC as a wallet. In summary we are offering personalisation and your first connectivity as well as then confirming purchases. Is that way down the line or something that’s imminent in terms of applications? I would say it’s very imminent.We have our first OEM programme. It’s moving very fast. Just a final question regarding Asia. You’ve invested a lot in China and elsewhere in Asia so could you just provide a perspective on how things are developing in the region? Asia is hot, it's growing. In China, everyone knows the numbers are staggering.You need a large development centre such as Harman has created in the market because you have to live and breathe it.We've put in place a big investment to reflect the importance of the market and you have to create specific solutions to match the behaviour and market demands. For example, a lot of cars are being chauffeurdriven in Asia and there are considerably different aspects to the traffic there. In most of the western world the car owner is the primary driver. In China, in parts of the Middle East and in Russia that’s not the case and you need different solutions. Just take something like rear seat entertainment. In the US, rear seat entertainment is all about movies for the kids, so that they'll leave you in peace while you drive. Rear seat entertainment in China is for the executive to make use of his time while he's sitting in his three-hour traffic jam. Are you finding the OEMs in China to be pretty receptive to new systems? Yes, certainly. I think having a large presence such as Harman has developed there helps.Yes, they know that we are there to stay and Harman is a supplier they can depend upon.

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Interview: Mikael Gustavsson Director Connectivity Hub, Volvo Cars

getting connected On Call was Volvo’s first big telematics product and, as the industry has developed, so has Volvo’s approach to connectivity. Mikael Gustavsson, Director of the Connectivity HUB talks to Automotive World about the future of connected technology at Volvo

Could you outline how Volvo’s involvement in connectivity originated? We realised at the beginning of 2010 that we had to work with connectivity in a completely new way.That’s because when you try to introduce or include this new type of technology, you have to go beyond the traditional car manufacturers and bring in inspiration and thoughts from other industries, such as mobile communications and so on. So we brought together in Volvo Cars a group of people with special skills and formed a specific hub or group. It’s the same direction we’ve used in the past for hybrid-related work and active safety features that are launched almost every year. We have quite an established strategy and that's why I was appointed to this job to lead this. It's not a project but it's more like team work, with members representing all different areas of Volvo Cars that have to contribute in some way to make connectivity a reality.That includes of course the R&D for cars, but it also includes Volvo Cars IT - the IT Department has so far focused on internal IT infrastructure but is now also involved in delivering services to customers.Then we are also including manufacturing, the marketing side, product planning and customer service. All areas have to contribute in some way to build connectivity - all are important. How many people are part of this team at present? It started quite low, but now, together with the people in the different programmes for cars that are coming in the future we are quite close to 100 people right now.They are associated with different programmes and have very short periods in which to work on projects that will be in the hands of the consumer in four to five years. Is it correct to say that the HUB’s activities are a sort of evolution from the telematics service that Volvo has offered for some years, such as On Call? Yes. On Call is today’s platform for connectivity but it has only been used for safety and security 48

‘When you try to introduce or include this new type of technology, you have to go beyond the traditional car manufacturers and have to bring in inspiration and thoughts from other industries, such as mobile communications’

features so far. It would be an excellent platform for convenience items as well.We started off on quite a small scale for model year 2011 vehicles in mid-2010 and then extended applications through to model year 2012 cars. For context, could you tell me a little about the history of Wireless Car,Volvo’s On Call provider? It started up in the late 1990s when we part of the larger Volvo Group. It was a joint venture between Volvo, Erickson and the Swedish national telecom company Telia.Then the group was split in 1999 and we became owned by Ford.Wireless Car is now the telematics service provider for us. Caption

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Am I right in saying you have to work quite closely with them? Yes, but they are classed as a supplier.We are not part of the same company. Does the On Call system have any kind of navigation abilities at the moment? No it doesn't have, all that is close to that is that we have a caller fix.You also have a journey log so you get data out from the system into a mobile app and then you can export it to Excel, for instance, and make a journey log. But we don't have the navigation features that you have in the OnStar systems etc. We offer a navigation system but it's not connected to Volvo On Call. It's included in the infotainment centre, it's an additional option. We have an integrated 7inch display in the centre stack.You can also operate it with voice activation. Are the new apps actually available at the moment on a specific vehicle? Yes an app for a smart phone controlling functions in the car or just reading out information from the car and that's connected to On Call as an option. In the future of course we will include many more customer services that connect to it.

It's available on all 2012 model year Volvo cars from the smallest to the biggest one and we have also chosen to make it available on mobile phones including iPhones and Android models. So I think we have covered quite a lot of consumers out there. It's a free app and the cost for the consumer is the purchase of the On Call option.The estimated recommended retail price is about €700 in Europe for that option, but that includes the safety and security features. New car buyers get two years free subscription and after two years they can then subscribe if they wish to continue. There are several approaches being taken with regards to operating systems - what are your favoured strategies at the moment? That's one of the most interesting questions right now.There a lot of people who think that you should embed a communication module in your car. But having an embedded communication module is something that you do anyway with the On Call system? Yes, we do it with On Call, but that is quite expensive compared to what you can achieve with different approaches. It's quite an

expensive component. Of course there are a certain percentage of customers who will pay, but some customers don't want to pay for that type of equipment.Their approach is to buy a good smartphone that has the capability and the capacity that is better than this embedded module. So we think that the most flexible, the most customer-oriented way is to have a hybrid solution that the customer can choose. But there are also a lot of people who think that the mirror link set up or the iPhone way could be the best way to do it. A lot of companies may go for some sort of all-in system to cover those areas because they don't know what the winning horse will be at present. We have to look at everything because we cannot say today who will be the winner. Probably in the long term there will be a communication module in all cars because it will support not only the connectivity part but other things as well.We have to create a new business model and it takes a long time to achieve that.We feel that consumers will have a lot of applications in their smartphones that probably will not be automotive, but which they want to bring into the car even if they can’t interact with them through the HMI. I think the flexibility will satisfy the consumer in the end. Cost is surely a vital issue here as well. There seems to be a need to try and provide high technology at the lowest possible cost. Yes. Do you see the growth of smartphones and what customers want to do with those as the key driver for changes in the next few years? Yes, I think that is one of two things which we feel are very strong trends. First, consumers have the possibility to listen to music, get information or other media wherever they are when they have the smartphone with them.We see a very clear demand from those same consumers to have the same functionality in a

So what approach are you taking? Are you working closely with specialist infotainment suppliers and more general tier ones?

more integrated way in a car infotainment system.You know people sometimes have to spend a lot of time in their car, going to and from their work for example, so they would like to bring that functionality into the car in a simple and safe way. Second, we feel that consumers today like to have more effortless ownership, and we think this system could be very good to create this more effortless ownership for the customer.The advantage from our perspective is that we get customers that stick for longer with our business and to our dealerships and so on for a longer period. Do you see it as an opportunity for further brand differentiation as well? Yes, I think it is a trend right now to add connectivity to the car and to highlight it in a way that can improve differentiation, but probably that will switch over to become more of a commodity in future years.We've seen the trend with CO2 and emissions.That also led to some sort of differentiation for some years but has now become a commodity. It will be a part of brand differentiation for some time but I think the most differentiating part of that is to create an intuitive HMI as well. As you know, Volvo cars are very much about safety and we think we have an advantage when it comes to bringing the smartphone into the car and using it safely to enhance the driving experience.

The main difference when dealing with this type of functionality is that you cannot rely on just the traditional big tier ones.They are obviously very competent in producing hardware and software for infotainment systems, but when you come to this type of functionality you are in the content and the apps area, they are not the number ones. I think we can see a quite similar scenario in the mobile phone area. For instance if you take Sony Ericsson, they discovered some years ago that they had to completely leave the content side because they could not control that operation and were not in charge of the content that customers want to have in their smartphones.They had to focus on selling a very good platform for the consumer with a very good HMI.You see the same thing with Samsung, HTC and especially also Apple with iPhones.The big suppliers have to deliver entertainment platforms that make it possible for the car manufacturers to bring in third party content in some way.What we are working on right now is to both create these platforms and also create partnerships with different companies around the world that can deliver the content that our customers would like to have in their cars in the future. Can you use a standard platform right across all your models or do you have to take a different approach for each model? You have to have some sort of standard.We talk about the electrical architecture because it’s one of the most expensive parts of cars today and it will become more expensive if we are looking at it in terms of the percentage of the total cost of the car. However, there will also have to be differences because there will be customers in the upper segments that would like to have the most advanced sorts of functionality, while in the lower segments there are those that don't expect that type of functionality. So we have to do some sort of segmentation as well. But the cost of the systems is the tricky part because they are not cheap, especially when we want to bring in mobile communications hardware and make them adhere to automotive specifications.Then it becomes quite costly.The tricky part for a lot of car manufacturers is to create a business model that makes it profitable to do it. I'm not

talking about only selling cars and options - you have to bring in new revenue streams that have not been the traditional way of making money out of the car business. I can’t give you details but you can imagine what I’m talking about. One of the other key factors here is the different speed of product development found in the consumer electronics industry versus that in the automotive industry. If I’m buying a Volvo with a state of the art infotainment system now, I want it to be engineered so it’s still relevant in ten years’ time. Is that something that you prioritise? All car manufacturers who compete in this segment have to work on that because that reflects consumer expectation and consumer behaviour. Consumers have been conditioned for some years now that they can frequently upgrade their home computers, their smartphones etc, so they also have expectations about upgrading.We’ve had the possibility for 13 years or so to upgrade cars and to have software downloads at the dealerships. But that was, and still is, quite a costly way to do.We had embedded software that takes a lot of time and costs a lot of money just to develop and verify. So we have to have some sort of solution where you can download applications and update customer experience during the lifetime of the car. I think that is the expectation. So if I buy a Volvo today and want a navigation system, what are the options besides taking a portable unit into the car? We offer a navigation system but it's not connected to Volvo OnCall. It's included in the infotainment centre. It's an additional option. We have an integrated 7 inch display in the centre stack.You can also operate it with voice activation.

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Are there any differences from a regional perspective that you have to take account of when developing connectivity solutions? Are there likely to be different trends in North America, versus Europe and Asia or can you engineer a single global platform that doesnâ&#x20AC;&#x2122;t require regional differentiation?

Weâ&#x20AC;&#x2122;re starting to see some sophisticated infotainment systems filtering into the market here in Europe, that have been available in North America for some time.The commercialisation phase appears to be well underway, but where is Volvo in terms of this at present?

I think that from the function and focus perspective, customer expectations and needs are quite the same, whether it is music, information, the need for updates, etc.The difference is that the North American market is already more used to this type of functionality it's usually incorporated when you purchase the car.They have different business models of how to make money out of this.Take for instance OnStar: in the Chinese market they tend to be gadget freaks and like to show off this functionality to their friends.The core value of this type of functionality is to be able to listen to music and to get information - to get media wherever you are, to have the internet and have the functions that you have in your smartphone. I think it's the same expectations.

We are working very hard. I cannot of course tell you the exact plan, but it will pop up in some years in Volvo cars in Europe and in China of course.

Is your ownership by a Chinese company relevant in this area? Do you work together with Geely at all? No not at all.We are completely isolated from each other and I think that is the only way to do it because otherwise we will mix brands and that is not good for Geely.The only relevance really is that we have a very aggressive growth plan in China.We have plant developments and are right now starting up a product planning, design and R&D centre to the north of Shanghai to develop localisation of the cars and there is also a special model for the Chinese market.We have a plan to sell 200,000 cars in China in some years from now, so it's quite an aggressive plan and that's good for us because then we get scale economies and so on so. Of course, the Chinese owner opens some doors for us and it's much trickier for some of our competitors.

Whatâ&#x20AC;&#x2122;s your take on the E-Call system debate in Europe at present? Does it have relevance here? Yes, of course it has relevance, because if that occurs, we will have to put the same module in all cars in Europe and that will influence both our connectivity and also the technical architecture of the car.We are part of the dialogue and we continuously investigate what is happening in the European Commission and so on regarding the legal requirements. They have a huge challenge to build up the infrastructure with mobile operators, etc. It's a very, very big job to make it happen across Europe, in all 27 countries, it's a huge task. But of course if it happens we are ready. Are you involved in any of the research groups or consortia, for example the Car Connectivity Consortium and the GENIVI Alliance, which are active in this area? The Car Connectivity Consortium is very much focusing on mirror link.We are not part of that consortium but we are looking at what's happening and it's interesting to keep abreast of things . It will be interesting next year to see what's happening with this, whether it will be some sort of standard or if it will die. I really donâ&#x20AC;&#x2122;t know.

Just going back to the HMI issues we talked about.With the Volvo brandâ&#x20AC;&#x2122;s reputation for safety and the growing concerns about driver distraction, especially in North America, do you see voice activation as critical going forward? I believe the concept You car had slightly more sophisticated systems such as HUD and touch screens. The corporate You car with the touch screen and so on could be the future of Volvo Cars, but we cannot promise that will be the case. I think that the number one interaction with these types of systems will be voice, because that is the safest way.We then have to introduce more customer friendly activation, one shot destinations rather than complex menus.You need a vehicle HMI that can control the functionality without distracting the driver you have to keep your eyes on the road and HUD displays can support that. There seems to be a need to create something like a wireless hotspot within the car so that all occupants, especially children, can use connected devices during a journey. Is that something thatâ&#x20AC;&#x2122;s coming with Volvo? I think it will be a clear requirement from customers because they don't like to have separate data plans for every device. Itâ&#x20AC;&#x2122;s a clear connectivity trend that most car manufacturers will aim to meet through hotspot functionality.

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Interview: Jim Nardulli Senior Vice President, Americas and Global Telematics, NNG Kft

drive, connect, arrive... Having established a strong standing in the aftermarket, NNG Kft is making the bold move of moving into OEM supplying. Jim Nardulli, Senior Vice President,Americas and Global Telematics at NNG Kft, discusses the business prospects of OEMs in the developing telematics world

Could you just outline where NNG is at the moment in the automotive sphere? I’ll try and boil it down.We’re a full-service software house with massive experience in GPS navigation.We’ve shipped close to 15 million units. More interestingly, we do complete end-to-end delivery of content and services. By that, I mean we have a fully deployed ecosystem aggregating content and services from several hundred providers all around the world.We compile that content and services and deliver them into a flexible commercial environment directly into the embedded software in the car, which we also control.That’s a link that people don’t appreciate yet. Lots of folks are trying to build that out.We’ve been doing it for three years now and we have over 1.3 million registered users.We saw early on that it’s one thing to find content and services but it’s another thing to be able to go out and actually deliver those all the way. Not just stop at some point.We handle the commercial side on both ends – managing contracts around the world at the wholesale level and we manage the e-commerce on the consumer level on the delivery.That’s one of the main points of our company that often gets overlooked. All of this is done on a white label basis - we do it for some of the largest brands on earth.

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Having established a strong position in the aftermarket you’re transitioning your business more towards the OEM side. How far has that evolved to date and what are the growth prospects outside of North America? We saw the train coming. It didn’t take a genius to look around three years ago and say this PND business is going to change.We looked at the way the market was consolidating, the way that the vertically integrated players like Garmin and TomTom were eating the market and dropping prices to gain share. So we understood the pressures that were coming. While we still see growth in the emerging markets around the world for PND, we focused our company three years ago on automotive line fit.We did that by targeting tier one providers.There’s a reason we did that. First of all, you have to awfully big to be a tier one and handle the interaction with the automotive brands because of their massive requirements. More importantly, we saw a competitive issue coming up for the tier ones and I really want to get into that later because I think that’s a major driving force in our industry right now. So we targeted that level three years ago and that was our main job - to go out and figure out how to get us into that business.We were reasonably successful - we have commitments under contract now for over 8 million units ranging from Ford cars in Australia and New Zealand, to the Toyota Camry in North America and Europe and the Subaru Impreza in North America.We have our software going into Renault cars on their new low-cost platform. So we were fairly successful in jumping into that business - in partnership with the tier ones. Now, on the services side, interestingly, we’ve maintained our direct-to-OEM relationships providing on-line services for these units - map updates which morph into subscriptions for traffic, speed camera data etc.That’s because we’re one of the only ones with this end-to-end platform that we built.We’ve been very successful, I think, but it’s been a heck of a lot of work.We see nothing but growth over the next five years - two model year cycles, CY2013 onto CY2015 and even CY2016. CY2015 is already close to set, so we can see how it’s going.We see this as the major growth area for our company.We’ve spent considerable resources in the last five years, learning how to deploy location-based services (LBS) into and within our software stack.

Next, we expand to the broader infotainment systems of the car so that we can take a whole product approach for the user experience - not unlike the philosophy that drives Apple.While we can’t control the manufacturing spec of the hardware, the more of that user experience that we can directly control, the better the user experience is going to be; the more seamless, the more solid.We just think that the traditional system integrator approach leads to really lumpy products that don’t give a great experience.You end up with a user manual for the infotainment system that’s longer than that for the car itself. And that’s not going to work. Apple has taught the world that it’s best to control as much of the user experience as possible.That’s our focus and we think that will delight consumers at the end of the day.That’s basically our simple approach to that. I think automotive OEMs are in the midst of a rapidly changing panorama around them. It’s not as if technology has had some kind of radical breakthrough; it’s more about evolving consumer expectations of what the car offers the intersection between the geospatial component and the wide array of consumeroriented applications including social media and the like. All of those have a geospatial component because it’s about ’where?’. And you can’t answer the ‘where’ without the map data being underneath.

Jim Nardulli

Are the OEMs really stumbling about in a dark room in all this? I don’t think they’re really stumbling about.The way I look at it is they have a really tough road to travel. In my mind they’re caught between the customer that responds to high performance, sportiness, radical new technology - and that’s what sells cars, right? When you or I go and buy a car we don’t respond to an ad that says this is the slowest accelerating, poorest cornering, safest car in the world because it takes control for you and assumes you’re an idiot driver.You and I wouldn’t buy a car based on that scenario. Most car buyers I know buy a car based on aspirations. Look at the horsepower war that’s going on in the automotive industry now, it’s crazy. I think the OEMs are caught between the need to have cars that have this radical technology, performance and sportiness and an increasingly pesky regulatory climate where there are people in very serious positions in government advocating reductions in speed limits, limits on the use of technology in the car, autonomous control of essential vehicle dynamics etc. All of 55

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these are aimed at safety. I know a tension has always existed but I see it deepening right now and escalating, especially in the US. I see that as a major issue for the OEMs: to try and keep up with the dual role of dealing with these regulatory and safety issues and satisfying the car buyers wants. At the end of the day they’ve got to sell cars. The argument we hear more is that consumers, particularly younger consumers, are looking increasingly at features such as connectivity rather than performance features, which I guess is a further challenge for the OEMs? There was a study that suggested people would rather do without a car than connectivity. I’d say we should be careful not to read too much into that. If that were true, there wouldn’t be a market for Jaguar cars, 600hp Chevrolet Camaros etc.These are mainstream cars and are going to sell a lot. People that aspire to a car like the Camaro and can’t afford it will buy a stepped-down version. So they can still look like they have it. It’s very interesting how the psychology works. People react to things in the same way whether it’s a car or a restaurant. It’s consumerism. People will go to a restaurant that advertises heart-healthy food and they’ll order the fettuccine alfredo.That’s how people are we should be careful how we review some of these studies. When you spoke at the Automotive Megatrends USA 2012 conference in Detroit you were emphasising the importance of the ‘what’ compared with the ‘how’, but not many people seem to want to discuss that. I call this the tyranny of the engineers.We’ve done some projects integrating the smartphone into the car with the Pioneer product in Europe and so forth. Our software stack is built on a one technology principle - we port that to all the major operating systems.We’ve the same code base for everything, which makes us a logical choice for the smartphone integration. But I don’t see this as an issue that’s about technology. I see the fundamental issue to be what I call the complexity problem. I honestly believe consumers have lost all tolerance for complexity. If the industry can achieve a situation where the user experience is ‘it just works’, then the smartphone integration story will be successful.

With the tendency towards Cloud-residency of content apps, does it really matter? If Steve Jobs was right and i-Cloud is where we’re headed and I think he was - then who cares if you’re integrating the smartphone, because all your stuff is on the Cloud. It’s just easier to have a CPU and a SIM card or some kind of cellular radio in the car. And there’s another reason to think about this. Consider the wireless operators.Their main mission in life, as the world approaches an equilibrium or saturation of mobile devices into the population, is to increase non-messaging data-side revenue. If you read their annual reports, you’ll find it in every one of them. It’s the wireless guys’ mission to ship more SIM cards for data only.The voice traffic is already killing them.We can outfit a car cheaply with a SIM card in a 3G radio that’s non-voice.We can enable, for a very low cost per month, quite a lot of stuff. Because you don’t need big fat bandwidth for in-the-car use. You just don’t. Someone once taught me ’follow the money.’ If the wireless operators have a significant need to get more of these M2M SIM cards out there then that’s what’s going to happen, because they’re going to handle the pricing accordingly. They’re going to resist tethering and personal HotSpots, and the like, if it is in their financial interest to do so. So if we can make it more simple as a user experience, plus make it affordable, plus keep the wireless operators happy then that’s how it’s going to go. Hacking smartphone apps to the in-dash display is pretty brain dead really. An app designed for use on smartphone is antithetical to the in-car use case. Jumping through hoops to solve that problem is the result of leading with the how instead of the what. I see this all the time when developers and engineers dream up slideware and somehow it becomes corporate mantra. Nokia’s mirrorlink is a good example.

I think the point you were making at the conference was that there is a danger that no-one, at least the traditional auto players, makes any money out of all this and that there’s a need to define a business model. OK, let’s look at that for a minute.You have to look at it in terms of the whole value chain.Tier one players face an evolving, and I think a fundamentally shifting, competitive landscape. Companies such as Nokia, Garmin and TomTom need to find growth outside the PND business. Everybody knows that.They have hardware

manufacturing expertise, they provide an integrated whole product and in the case of Nokia and TomTom that even extends to the map data. So from a competitive standpoint, this ought to provide something for the legacy tier one guys to really watch and think about. By definition, location-aware apps and services have a geospatial or map foundation and that brings Google into the picture as well now. While they have no hardware savvy, remember they just bought Motorola. As dysfunctional as we all know Motorola had become, they remain a prestigious, capable hardware company - they are a hardware powerhouse with loads of experience. In a strange way it would be kind of an ironic twist if, through the acquisition by Google, Motorola once again fulfilled on the vision that gave the company its name. It got its name from the Galvins, who decided they wanted to put a victrola (radio) in every motor car.The Galvin family, who founded Motorola, decided it was a cool idea to do that and then combined the two words, motorcar and victrola, to form the new company name.That was the birth of Motorola. Could it be that Google made that acquisition in part because they knew they were going to need hardware expertise to become a tier one player in the automotive business?

trying to build.They see it as a platform war and they see players that don’t have all the assets as kind of also-rans. Nokia has the software for nav, they have the location based services integration, they have the developer community. Now they’re with Windows.They have the hardware expertise for sure.They can go into any OEM and basically be massively competitive against anyone else because they can discount the map thing.That’s the 800lb gorilla that nobody’s publicly talking about even if they’re thinking about it.

The only way to make telematics widespread is to understand that at the end of the day the consumer doesn’t pay. In most cases you’re not going to pay good money in order to find information about where to spend your money. That’s the mission of advertising. I just think that the ‘how’ guys have been in the drivers’ seat way too long and it’s time now to get serious about the actual business part and make something sensible out of this industry.

So you believe that’s a threat to the traditional tier ones? Hell yes. Put yourself in the position of the CEO of a tier one.You are being outflanked because you’re up against an army that has weapons that you don’t have.There’s a reason Garmin hired a guy from Harman and opened an office in Farmington Hills - it’s not just fun and games.

Do you think that’s going to happen? They’ll say no, that Nardulli is crazy, but five years from now I honestly think that the scenario will be that a player like Google will be able to be so massively competitive that the tier ones won’t be able to compete because they [Google] have the whole stack.They have the map data, the apps and software and services and if they add the hardware part …. It becomes a horizontal attack, which is massively expensive to repel. I think you said in your speech that they regarded the centre stack as their realm in the future. They do and it’s only logical because the thing that Google thrives on is consumer interaction. People spend hours a day in their cars. I honestly believe they’ll do that. I think it was a genius acquisition if they go that route. In my view, and I don’t have any inside information, this is just my analysis, I think Nokia thinks that as well. I think Nokia sees their ability to save their company in the location and commerce division that they created.That includes all the same assets that Google has, except for the advertising platform that Nokia is feverishly 57

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