Wireless network evolution

Cloud connection

Mobile device integration

Navigation

The connected vehicle issue

Embedded solutions

Software and apps

megatrendsIssue 1: July 2012

AUTOMOTIVE

M A G A Z I N E

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Although connectivity has been of interest to theautomotive industry for some time, it is only inthe last few years that the concept has gained realmomentum.This has been driven by events in theconsumer electronics industry and the growingdesire of car users to remain ‘networked’ andinteractive with important elements of their dailylifestyle, whether they be professional or personal.

In an industry typically characterised byrelatively long development and modelcycles, automotive OEMs and suppliers have

been challenged to speed up thinking and toanticipate and cater for trends where progressand innovation is measured in weeks andmonths rather than years.The growingimportance of the IT industry and the arrivalof new players into the automotive supplychain has added an additional dimension towhat has become a dynamic landscape, theprecise contours of which continue to evolveat a rapid pace.

This connectivity issue of AutomotiveMegatrends focuses on aspects of this trendtowards greater connectivity and draws on anumber of interviews with key stakeholderswho are now actively involved in driving thefuture of the subject and defining theboundaries of its growth.

It is clear at this point that, despite anincreasingly robust technological infrastructure,no single, well-defined business model prevails.Rather, a set of ‘solutions’ has evolved forindividual players striving to stay ahead ofconsumer aspirations while simultaneouslysearching for both competitive advantage and acommercially-viable answer (i.e. revenuestreams) to the challenges being presented.

It is unclear which of these solutions willdominate in the longer term.What is clear isthat vehicle owners, drivers and other users,keen to remain networked in the car -described by some as the last frontier for theinternet - 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 withthe business or social world.

As outlined in a number of the interviews, thechallenges to the traditional automotive valuechain, where roles have been clearly defined formany years, cannot be over-estimated.The valuechain appears, at least in the context ofconnectivity, to be evolving into a valuenetwork, where former boundaries betweenplayers and their respective roles are becomingat best fuzzy and at worst non-existent, formingan open ecosystem driven by software, ratherthan hardware, experts. Promising new strategicpartnerships encompassing traditional and newplayers have already been formed and furthersimilar developments, in what is a very dynamicand fluid environment, seem assured.

It is also clear that the overall safety of newconnectivity solutions, particularly in the HMIfield, is increasingly exercising the minds oflegislators keen to ensure that road safety is notcompromised in the rush to remain networkedwhile driving. Fortunately, the AutomotiveIndustry has a long history of mutual co-operation on a host of safety issues withnational legislative bodies and there must besome optimism that the real issue of driverdistraction can be tackled successfully withoutthe heavy hand of legislation resulting indisharmony.

The following features thus present a flavour ofhow a number of major players see automotiveconnectivity evolving and how the challengesdriven by this evolution are being confronted.

Contents

Introduction 3

Wolfgang Bernhart 6&Thomas SchlickRoland Berger

Helmut Matschi 12Interior DivisonContinental

Jim Buczkowski 20Electrical & Electronics SystemsFord Research & Innovation

Nick Pudar 30Planning and Business DevelopmentOnStar

Ralf Lamberti 38Telematics, Infotainment and CabinElectrics/ElectronicsDaimler AG

Rick Kreifeldt 42Research & InnovationHarman International

Mikael Gustavsson 48Connectivity HubVolvo Cars

Jim Nardulli 54Americas & Global TelematicsNNG Kft

megatrendsAUTOMOTIVE

M A G A Z I N E

Editor's welcome

Wireless network evolution

Cloud connection

Mobile device integration

Navigation

The connected vehicle issue

Embedded solutions

Software and apps

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54

Automotive Megatrends magazineISSN 2047-9840

Publisher:AutomotiveWorld Ltd1-3Washington BuildingsStanwell Road, Penarth CF64 2AD, UK

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Chief Executive:Gareth Davies

Editor:ColinWhitbread

Analyst:Martin Kahl

Sub-Editor:Ruth Dawson

Production Manager:Michael Franklin

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John Cumpstonjohn.cumpston@automotiveworld.com+44(0)2920 709 348

Copyright AutomotiveWorld Ltd 2012

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The connectivitybreakthrough

As the last millennium drew to a close,the automotive industry was investingheavily in systems to connect vehicles

with the outside world. One of the mainmotivations for introducing "telematics" wasto enhance mobility.The driver could be toldin real time about road accidents and trafficjams. But there was little to show for all thehype.Various factors prevented the initialadvance of telematics. For one thing, thetechnology was simply too expensive at thattime and networks were not available in allareas. Moreover, the industry could not find aviable business model.And on the demandside, customers were not yet ready toembrace the new technology. Car buyersbalked at the additional costs.What’s more,the IT sector was struggling with an economicdownturn and unwilling to invest long-term intelematics.

How things have changed! Almost every activityin today's world is networked in some way.Smartphones enable us to live online.We canbe connected anywhere at any time.And theGoogles and Facebooks of the web havecreated new and successful business modelsrooted in the value of data.The path to fullvehicle connectivity is now wide open.

Connectivity is not a new theme for the automotiveindustry. Back in the late 1990s, everyone was talkingabout "telematics". Automotive engineers were busyworking on ways of connecting cars and drivers withthe world around them – bringing togethertelecommunication and informatics. But there was littleto show for all the new visions. Before long, vehiclemanufacturers had largely pulled out of vehicleconnectivity.Yet more recently, consumers have come toappreciate the power of being online while mobile. Soour cars can be no exception.This is why technologiesand business models that initially failed are once againhigh on the automotive agenda.This time round,however, it is players in the IT sector who are drivingfull connectivity rather than the automotive engineers.New players are redefining the boundaries of the car asthe value chain morphs into a value network.With novelbusiness models emerging, automotive OEMs andsuppliers face a whole new set of challenges.

connectingthecarInterview:

Wolfgang BernhartandThomas SchlickPartners at Roland BergerStrategy Consultants

New technologies commercially available such as LTE willenable the breakthrough of connected vehicle solutions

Limiting factors in the past

• Lack of technological maturity• Standards• Mobile/ wireless coverage andbandwidth

• Lack of applications (software)• Existing applications werestandalone or webpage based

• No precedent success stories inother areas

• Lack of investment appetite• Most investments anddevelopment efforts wherehalted for some years at theinternet burst of early 2000

Drivers for breakthrough now

• Existing technology base• Increased bandwidth100mbit/s -1Gbit/s

• High mobility communication(cars, trains, …) enabled

• Cloud computing/ mobile datastandards

• Wide applications portfolio• for the automotiveindustry/market

• for mobile platforms• for different platformsintegration

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

• Datamining able to access andprocess large databases

Drivers that support the development of connectivity

2000

Wifi

iPod

Wimax

3G

iPhone

Cloudcomputing

iPad

2010

Locationbased serv

LTE (4G)

2015

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Vehicle connectivity:the key driversWith the right technological framework now inplace, vehicle connectivity is set to grow veryrapidly.And the pull of growing customerdemand makes it inevitable. Specifically, we haveidentified six key factors driving car connectivity:

1. Policies and regulationsAn enabling environment at national andinternational level is encouraging vehicleconnectivity initiatives. Plans to upgrade vehiclesafety, for instance, include the introduction ofthe automatic eCall service in all new cars bythe end of 2014.And Secure Intelligent Mobility(SIM-TD) and other research programmes areadvancing car-to-X communication, which willgive drivers real-time warnings of hazards onthe road ahead or traffic disruptions.

2.CustomersMore and more drivers now expect fullconnectivity.They want to be networked 24/7from any location. Indeed, smartphone use atthe wheel shows how many are prepared totake risks and break the law in order to keep intouch. Since this is particularly important foryounger drivers, connectivity will undoubtedlybe a major selling point in automobilemarketing going forward.

3.TechnologiesThe latest data gathering, processing andrecording technologies enable unlimited carconnectivity.Thanks to cloud computing, hugeamounts of data can be handled centrally. L…T… E… (LTE) technology offers high-speeddata transmission and ensures safe, stableconnections between a vehicle and the widerenvironment. LTE systems are planned in somecountries and already being deployed in others.

4. E-mobilityElectromobility also needs greater connectivity.In particular, e-car drivers must know where thenext charging point is when they are on theroad.They also want to book themselves in andpay for charging online.

5.Mobility solutionsThe future holds a plethora of novel mobilityarrangements and user options across alltransport modes. Some ideas are aboutflexibility, others about green choices. Smartsystems for car sharing or multimodal traveldemand that users and their vehicles be fullyinterconnected.

6.Unlocking value in electronic dataGoing forward, the automotive sector willincreasingly adopt business models based ondata recording, processing and evaluation. In our

networked world – with its Googles andFacebooks – the commercial potential ofnetworks lies in the users.The consumer is botha provider and consumer of data.As valuabledata is generated, services can be paid out ofrevenue streams. So drivers may not have topay anything if companies exploiting customerdata can offer end-users free basic in-vehicleconnectivity, possibly with chargeable add-ons.

Connectivity: global with localdifferencesFew now question the shift taking place; vehicleconnectivity will one day be the internationalnorm. But the pace of change and the featuresfirst introduced will vary from country tocountry. Connected vehicles will initially breakinto markets with the highest level oftechnological development.While LTE is alreadybeing rolled out in the US, this type oftechnology is only now being fitted inautomobiles on EU roads. One key aspect ofconnectivity is the "car-to-X" communicationdesigned to enhance vehicle safety. In this field,Russia has plans to use its own satellite systemfor eCalls and tracking stolen vehicles.

Vehicle connectivity has already becomeavailable in certain markets, especially for cars inthe premium segment.There are still somequestion marks concerning the viability of

business models, however. Over six million usershave already subscribed to OnStar in theUnited States as a safety and assistance solution.Europe has so far had a stronger focus on wideraccess to information and entertainmentservices, but with help features for anemergency. Japan and Korea are definitely thetrendsetters: vehicle connectivity systems arehighly successful and include added-valueservices for intelligent traffic management.

The ecosystem forconnectivityVehicle connectivity is widening the boundariesof the current ecosystem.The ecosystemgenerating the necessary technologies atpresent will open up and bring in new groundrules, new players and fresh business models.

The current ecosystem has clear roles andtraditional processes. Basically, automotivesuppliers develop and deliver both hardwareand software to the OEM in a context of closecooperation.Value is added along this chain. Infuture, the ecosystem will be open. Dataexchange and IT innovations will explode thesystem boundaries and turn the value chain intoa value network.As new players push into themarket, novel business models will emerge, thistime based on data. But the new system willbring both opportunities and risks. Players in anopen ecosystem will not care about the oldrules.They will leverage their innovations andbusiness models to attack the established andclosed ecosystem, benefitting from the shift ofvalue from hardware to software.

Connecting vehiclesto a wider systemVehicles will be connected to their externalenvironment at four levels: data communication,multimedia hardware, communication interfacesand added-value applications.

Providers of connected mobility solutions mustget their business model right.They must askthemselves not what services customers arewilling to pay for, but who will buy what data.Tostart with, however, there must be clarity aboutthe kind of data that may be sold to thirdparties.And they need to know the long-termvalue of that data.They must also look at howthe data originates and whether the dominantmarket players already have this data or controlaccess to it.

Take, for instance, navigation services.The addedvalue clearly goes to drivers. But car drivershave become less and less willing to pay fornavigation data, since they can get somethingsimilar for free from Google Maps or otherapps.And Google, for example, can offeradditional benefits to business users by enablingthem to produce their own maps or linkinginformation from other services. So businesses

Trends Europe USA Japan & Korea China

Technology (LTE) Available in somecountries, being rolled out

LTE networks in urbanareas, being rolled out inless dense areas

Technology leaders Adoption of LTE expected

Regulation eCall recommendationadoption for 2015

Questions on dataprotection have to beanswered, especially onOEM level; want to limitaccidents caused by usingmobile devices in car

ITS system - supportexport of system intoAsian developing countries(e.g. India, Malaysia)

Telematic as national levelprogramEncourage ETC, GPS,…Special gov. incentives

Customer Entertainment on boardfor some high-end brands

Entertainment and mobileinternet is one of thebiggest traffic accidentcauses

Technology savvyPreference for realistic 3D- illustrations

EntertainmentWork/informationTraffic information

E-mobility OEMs and infrastructureproviders enforcing EVs

Over 17,000 ChevroletVolt/Nissan Leaf sold in2011 - strongnational/regional incentives

Toyota and Honda areleaders in hybridtechnology; rollout of xEVsexpected before 2014

262K EV and 385K PHEVin China 201525 pilot cities

Mobility solution Development of mobilitysolutions especially car-sharing services in largecities

Highest car sharingpenetration ratePushing the EV topic,especially for cities andurban areas

Trend to smaller and smartvehicles for overcrowdedcitiesDemotorisation trend

Motorisation trend

The idea of the connected vehicle is driving all major automotive marketsand Japan and Korea are leading the way

International trends in the connected vehicle sector – Main differences

As opposed to the current vehicle ecosystem, the connectedvehicle one will be open and new business models arerequired for this arena

OEM Customer

Supplier

Current system boundaries

OEM Customer

Supplier

Future system boundaries

PoliticsCloudservices

Energysuppliers

Communicationsproviders

Dataproviders

Mobilityservices

Closed Ecosystem 2012 Open Ecosystem 2020

• Clearly defined tasks andresponsibilities

• Clear processes and structures• Long established business

models and rules

• New players - closer interaction of players fromdifferent industries

• New business models and revenue streams

connectingthecar

“Vehicles will be connectedto their externalenvironment at four levels:data communication,multimedia hardware,communication interfacesand added-valueapplications.”

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can pay for the service through their advertisingand allow Google or others to give end-users abasic map service for free.This trend will sinkthe existing business model employed bynavigation suppliers.An option for OEMs is tosafeguard their business by avoiding the at-risksimple systems and offering high-valuepreinstalled navigation systems offering greatersophistication.

Opportunities and risksCompanies should be thinking in terms ofscenarios.This is the best path to assessing theopportunities and risks associated withconnected mobility.Take the bleak scenario ofnon-safety critical functions leaving the vehicleentirely due to high-speed data transfercapabilities. Billions in component sales are atstake here.

Another plausible scenario is for internetcompanies like Google and Facebook to beginsubsidising the hardware used to access theirservices, following the telecom suppliers'current model of subsidised smartphones.Thiswould obviously impact heavily on hardwaresuppliers. On the other hand, in-car internetaccess also presents suppliers with newbusiness opportunities.

Big potential for in-carInternet and eCallWith high-speed networks like LTE widelyavailable in a number of urban regions acrossAmerica, in-car internet services currently have

the biggest growth potential in the UnitedStates. In-car internet solutions could be foundin 30% of the new US automobile fleet by 2015.Europe will take somewhat longer as thenecessary technology gradually establishes itselfin future vehicle generations. One in ten newvehicles is expected to have internet access by2015.

The United States is also set to be the majorgrowth market for vehicle tracking and eCall.Solutions such as GM's OnStar, Ford Sync andToyota's GBook already generate considerablesales, while Chrysler is also expected to launchnew technology.Analysts expect penetration toreach over 60% by 2015.There will also be aneCall surge in Europe, where new safetylegislation is anticipated and insurers are offeringnovel service and pricing arrangements.

In-vehicle wireless connection for smartphonesand tablets is also bound to expand rapidly.Most Europeans already want Bluetoothfunctionalities in new cars, and this preferencehas extended to the volume market. In the US,Volkswagen offers connectivity via Bluetooth asstandard in a number of models, including Eos,Passat,Tiguan and Golf. And uptake is alsoexpected to accelerate in countries such asChina, where the use of cell phones at thewheel is forbidden. Businesses are also aligningthemselves to a potentially strong aftermarketfrom 2015 for audio streaming (12 millionunits), hands-free calling (17 million), vehicletracking and eCall (6 million) and vehicles withintegrated Internet access (7 million).

Myths about automotiveappsOEMs are now very interested in automotiveapplications. But the vehicle manufacturers willhave to interface closely with both customersand developers if these apps are to succeed.Open innovation is the way forward. In alliancewithT-Systems, BMW and Continental havecollaborated to launch innovation competitionsaimed at finding great apps that will work.Thegoal is to develop many thousands of apps thatcan be rolled out in small numbers, selling forless than €10 each within an appropriatebusiness model.

A slightly different business model is used forApple's iTunes store and the open Androidsystem, but it is equally promising.Withindependent developers working in theirthousands on all sorts of apps, the aim is to sellmillions of them for less than €5 each.The ideais that the sheer volume on offer makes theplatform a must for customers and highlyattractive for independent developers.

These are exciting times and automotive OEMsand their suppliers will ignore thesedevelopments in mobility and connectivity attheir peril.They must now think outside the boxand enter into new alliances to come up withwinning solutions. Part of this is a question ofenvisaging the future. Scenarios will beimportant in spotting opportunities andidentifying risks.And for automotive companies,future growth will also depend on their abilityto build innovative strategic partnerships.

Runtime environment(HW / SW)

Mobile devices Aftermarket devices Factory installed devices

APP-lications •Vehicle and driverguidance/assistance data•Use of external data/information for driver•Use of driver data/information for externalsystems/services

Personalised cloud data(not vehicle related)

•Vehicle andenvironment/drivingassistance data•Use of external data/information for vehicle•Use of vehicle data/information for externalsystems/services

Vehicle health status data(not driver related)

Billing service

HMI / MMI(incl. "translation")

Human input Human output Measuring elements(Sensors)

Controls (Actuators)

Communication /"Connection"(HW /SW)

PANData transfer with mobile devices:Wifi, Bluetooth

WANData transfer outside vehicle:LTE, UMTS

LANData transfer inside vehicle:CAN, MOST, TCP/IP

A ‘systems view’ needs to be applied - different layers become relevant

connectingthecar

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

putting as much information in front of drivers as possible. This helps them

to focus within a 20-degree �eld 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

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

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Interview:

Helmut MatschiMember of the Executive Board, Interior Division, Continental

How can you combine life, technology and low costs into auser-friendly interface? Continental thinks it has the answerwith its newAutoLinQ system.Helmut Matschi,Member of theExecutive Board, Interior Division at Continental discussestechnological innovation withAutomotiveWorld

Connectivity is a broad ranging subjectand Continental is clearly active in anumber of areas, but focusing primarilyon infotainment, could you first sharewith us some thoughts on currentconnectivity trends and the interfacebetween the auto and consumerelectronics industry.

When we look at what’s happening in theindustry we see a change in the trend towardsperceived intelligence in the car.This issomething that we see very concretely and wesee the way the car is connected will determineif a new car model is fascinating for youngerbuyers. How this can be reached is what we callthe secret of success for us. If it is simple andintuitive so that things appear to work almostby magic, then this will drive things forward.Thistrend towards perceived intelligence issomething that is very important for us as wesee demand coming not just in high endvehicles but through all other car classes as well.

It certainly looks as if there are a coupleof key trends at work here and it wouldbe interesting to know which one youthink is the most important. It seems tobe that this is being driven by consumerdemand and particularly consumerdemand from the younger age groupbut at the same time, vehiclemanufacturers very much regard this asa product differentiation focus as well.They feel it gives them a competitiveadvantage to have the mostsophisticated system in their vehicles.Am I right in thinking that they are thetwo key drivers for this? Maybe theavailability of technology is anotherfactor?

What we see is that there are different kinds ofsolutions depending on what the objective is,and this is also coming back to the question youasked before.The most obvious way to achieveconnectivity in the car is to use an existingsmartphone device that a user already has, andto use the terminal mode (MirrorLink) interface.That way you have your mobile device and youmirror it into the vehicle - you use the HMIelements in the car but the full functionality isrunning on the mobile device.When we lookedat this at Conti, we developed with Nokia aterminal mode system and demonstrated it bydirectional link in a French test car based on atouch screen version. So this is the terminalmode way and is the easiest way to do it.

Then you can look for a next higher level andthis would be when you might only use yourphone as a connection device.Then you do thecomplete HMI and operate features directly inthe vehicle.What is the advantage in that? Itmeans that the phone is the connection deviceand then you don’t need a SIM card in yourvehicle because you are using the internetconnectivity directly from the phone but thatyou can also define everything in the vehicledirectly.This is what we in Continental call theAutoLinQ solution, which we are doing withanother strong partner, in this case DeutscheTelecom.With that close partnership, weunderline our proximity to the consumerelectronics business.We have launched, withDeutscheTelecom as a back end provider, aninternet connection via speech in a Chinesevehicle.This is really showing our best practiceexample of how we are going forward towardsthis vision of “always on”.At one level higheragain, someone can also use a completetelematics unit, something that has been aroundfor a long time with services such as GM’s

OnStar. I think more than 20 million such unitsare already on the road and therefore, we havegained a lot of experience there.These threelevels are all about connectivity.Adding on allthe other features of infotainment gives acomplete connected head unit as exists inembedded systems in higher end vehicles.This isthe full range of connectivity that can providean answer to the need for differentiatedproducts for OEMs.

With the MirrorLink system that youwere outlining, do you think that’s justan interim phase and then things willmove on?Are there any active systemsavailable at the moment that use thesystem? I know one or twomanufacturers are working on that, butare there any applications at themoment?

The MirrorLink system is not in seriesproduction

Do you think that will go into seriesproduction though or will that be astage that’s missed and we’ll just goonto the next one?

There is the consumer/automotive group CE4A(Consumer Electronics for Automotive)working on it.This is the group which isdeveloping it and in the end it will be for theOEMs to decide what to do with it. It would besimple to do it but we focus our work a lot inwhat we call this magic human machineinterface. Here we believe that the secret ofsuccess is when it is most simple, most intuitiveand working as if by magic.The MirrorLink is thesolution which is technically the easiest one butthe question is whether it is also the simplestand the most intuitive one.That’s open todebate.When going forward to the secondlevel, what we call AutoLinQ, then we take carethat the driver can focus on his or her primetask, which is driving.We want to ensure thatdrivers are concentrating on driving and do notneed to fiddle around.When you just have the

intelligenceinthecar

Haptic feedback controls

Helm

utMat

schi

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mirror of the mobile device in the vehicle, thencertainly you are used to that from your mobiledevice, but the question remains whether that isnecessarily already a perfect automotive HMI.This is the reason why Continental goes forAutoLinQ.

That’s interesting, we’ve spoken to oneor two OEMs and they seem to suggestthat the best system is one that doesactually replicate the front of yoursmart phone on the dashboard becauseyou’re used to the layout of all your appsand everything else but maybe that’s notthe most efficient way of looking at it.Asfar as yourAutoLinQ system isconcerned, could you just update us asto how that system has developed todate?Where are you in terms ofcommercialisation?

As you know we showed it at the 2011 CES inLasVegas and we also launched it last year, in2011, for the first time with a Chinese OEM.You can see from this that this is really veryglobal - it hasn’t been launched for the first timein Europe or in the US, but in China.We do theinternet connection via speech and we believethis form of HMI is preferable when driving as itavoids fiddling around on your mobile device,something that we definitely cannotrecommend.

So you believe that voice control isreally the way forward on all of this?That also seems to be the generalconsensus.

Voice control is one solution but you need todifferentiate between different drivingconditions, because there is no HMI which is

best per se. It has to be the best possiblesolution for the conditions in which you aredriving.Whilst driving, it’s best to keep yourhands on the wheel and your eyes on the road,but whilst stationary it can be that othercommands, e.g. via haptic inputs, can be anadvantage. Depending on the driving situationthis is exactly what we are providing.At the2012 CES show we highlighted the work wehave done with the integration of hapticfeedback into touch-sensitive surfaces. By thismeans, the driver is able to sense directlywhether he or she has actually activated a‘touch element’ after touching it.We have thefirst series orders for this technology.

You mentioned one or who of thepartners that you’ve been working with,like DeutscheTelecom and Nokia, butpresumably you also work with otherspecialists, for example with supplierssuch as Nuance for the voicerecognition/control system?

You mentioned one very well known specialistthere and of course, we have deep relationshipswith these kinds of companies because we viewourselves as being in the role of a systemsintegrator. So this means that with the manyactivities which are coming up, what we arealways looking for are those companies outthere who already can do those things the best.So when speech is a key element, then we willgo to companies like Nuance and worktogether with them to integrate their softwaresolutions into the product in order to have thissystem integration in place.This is how weunderstand our roles.There are differentdemands in the connectivity area and bringingtogether core partners who are already in therelevant business is always the best way torealise cost effective and compelling solutions.

As a systems integrator, what do youbring to the table? Obviously yourintegration expertise is there but interms of physical hardware andsoftware,what does Continentalactually contribute?

First, we are bringing the product hardware andsecond, certain portions of the software andpreparation of the overall architecture.Weprovide the electric and electronic architecturein order to have, at the end, a whole integratedproduct.We have to be pretty flexible.Why?Because we have this large product portfolio -it’s not only the infotainment head unit we aredelivering - therefore the relevant softwareavailable for the different products.This helps ussupport the car manufacturers and really helpthem develop attractive, cost efficient and nicecars.

There is a traditional interface betweensuppliers and OEMs that dictates whatthey want to do themselves in-houseand what they allow their suppliers todo, but how is that shaping up at themoment in this area?At the momentthere seem to be one or two companies,like Ford for example, that really wantto retain a lot of this in-house,whereasother OEMs probably seem more willingto hand over more of the responsibilityfor being a systems integrator tosuppliers like yourselves.How is thelandscape looking at the moment?

Traditionally there are defined roles from theOEM through the supply chain - from the tierone, to tier two, to tier three suppliers, but thatcan change and evolve, especially in this area,because we do not only have pure embeddedproducts but also this link to the outside world.Therefore there are many different elementsbeing put on the table and what we see alwaysis, of course, different strategies being tried. But

you always realise you need someone whoknows automotive requirements very well andConti does.Also someone who knowsconsumer electronics very well and again Contidoes.You also need someone who is on top ofall these fast changes and can embrace andintegrate the lifecycles of the automotive andconsumer industries, which Conti does.Thispositions us in a role which we view as a sweetspot - we feel very comfortable in that arena.One thing that also has to be acknowledged isthat there are several aspects of all this whichare non-differentiating.There are some thingsthat the final user doesn’t get to see, such asoperating systems and drivers which aretherefore non-differentiating, but nonethelessvery important.This is where standards areimportant, otherwise there would be such ahuge amount of R&D necessary to get thevarious things done.This investment in R&Dwould be comparatively higher than we findwith other product areas within automotive andthis is the reason why we push a lot for non-differentiating aspects to be standardised.

Can I just clarify, with yourAutoLinQsystem, does the consumer take asmartphone into the car and use that asthe connection to the outside world?

Exactly.You take the smartphone and then it’sjust connected either through a wired orwireless connection - that is how the link withthe internet is achieved.You can then accessrequired applications like, for example, theweather forecast, stock market information,traffic congestion updates etc. In this case, youconnect through speech, you actually ask for theapplication and information is then downloadedvia the internet.This means that the mobiledevice is working like a modem.AutoLinQ isthe umbrella product name for Continentalwhere we have different solutions from a verybasic embedded solution up to a full scale headunit also providing the AutoLinQ solutionfunctionality we have shown already, forexample with DeutscheTelekom during CEBIT.So there is the road map from the entry systemup to the high end system.

intelligence inthecar

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The potential weak link in this isobviously the link to the internet. I knowyou’ve worked very closely withDeutscheTelekom on this but are you100% certain at the moment that theselinks are robust enough as you travelround, particularly as you mentionedwith the Chinese vehicle? Is theinfrastructure in terms of internetconnection robust enough to be able tosupport this connectivity in the car asyou’re driving along all the time?

We see continuous changes. Users will alwaysseek a more stable and a more high-speedconnection than that available today.With4G/LTE we can already see that this will be thenext level of demand but the human machineinterface and different driving conditions arealso relevant. Driving within cities, especiallywithin mega cities, might need solutionsdifferent to those say, when driving across thecountry.We want to use in the future, all thedifferent possibilities, like a wi-fi connectionwhile we are close to stations or close tohotspots, enabling downloads of information.Driving across the country might not offer thesame connection possibilities as in the city.These preparations for the whole networkneed know-how and experience and this will beour main development work for the future.What we must remember is that there are a lotof radio frequency elements that need to betaken care of - telephoning, GPS, television etc.

We had to look to all these needs and what wedeveloped was an intelligent antenna module.This module combines and receives all thesedifferent frequencies and then transfers themonto a computer base via a wireless or wirednetwork below the roof.Then we haveeverything digitised. So based on this, we bringall these external radio frequencies on a digitalbasis into the vehicle.

There is clearly an important costelement in all this because you’re talkingvery sophisticated technology here. Itmust be a relatively expensive thing toput together and sell to consumers. ButI get the sense that Conti is very keen tomake sure than this is affordabletechnology, so how do you do that? Howdo you keep the cost of this equipmentto a realistic level, particularly if you’reaiming it towards small and compactvehicles, which I guess are the targetgroup for the younger customers whoparticularly value connectivity? I canunderstand how it can be fitted into aBMW 7 Series or anAudiA8 becausecost is probably not so much of an issue,but how do you engineer it in such a waythat you could also get it into the BMW1 Series or theAudiA1 and similarvehicles at reasonable cost?

This is especially where our strategy kicks in,when we say that we inform you well, weconnect and all at lower cost. So we addressalready the ‘we inform you wel’” with the majorhuman machine interface.We address the ’weconnect’ and we are exactly at the third point ofthe strategy - ’all at lower cost’. Remember wetalked about the four different solutions and thefirst two already are kicking in: MirrorLink andAutoLinQ.Why? Because you already have yourmobile device and applications on it, likenavigation, and this is exactly why AutolinQ issuch an attractive scenario - you have thesefeatures already. So it is just the connection intothe vehicle and this is per se the minimumeffort someone can make in order to bring allthese things that are already there together onthe mobile device into the vehicle.And whensomeone is prepared to make some sacrificewith regard to the HMI, then the MirrorLink isby far the cheapest solution.

Legislation can also be important - for exampleconcerning E-call in Russia and Europe.We’veonly talked about infotainment applications butsafety is also an important aspect. E-call hasbeen discussed for a long period of time but inRussia there are discussions to introduce theemergency call system in 2013, even though ithasn’t been decided on in the parliament.Thisrequires vehicles to be installed with a GPSsystem. Once you have that hardware installed,it is exactly the same hardware and

infrastructure that you need for all the otherfunctionalities that we've been discussing, alongwith applications like remote diagnosis andother things.This could also be a developmentwhich boosts connectivity because there wouldalso be a legal demand for it going forward.Once you have it already in those cars whichare produced in, or exported to, Russia then itis not so big a deal to have it in vehicles in othercountries. One thing is also clear today; peopleare already using their mobile devices in thevehicle to meet demands and needs so this is asubject which cannot be neglected.We have tomake sure that this is done in a responsible way.

The E-call system is being looked atacross Europe now isn't it? Hasn't therebeen some sort of implementationtarget suggested for 2015 right acrossEurope, not just Russia?

There are different memorandums ofunderstanding but the memorandum ofunderstanding does not automatically meanbinding.

If we did get the E-call system forexample, across Europe,what you'resaying there is that every car would haveto have hardware which had anembedded modem of some sort in it?

You need to have a very safe solution.Youcannot guarantee that with connection justthrough a smartphone, which you might forgetand leave at home.That’s the reason that withan E-call system you would need an embeddedtelematics unit and once you have that, themain hardware requirements are satisfied.

So we could have a situation in a fewyears time where cars have got anembedded modem/embeddedtelematics systems in them and are alsodriving along with smartphonesconnected to theAutoLinQ system. Ineffect you've got almost a dual system inthe car.

Which also could help for diversity purposesand in that way also fulfil demand for the things

intelligence inthecar

“Driving within cities,especially within megacities, might need solutionsdifferent to those say,when driving across thecountry.”

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we talked about before such as accuracy,constant availability and bandwith.You could usethe various solutions in the best manner.

Can I just go back toAutoLinQ and yourChinese customer. It's a little bitunusual, as you mentioned, to first havea customer in China for a system likethis, rather than a customer in Germany,in Europe or in the US.Could yououtline why a Chinese customer wouldgo for it first and give a perspective as towhen or if you expect to get somecustomers from Europe and the US.When is broader commercialisation ofthis in prospect?

Let us look to the China approach first. China isnot only interested in low-cost solutions butalso in very innovative, high end functionality.This is exactly how these two things are comingtogether. In China things move very fast so it'snot so big a surprise that a Chinese companywas the first. For me that's just a logicalconsequence of all the attributes that we haveright now. Looking forward, what is going onglobally is, as we said, that perceived intelligencein the vehicle is becoming more and moreimportant.And as we also said, it is quite clearthat these kinds of products and solutions willbe there for the future, so it is just a question ofwhen, rather than if, they come to the market.We are seeing a lot of interest and at the 2011Frankfurt motor show we had many, manycustomer meetings and they were all interestedin the solutions Continental was showing. It wasvery open, very transparent, very innovative andvery professional and we have been very muchencouraged and remain convinced that this isthe right way to be going forward.Wecontinued with this at the consumer electronicsshow (CES) in January 2012 and we were thereagain in LasVegas to demonstrate the nextsteps.Year by year we've been able todemonstrate at the CES constantimprovements to solutions and improvedattractiveness.

We have brought in a lot of support to combatdriver distraction.This is the reason why wefocus a lot of resources towards the humanmachine interface – in order to be veryresponsible. How can we do that? Because ofthe fact that for more than 100 years, we'vebeen working on instrument clusters.This issomething that is helping us a lot.

intelligence inthecar

One final question and just to extend alittle further than we have already.Other divisions within Conti haverelevant equipment here and I was justinterested in terms of things such as car-to-car communication, and predictivedriving and so on, how your area ofresponsibility is interfacing on a crossdivisional basis with other parts ofConti?

We have a very strong communications link forinformation management between the divisions.When we look, for example, at powertrain,then we see clearly, especially for hybrid andelectric vehicles, that information managementand user friendliness are additional key factorswhich are vital in determining their success.When we are using a hybrid vehicle weimmediately want to show a range of particularinformation, the battery versus combustionengine, etc. Similarly, when we look to chassisand safety and, for example, zero accidents, thenit is quite clear that within the Contiguardsystem we look at all the aspects of safety.Active safety and advanced driver assistancesystems are using a telematics unit as anadditional sensor to look further ahead than the

first 100 metres in front of the car.We canprovide those links and so that's very interestingfor us. I think it was in early September 2011that we won the ÖkoGlobe award for beingthe most innovative supplier and we got thatfor combining the Electronic Horizon softwareconcept with the Accelerator Force Feedbackpedal.You can see from this combination howthe cross divisional aspects are working and thisis something which we work on a lot withinConti because the cross divisional approachesdo definitely add value - one and one adds tomore than two.Tyre pressure monitoring is another relevantarea.We have developed a sensor for tyrepressure motoring which is not mounted to thewheel rim, it is mounted directly to the tyreitself.With that there is the possibility to see thefootprint with every rotation and by that wehave a direct link to the pressure of the tyre.We can say how much the tyre is already wornand under which driving conditions and whichtemperatures.We can also know whether thetyre’s location has changed on the vehicle orwhether it has been used on more than one.These are things that we at the Interior Divisionwork together on, via information management,with all the other divisions.

Haptic control and black-panel technology Antenna system

“We have brought ina lot of support tocombat driver distraction.“

There is only one division which we have notmentioned so far and that is ContiTech.ContiTech is doing the slush foils for the cockpitand the majority of our products are mountedto this in the cockpit, requiring collaboration.Looking at more innovative things - we can alsoconsider whether outer surfaces can also beused for electrical functionality.That’s whereContiTech and the Interior Division cometogether. So we regard ourselves as thenetworker within Continental.

So it really gives you the potential for acompetitive portfolio of products acrossthe different divisions.

It certainly does, yes.

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vehicleconnectivityLaunched in 2007, Ford’s SYNC was by no means the firstconnectivity system on the scene, but, when this acollaboration with Microsoft was announced, the industry presswas clamouring for attention.Now, five years later,AutomotiveWorld catches up with Jim Buczkowski, Henry FordTechnicalFellow and Director of Electrical and Electronics Systems, FordResearch and Innovation, to discuss Ford’s current andcontinuing vehicle connectivity plans

Could you first of all outline yourdefinition of vehicle connectivity andFord’s strategy based on that definition?

Our strategy refers to the portion that's builtinto vehicles, including smartphones, theconnecting device, and then beamed in -connecting through that device to the cloudand the internet and services, and so on. Our

definition is very broad when it comes toconnectivity and how the vehicle interfaces andconnects with its environment.

Does it embrace safety-related things aswell, such as accident preventionsystems, lane departure warningsystems, rear-view cameras etc?

Some forms of connectivity include safetyrelated systems. For example, some of theadvanced work that we've talked about in ourpublic news releases includes vehicle-to-vehicleand vehicle-to-infrastructure communicationand these services can include safety features,that we would consider part of connectivitytechnologies.Any time the vehicle is connectingelectronically to something external, we refer tothat as part of our connectivity strategy, broughtin devices are one way we connect to theexternal environment.

Maybe we can initially focus on just thein-vehicle connectivity area.One thingI’m quite interested in is getting a bit ofcolour on the background to Ford’sinvolvement in this. I believe SYNC wasintroduced in 2007 in NorthAmericaand some background to itsintroduction would be useful.Presumably it all came together someyears before the launch?

Well, it really begins with people bringing inmusic to their vehicles. In the past, prior to2007, back in the days of eight tracks andcassettes and CDs, brought in meant bringingthose media into the vehicle.They were alsoobviously receiving AM and FM broadcasts andso on too, but in that timeframe, in 2005/2006,

“We asked ourselves howwe could create a betterexperience for folks thatwere bringing these devices,both phone and mediaplayers, into the vehicle.”

Jim

Bucz

kowsk

i

Interview:

Jim BuczkowskiHenry FordTechnical Fellow

and Director of Electricaland Electronics Systems,

Ford Research and Innovation

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we also started to see the emergence ofdigital media - MP3. People could store mediafiles on devices, not only on their computerbut on portable devices like iPods and otherMP3 media players, and so rather than havingto bring cassettes and CDs into the car, theycould bring in a single device, or simply amemory stick containing a lot of music. So wesaw folks wanting to connect thesedevices/media players to the vehicle to beable to enjoy the music and play personalcollections through the audio system in thevehicle.

Likewise on the telephone side, it was clearthat people really found that making phonecalls, staying in contact with theirfriends/family/business acquaintances anddoing business while they're in vehicles wasbecoming very popular as well.That's reallywhere our strategy originated.We askedourselves how we could create a betterexperience for folks that were bringing thesedevices, both phone and media players, intothe vehicle. But those devices are notdesigned to be used in a vehicle, they aredesigned to have your focus of attentionwhile you are making a personal call orselecting a piece of music, so that's whereSYNC really came from. How could weprovide a better kind of user interface andbetter experience that is more appropriate inthe vehicle? Using voice recognition, with thesupport of Microsoft and Nuance to achievethat, that's the real essence of where SYNCcame from.The other thing that wasimportant to us at the time was that weknew that these devices would be rapidlychanging.We were watching the consumer

electronics business very closely and knew itwould continue to change very quickly in thefuture. So therefore, rather than choose onespecific device and dictate that if you want tobe able to use music in the car you've got touse that device, we wanted a platform thatcould interface with not only iPods, but othermusic players as well, as well as simply memorysticks, and apply a platform that could interfacenot only with the phones back then, but alsocould move along with and stay competitivewith the latest phones that are being producedand that seem to come out every six monthsor so. So that really was the essence of whereSYNC came from.The voice recognition isobviously very important for inter-operabilitywith different phones and different mediaplayers, as is being a platform that is built intothe vehicle that interfaces with the brought-indevices, and then further allows a connectionthrough the brought-in device to externalservices.

So it was really a reflection of consumertrends at the time and also, I guess, thecoming together of the consumerelectronics industry and the automotiveindustry?

Yes.

Which is a pretty difficult thing toachieve because of the product lifecycledifferences between the two?

Exactly. In developing it we knew that, obviouslythe consumer electronics business moves very,very quickly and our automotive business,

because of the complexity of our vehicles, takesa little bit more time to develop.We neededsomething that would be able to match thespeed, or at least adapt the speed in the vehicleto the speed of the consumer electronicsbusiness and, therefore SYNC was a platformor interface that allowed this slower cycle timeprocess for automotive development to matchthe faster development time of consumerelectronics.

Has this platform evolved then in thelast few years?

In fact yes. One thing about software andplatforms like this is you can provide upgrades.We added features to it like Emergency 911Assist here in North America.We added aVehicle Health Report.We added a set ofservices calledTraffic Directions and Informationwhich allows you to connect to off-boardservices and get real-time traffic information,weather, sports, news and so on.And then wedid a major upgrade, launched in 2010 calledMyFordTouch in the US here and MyLincolnTouch for Lincoln vehicles, and what we didthere was to take Sync to the next level.Theway it was originally launched was kind of like aperipheral to the radio, it allowed things toconnect into the radio system.We’ve nowbrought SYNC more front and centre to be anentire experience in the vehicle with an eight-inch touch screen, centre stack display and two4.2 inch LCD displays in the instrument cluster.We made it a more immersive experienceinvolving more of the features of the vehiclenavigation and climate control as well as all theaudio sources and the phone sources.

Was there an element here of productdifferentiation as well? Did you see it atthe time as a way to take one stepahead of the competition?

Well, in fact I would say we took a differentstrategy than our competitors because many ofthem had chosen to build a modem into thevehicle, and that involved subscription fees aswell as the problem of technologyobsolescence.We embarked on a strategy thatrelied on the brought-in device, making theassumption that if the brought-in device wasgoing to change with technology we couldcontinue to be compatible with it.We wouldnot have an issue with the fast technology cycletime change with 2.5G/3G/4G and so on forconnectivity 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 thefundamental difference in our strategy - to relyon the consumer's device - and that meant thatSYNC, other than just initially offering it atUS$395, now it is US$295, would incur nofurther monthly costs, unlike competitorproducts. I do want to say that as a result of ourstrategy, we think it has resonated really wellwith customers.They appreciate the fact that itis compatible with their devices. I think the truthis that our devices today, especially our phones,are really a focal point of our lives, carrying a lotof very important information, so relying orusing that as a focal point for connectivityseems to a make a lot of sense now and goingforward as well.

What stage are we at now? Is thesystem compatible with BlackBerry,Android and iPhone devices?

Yes.We continue to work with all of them - allthe carriers as well as all the handsetmanufacturers.As new versions of the phonesare developed, as they upgrade their operatingsystems and so on, we continue to test phones.We have the ability to download upgrades overSyncmyride.com; you can use a memory stick, ifthere is an upgrade required for a particularphone, to upgrade SYNC.

What coverage is there now on the Fordmodel range in NorthAmerica? Is ituniversal and if not when will that beachieved?

We offer SYNC on nearly every vehicle line inNorth America from the Ford Fiesta to theLincoln MKS including our F-series trucks.Weare launching in Europe in 2012 and expandingglobally as well.

It’s a little unusual for important newtechnology to be introduced in NorthAmerica four years ahead of Europe.Why the gap?Was it for technicalreasons or did you just want to provethe system first in NorthAmerica?

Well, I think part of the reason is that theoriginal development work was done here inNorth America working closely with Microsoftand quickly launching it on North Americanmodels. Simultaneously, over the last couple ofyears as part of the One Ford Plan, we havereally globalised Ford into one company.

Prior to that we had different strategies indifferent regions, and so the compatibility wasnot universal across all of them.We launchedour North American product, which had acertain architecture and the Europeanarchitecture was a bit different. So we wereunable to launch products at the same timeusing different architectures.As we've movedmore to global engineering, and to a globalorganisation, our architectures have cometogether globally which makes it much easier tothen launch a common system.

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If the One Ford programme had been inplace a few years earlier, there couldhave been a simultaneous push of SYNCthroughout the US and Europe?

Correct.

Have any details of the launch in Europebeen decided yet in terms of models,countries etc?

We announced at the MobileWorld Congressin Barcelona in late February 2012 that the newB-MAX heralds the European introduction ofSYNC.The B-MAX with SYNC featuresEmergency Assistance as standard, placing a calldirect to emergency services in the event of acrash.We also confirmed that we expect tohave over 3.5 million SYNC-enabled vehicles onroads in Europe by 2015.

What about applications beyond Europeand NorthAmerica? Is that somethingin the pipeline?

Yes. I don't think we have announced specifictiming for South America and Asia, China aswell.What is different, of course, is that we'vegot to make sure we have the languages andnavigation map information to support thoseregions as well.

Do there have to be many region-specific changes made? For example, dohigher speeds in Germany requirespecific navigation system upgrades?

Well, there are some differences in roadsystems and types of connectors, so thenavigation system has to adapt to thosedifferences, but that's not unique to SYNC byany means, it's a navigation-specific requirement.There are some unique features in China, forexample the road system and labelling of roads,buildings and addresses, and so on, but that'strue in Europe as well. So those are morefundamental changes for a navigation system.We’ve launched navigation in all regions of theworld as well so we've had to go through thoseand make the required changes.

You mentioned there the worddistraction.There have obviously beencriticisms of your MyFordTouch systemand other systems as well.Are youcomfortable with this at the moment interms of this possible trade-off betweenwhat is feasible technically and thewhole issue of safety, driver distractionand so on?

Well, a couple of things. First of all, we do a lotof research in this particular area to understanddistraction and what we really need to focusthe driver on. For the most part the researchtells us that we need to keep the driver's eyeson the road and hands on the wheel. Of coursequick glances up and down to mirrors as well asdown to the radio head unit, and other places,are normal as long as we keep those to quickglances.Voice recognition therefore plays anextremely important role.The second thing I'dsay is that people are using these devices; theirphones, their media players and so on, in theirvehicles anyway.We think the best way is to finda better way to use those devices because theyare finding great value in what the devices candeliver.We just have to find a way to help thembe able to use those devices better, and voicerecognition works really well at keeping yourhands on the wheel and your eyes focused onthe road. So we will continue to do research toimprove the system and further reducedistraction. For example, with navigation wehave some features that are blocked while thevehicle is in motion.You cannot manually enterin an address through the touch screen, whilethe vehicle is in motion. However, you can enterin an address using the voice recognition systemwhile the vehicle is in motion.There are anumber of other areas where we feel a task isgoing to take the driver's attention away fromthe road for any extended period of time, andso we make that task unavailable while thevehicle is in motion and, in many cases, providean alternate way using voice recognition.

vehicleconnectivity

B-MAX heralds European launch of SYNC

“We just have to find a wayto help them be able to usethose devices better, andvoice recognition works reallywell at keeping your hands onthe wheel and your eyesfocused on the road.”

You mentioned Microsoft as the obviouskey development partner, but did youalso involve any other suppliers in thedevelopment process?

Sure. From a technology partner point of viewwe've had some very important partners. Forour voice recognition a very important partnerwas Nuance, and they continue to be a veryimportant partner for us going forward.Voicerecognition is very important for this product inorder to reduce driver distraction, and so on,and Nuance have been a great partner inhelping us deliver the system.There have beenadditional partners as we've launched MyFordTouch for navigation:Telenav is an example. Forour services portion of the business a companycalled Airbiquity has helped us enable sendingdata-over-voice.We have traffic information inNorth America that comes from a companycalled INRIX. Many partners have providedtechnology that supports how the systemworks.

What about the actual physicalhardware equipment - the centre stackfor instance? Did the actual touchscreens etc involve working with someof the more traditional automotivesupplier partners?

Well, for our first generation SYNC introducedin 2007, Continental and Flextronics were ourhardware manufacturers. It is a design that wecall a ‘Build Print Design’ that is a little differentthan in the past.We flattened out what wouldhave been a typical supply chain.Typically inautomotive, you'd work with aTier One thatwould take care of everything beyond theTierOne. In this particular case because we aredirectly involved with Microsoft and directlyinvolved with Nuance, the supply chain was abit flatter.The other side of it is that we wantedto have a very consistent design and so wehave a platform design that we built. It will be aglobal design as well too, once we launch inEurope and the rest of the world.That design isproduced for our first generation of SYNC withContinental and Flextronics, and for our secondgeneration - which is the MyFordTouch/MyLincolnTouch - Flextronics andContinental are also the manufacturers of thehardware. Sharp is also an important partnerproviding us with LCD displays, and JCI is animportant partner for clusters, but there aremore in the system as well.

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Do you fear the heavy hand of legislationin this area because it seems the sort ofthing that politicians and safety expertsmight want to influence going forward?Is that something that’s on your radarscreen, especially in NorthAmerica?

Well, we're working closely with theDepartment ofTransportation.This is an area ofgreat concern for them.Their objective ofcourse, and ours as well, is to improve safety onour highways.This is a very new area and reallyinvolves more research, collecting moreinformation, really understanding the problemand understanding how we can use technologyto solve the problem. So again, we're workingvery closely with the Department ofTransportation on better understanding of whatis ‘distraction’ and better ways to manage it andlimit it and provide better solutions forcustomers.They are dealing with the sameissues as well too - people want to use thesedevices in their vehicles, and it's very difficult tojust create laws that say you can't. In fact, insome cases, there is the concern that banninghandheld device use hasn't really helped muchbecause now people are trying to hide themwhile they are using them. It is probably evenmore distracting. So we spend a lot of timeworking with the Department ofTransportationand we will continue to work with them onresearch in this area. It's an issue that we think isresolvable or manageable through the use ofthe right kind of technologies.

smartphone. Our intent with App Link is toprovide those APIs to a select group of folksthat have apps which they're developing forsmartphones that make sense to use in thevehicle. In addition to Pandora, we aresupporting Stitcher right now and OpenBeakwith their Twitter application.We offer aTDK(Technology Development Kit) that allows appdevelopers to incorporate the APIs into theirapps. Developers can apply to be part of theSYNC developer community and received theTDK.We screen through the ones that wouldmake sense for the vehicle, and we work withthem to enable their applications to be usedwith AppLink and interface with Sync.

Has involving external applicationdevelopers been pretty successful so far?

It has grown and is continuing to grow rapidly.The number of apps that are out there allows alot of personalisation for people. So rather thantry to incorporate everything everybody wantsinto the vehicle itself, it's an opportunity toleverage developments that are done onconsumer electronic devices.

What particular application types areyou seeing the most work going into atthe moment?

Well, there’s a combination. I think certainlythere’s a focus on music and entertainmentrelated services - being able to connect to

music servicers or podcasts, news andinformation, and so on.There are services thatare related to navigation and location-basedkinds of features that make sense, and obviouslysocial networking-related items.The appropriateways to use those social networking items inthe vehicle are again things that we're lookingat.There’s a lot of different streaming media, andthere are other services that we are consideringas well.The objective is to take the average timethat people spend in their cars and put it to usewith things that help them be more productive,but doing it in a safer way.

There’s been quite a bit of media interestabout consumers not being entirelyhappy with the way the MyFordTouchsystem has worked.Are you comfortablenow that those issues have been resolved,or is there further work to be done interms of educating users, etc?

Well, we've put a lot of effort into improvingthe support we provided customers, whetherit's through the dealership or online, so theycan understand the system better and faster.We're also continuing to refine the system,improve its performance, improve the look andfeel, and so on. I think what customers canexpect is what they expect in consumer devicesas well today.They will see us continuallyevolving and improving MyFordTouch based onwhat we learn.

In 2010 we launched MyFordTouch, and itssignificant upgrade to the user interface andpeople love it. People love the technology, butpeople also have given us a lot of opportunitiesand suggestions, and ways to improve it and, ofcourse, we are responding.We recentlyreleased our first software upgrade owners canperform themselves. It has a modified look andfeel and improves system response. I think theimportant thing is that with connectivity we'rechanging the ways cars work in terms of howthey evolve over time. It's not just somethingthat you buy once and it never evolves. Just likephones get a download occasionally for a newupgrade or your PC gets a download for anupgrade, customers can expect to seecontinuous improvements for their in-carconnectivity systems.

Can you just outline your recentlyannounced relationship withToyota inthis area?

Sure. In reality there are plenty of things thatare behind the scenes, which the customerdoesn't necessarily experience.These systemsrequire Automotive OEMs to requireinvestment in areas the customer never sees.Ford as well asToyota have to invest, in thosekinds of behind the scenes enablers, in additionto the things that the customers do see, theexperiences that make aToyota aToyota, and aFord a Ford. In this particular area we've come

Do you think there will be a legislativeframework in the future, albeit one thathas probably been agreed by partiesincluding OEMs and the DoT, or do youthink it will remain unregulated?

Well, we actually support the ban on handhelduse, and given that we have a solution withvoice recognition, and so on, there is a way toaddress the issue and not be texting whiledriving or trying to manipulate a handhelddevice while driving. But even with laws, there isthe concern about people still trying to use ahandheld device, by hiding it; that is a concernwith legislation, but we will continue to supportit because we want to encourage the use ofhands-free solutions like SYNC.

Just one thing on theAppLink – couldyou just walk through how far it hasevolved to date because it seems aninteresting area.

Yes, in fact it's another area that shows how weare trying to extend the platform.AppLinkbasically is a set of APIs - ApplicationProgramme Interfaces - that can getincorporated into apps that are beingdeveloped for smartphones. I guess, the bestexample is Pandora, where the use of thePandora music service on smartphones hasgrown pretty dramatically in the US.The issueagain is that trying to use it on a smartphone,on a handheld device, is not the safest thing thatyou can be doing while you are driving.WhatAppLink does is provide a set of interfacesbetween Sync and the smartphone so that youcan use the voice recognition and steeringwheel buttons, in the vehicle to control anapplication like Pandora that is running on the

together withToyota to look at those thingsthat the customer really doesn't directlyexperience.Things like standards, includingcommunication standards, such asWi-Fi andBluetooth and chipsets and some of the driverdistraction-related standards, and so on, that wewould both have to invest in separately, butwould not be things that differentiate aToyotafrom a Ford. By working together on thoseitems, by sharing the work, we can devote moreof our attention to things that do differentiateour companies and products. So there are a lotof the behind the scenes things that customersreally don't see directly including cloud servicesand back office service structures, and so on.That’s where the focus is.

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for a better integration of the vehicle to aperson's life.

The Evos obviously increases thepersonalisation of infotainment systems,but also introduces driving dynamicsand powertrain management into theequation as well, which is a whole newarea.

Yes, absolutely.Again, as we leverage the cloudside of the business we can store moreinformation about a user and use thatinformation to tune all sorts of things about thevehicle to the specific driver that is using it.Thatapplies whether it's information around routesthat they take and meshing it, with real timeinformation or schedule information.We canschedule a route, or suggest an alternate routegiven traffic conditions or given more timeavailable provide a more leisurely route, and soon.Again, a lot of what the internet provides usis the ability to take information from manydifferent sources and then optimise it for theuser. So in this particular case what Evos is really

trying to show us is that through the cloudservices, through knowing a bit of informationabout the driver and then mashing it togetherwith real time information, or just information ingeneral, it can provide a service that is moreoptimised or better tailored for the driver.

In a situation like that do you moveaway from a connection via asmartphone?Would the car be almostpermanently connected directly to theinternet? How does that work?

Well, we still continue to look at the brought-indevice because I think it’s going to be essentialto your life when you're not in your car as well.So if you think about those experiences that wetalked about with Evos, there are versions ofthose experiences that exist outside the car aswell too and you are going to need some kindof connectivity outside of your car.That’sobviously, or most likely, going to be the phonethat you carry around. It’s going to be central tobuying things, it's going to be central to yourcalendar, it's going to be central to

communication, it is going to have privileges andidentity for you as well. So to us it’s still going tomake a lot of sense to keep the phone, thebrought in device, as the central connectivitypoint of the vehicle.That could change though.There are instances where you may want toaccess your vehicle when you're not in it.We'realso looking at alternatives -Wi-Fi connectivityis becoming prevalent just about everywhere,and there can be other sources of connectivityto the vehicle. I don't think you can ever replacethe brought-in device. It’s always going to haveto be connected because it serves such a bigpurpose outside the vehicle, it will always bethere.The question is whether we need anadditional connectivity device in the vehicle, andwe're thinking today based on what we see andwhat we project that there are otherconnectivity measures, or connectivity paths liketheWi-Fi, and so on that may work.Again, wecontinue to re-visit ‘built in’- it's an importantquestion.

However, the issue still remains that technologycontinues to change.What's after 4G and LTE,

and what is it going to do to any 4G or LTEmodem that is built into the vehicle? The cost aswell, too, those issues still remain. If we can finda way to continue to leverage the phone, that’sgood because it’s going to continue to becentral 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 havephones.They may not have PCs or laptops, sothey access the internet through the phone;they pay bills through the phone, and so on, sothe phone continues to be the central device.It's going to be an important central device inthe vehicle.We are evaluating the connectivitystrategy based on experiences that customersvalue.We look at experiences when you're inyour vehicle, and it‘s usually safe to say thatwhen you're in your vehicle you are going tohave your phone with you. However werecognise that when you're not in your vehiclethere may be a few experiences that areimportant as well.

It’s a difficult question to be objectiveabout I know, but there seems to be aperception that Ford was an early leaderin the area of connectivity but thatcompetition is now heating up and thegap with competitors is closing.How doyou feel? Do you still feel comfortablethat you’re ahead of the competitionand will stay ahead, or do you see this asbecoming something like a commodityarea in the future?

Well, I guess you never want to be comfortablebecause you have to keep focusing on thefuture. I think that's what it’s all about.When westarted on this path, we knew that it wasn'treally about exclusivity and things like that. Evenour legal arrangements weren’t centred around

exclusivity. It was about being there first, andthen working on the next thing. So ourobjective is always to be working on the nextthing.What’s the next thing to be coming out?When something works well and resonateswith customers, everybody is going to want todo it and you are going to attract thecompetition and you can spend a lot of timeand effort, and money trying to keep thecompetition out. I think we feel the best way tocompete is to be working on the next thing. Letthe competition be focused on catching up withus where we are today. If we are working onwhere we're going to be tomorrow and intwo/three years from now, that is really wherethe focus needs to be.

I worry more about making sure that we'rereading the future correctly, that we've gotaccess to the right technologies and we're allworking on the next thing.

Presumably Ford has a pretty big groupof dedicated people permanentlylooking at exactly these kind of issues?

Yes, we actually have a forward model groupthat works on vehicles that are going intoproduction in the near term, and there are twoparts of that.There is the part that is in thevehicle, that is designed into the vehicle, andthen the connected services group, which iswhere we are working on the services or’beamed in’ experiences. Looking much furtherout into the future, is our research andinnovation activities and that's where I am.Wehave a team here that is looking at what is thefuture.What will our next generation ofexperiences need to be, and sorting throughthose.The research and innovation group

There was a lot of publicity surroundingthe Evos concept car that was at the2011 Frankfurt auto show. I wonder ifyou could talk through that conceptbecause it seems to be regarded as apointer to how SYNC might evolvefurther in the future, especially withregard to a greater use of the cloud. Isthat a fair representation of what theconcept is all about?

Yes, I think that Evos being a concept car reallytries to emphasise the experiences that we'retrying to create, and those experiences allowthe vehicle to better interface with your worldas the owner/driver and so on. Using the cloudto store information and access information justmakes the experience more seamless for thecustomer.As you move from one environmentto another, as you move from your home intoyour car and into your office and so on, it is amuch more seamless experience.The Evosconcept car gives you a picture of the futurewe'd like to create; the future experiences wewant to create that we think are going to make

obviously works very closely with the forwardmodel activities, but the difference is that weare looking further out into the future.They'refocused on getting experiences to production inthe next couple years.

How does this all operate as a businessmodel? It seems the actual cost of this isrelatively modest for consumers, which Iguess is a good thing, but is there moneyto be made in this from an OEM’sstandpoint? It never seems quite clearwho is actually going to make moneyout of all this.

Well, our focus is really to differentiate ourvehicles, to create experiences in our vehiclesthat result in people wanting to purchase Fordvehicles.We make our money selling cars, andso creating great experiences attracts people tobuy Ford vehicles and that's fundamentally ourprimary focus.We do have services that dogenerate some revenue, and so on.We've gotto cover the cost of those services, we've gotto create great experiences, but our numberone focus is providing differentiatingexperiences so people want to buy Fordvehicles.

Sync has really helped us with differentiation aswell. As you recognised, we've been veryfortunate with the success of SYNC. It’sattracted people to our showrooms. It hasattracted people to be very inquisitive aboutSYNC, etc. It helps them make decisions. Eventhe folks that aren't traditionally Ford buyerscome to Ford dealers as do customersreturning because they want to continue withthe same connectivity.

So although there’s a revenue streamfrom subscription services, it’s a minorconsideration?

Right.

How do you see the future role ofsuppliers in all this? A number haveindependently developed similarsystems to yours – Continental andDelphi spring to mind – and will belooking to sell them to OEMs.Do yousee a future switch to more outsourcingin this area, for example for costreasons, or is it the kind of expertisethat OEMs will always want to retain in-house for competitive reasons?

Well, I'd say that we've been very fortunatewith Sync in that it has become a differentiatorfor Ford, and as long as the technology deliversgreat experiences the resulting differentiator isgoing to be very strategic for us. Even if thebasic connectivity gets commoditised, creatingthe Evos-type personalised experience allowsthe differentiation to continue.Although we'llcontinue to leverage the capabilities ofsuppliers, I think we are going to continue withour focus on connectivity as strategic to Ford.As long as we can create experiences thatdifferentiate us, then we are going to have to bevery, very actively involved in the product designand innovation and cannot just source an entiresystem with capabilities equivalent to ourcompetitors. I think suppliers will continue tofocus on how to customise their systems forcustomers, but we think that in the currentenvironment, and in the foreseeable future, thisis what's going to differentiate our vehicles fromothers and so we need to continue to play avery active role in design and development.

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telematics&infotainment

Interview:

Nick PudarVice President of Planning andBusiness Development, OnStar

Keeping the customer in the driving seat has become an increasingly difficult task asthe 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 thetelematics field and what is arriving in the infotainment field. Is that a fair perspective?

Yes, absolutely.The way I've always described it is with this traditional, very safe, peace-of-mind-centric view of telematics and the entertainment side that is growing alongside with its connectivitycapability, there has always been an overlap.That overlap is continuing to grow. Blur is a good wordas well because there are many different ways in which you can execute a particular service, featureor outcome for a customer.The range of technologies and the range of connectivity options thatpeople have make it blurry for them as to what's the best way forward for them. So, the challengefor all the participants in this connected space is how to take a particular need that a customer hasand to make it very accessible in a user-intuitive way.With some of the technologies, the manualsare actually fundamentally bigger and heftier than the product itself.

I suppose this is really being driven bywhat customers want, although it seemsto be evolving all the time and is difficultto determine accurately. Some of it isalso probably OEM-driven, for productdifferentiation reasons, but primarily it’sthe customer in the driving seat forthese trends.

Absolutely, the customer is in the driving seat,and in our automotive environment it couldn'tbe more true. So the way in which we designthe services to meet those needs is important.A lot of these needs have really not changedover the years; the need is for people to getfrom point A to point B with confidence. Peopleare spending more time in their vehicles, sothere is a need to get other things done, to bemore efficient with their time, to be moreeffective in getting their own personal agendaco-ordinated. So a lot of the services areevolving and emerging to help people do thethings they've always wanted to do.They're justmore time stressed, they're dealing with morecongestion on the roads, they're dealing withhaving to solve fuel efficiency issues. It used tobe where is the nearest gas station, then whereis the cheapest gas station, then what's themost effective route to get home from anenergy efficiency standpoint. So, similarquestions, different nuances, different overlayingmotivations.

What seems to be happening is that thelayers of complexity are growing, butthere have been some comments fromOnStar executives very much stressingthe attraction of the simplicity of yourservice. It performs a function thatconsumers want, but it doesn’t involve ahost of centre stack, head unitoperations etc. Is that relative simplicitysomething you are highlighting as thiscomplexity grows?

Simplicity has been one of the key tenets of ourbusiness ever since we started operations 16years ago.The way in which we come at this isto say, look, the technology is very powerful butthe vast majority of customers don't care howit works; they just want to make sure and beconfident that it does work and they don't wantto have to read manuals.They don't want tohave to remember a whole series ofcomplicated commands to speak. So one of theways in which we talk about this, internally hereand externally is to say that we have apowerfully-simple system. In other words,there's a lot of stuff in the background betweenthe robustness and the complexity of thehardware and how it does its task to get thatsecure connection back to the OnStar backoffice.Then our back office has to be able to cutthrough the clutter of complexity concerningissues with the telecommunications, with theGPS, with everything that goes on in the world.The customer doesn't have to worry about that

“Hey, your vehicle is doing fine; everything is good,everything is in tip-top shape.Your engine oil life is stillhealthy.Your tyre pressures are all good to go.You don'thave any routine maintenance schedule requirements.Everything is great”

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because they know that it'll work. Just as anaside, we hear of many, many situations wherethere are hurricanes or wildfires or othernatural disasters, where there are massivepower outages, and where people's cell phonebatteries die or that the cell sites themselvesare out of power.Yet the vehicle OnStar callsystem still works because of a higher-exposure,higher-power system that's able to reachneighbouring counties and maintain thatconnectivity. In many emergencies it’s a lifelineto stay connected with loved ones.

So the approach to building, designing, deliveringand executing the system is one where thatcomplexity, that power behind the system, ishidden from the customer.The customerdoesn't have to think about it; just be confidentthat it's going to work.

More and more vehicles these days havenavigation systems built into them, and thereare going to be a wide array of solutions thatare coming out there. One of the nuisances ofnavigation systems is that, at least here in theUS, you have to pull over and put your vehiclein park; you cannot be moving to interact withthe navigation system and enter yourdestination. It's a nuisance but you put up withit.With OnStar you press the button, you talk

to a live person and they can actually downloadthe destination to your navigation system whileyou're driving, and you don't have to worryabout it. In fact, you may not even knowspecifically where you're headed.They can findout the most appropriate destination basedupon your needs and do that humanintervention, that human interpretation andthen download the perfect hotel detailsbecause you're too tired to keep driving. Orthat perfect Italian restaurant that you weren'taware of. It's the intermingling of human touchand appropriately-designed technology that candeliver services to drivers in ways that arerelevant and easy to digest for humans.

Do the operators use just a staticdatabase when giving navigation adviceor directions or do they have access toreal-time traffic information which canbe used to offer an optimum route at aparticular time?

It's partial at the moment, with more to comein the future. One of the things about trafficinformation is that it's not complete and it's notperfect. So we might route you to avoid badtraffic that we are aware of, but we might theninadvertently route you to a worse situationthat we're not aware of.When you think about

the risk and reward of making decisions basedupon data, there are several different layers oftraffic information. I can turn on my AM radiostation and listen to a traffic report that isbroadcast every ten minutes. I can personallydecide whether or not I believe them andwhether or not I believe that it will actuallysubstantively affect my drive for me to take adifferent route. If I actually make that decision totake a different route and it turns out to beworse than what I would've done that's all myfault and I blame myself. But I'm not toodisappointed - I'm just inconvenienced. If anautomated system, or even a paid premiumservice with human intervention, gives youinformation based upon incomplete or less-than-perfect information, it's an entirely differentexpectation of precision.Today, that data andcompleteness aren't sufficient for us to beconfident to actually send you a different way.

As I understand it, your system is onlyoffered in NorthAmerica on an OE basiswith General Motors and was alsopreviously fitted on Saabs. Is that correct?

It was on Saab as well, yes. It's in GM cars andthen also we provide the service in Canada andChina.We've been in China now for about ayear and a half.

We’re starting to see new systems inChevrolets (MyLink) and Buicks(IntelliLink) that actually integrate theinfotainment and your OnStar system: isthat something that will develop moreand more over time?

Yes, that's right; the systems and the services arebecoming more seamless and more integrated.

These new systems have the notion of the app.So in the very first version, the Chevy MyLinksystem is going to have a Pandora applicationand a Stitcher application. Over time there willbe more applications that will find their way tobe downloaded into the vehicle.You can veryeasily imagine that there will be OnStar appsthat become available as well.

Will the OnStar part of that serviceoperate in the same way as it does atthe moment,with the button system?

Initially yes, and over time we are going to makethe integration of OnStar capabilities asintuitively obvious and as seamless as possibleinto the vehicle.

Do you have any data concerning thenumber of subscribers in NorthAmericaand the number of models on whichOnStar is available?

Yes, we are in over 50 models.We have sixmillion subscribers and have answered over onemillion emergency calls in North America,responded to over 179,000 crashes and givenover 86 million turn-by-turn route details.Therehave been over 405 million cumulative serviceinteractions.

The subscriber numbers are interesting.As I understand it, when you buy yournew GM car in NorthAmerica and it hasOnStar fitted, you get the service forfree for a certain period of time butthen you transition to a subscription ona voluntary basis?

That's right.You get a trial; depending upon thevehicle you get it for six months or 12 monthsand then after that trial period then customerscan transition into a subscription basis.

What is the transition rate across themodel ranges of people moving on tosubscriptions?

It is north of 50% of the people who have thetrial. Once the customer is a paying subscriber,it's around 80% continuation beyond that on anannual basis.

You can pay monthly or you can renew annually;we operate both ways. But I would say that ifyou were to do a conversion to only an annualview, it's about 80% retention of payingsubscribers.Then of course a lot of ourcustomers churn out of the service becausethey actually turn in their vehicle and get adifferent vehicle. So we have a very, verystringent look at how we measure churn.There's a whole other part of the business,which is how do you acquire second-ownervehicles and how do you make those ownersaware that their vehicle has this capability andservice?

telematics& infotainment

“The customer doesn'thave to think about it;just be confident that it'sgoing to work.“

Access via RemoteLink app

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In terms of regional coverage, at themoment it’s just the US,Canada andChina.Your absence from Europe seemsa bit surprising given GM’s presence inthe region. Is there a specific reason forstaying out of Europe?

Well, there are lots of reasons over the years,but no single specific thing; it was really justmore a matter of timing and opportunity andpriorities.

The potential in Europe seemsparticularly interesting, especially as weseem to have a real intent on the part ofthe European Union to start talkingabout the compulsory fitment of the E-Call system from 2015.This surely has tobe a potential positive for you?

telematics& infotainment

The service is available right acrossChina but you’re doing this in tandemwith GM itself and also SAIC is thatcorrect?

Yes, and SAIC is GM's joint-venture partnerboth for building vehicles and also for deliveringthe OnStar service in China; it's called ShanghaiOnStar.

The other key development for youappears to be the FMV,where you’requite significantly extending thepotential for the system by aftermarketfitment on other brands of vehicles?When was that introduced?

Yes, we launched in August 2011.There are a lotof customers that have over the years said tous:“I wish I had OnStar but I can't afford a newvehicle; is there some way that you can make itavailable in the aftermarket?”We've always hada desire to do that.With the reality of the costof the technology, the size of the technologyand the economies of scale that we've built upwith the business, now is the time where it allcan work. So not only can we deliver a productnow like this in the aftermarket with a relativelystraightforward installation process but thetechnology can all fit in a single mirror; it's areplacement mirror. So the GPS chipset, thecellular components, the microphone, thespeaker, the Bluetooth, the power electronics,the mirror itself, all of the OnStar componentsare built into this, and an accelerometer to beable to detect crashes and the ability to do theturn-by-turn routing.All of the capabilities thatyou'd expect are all built into a mirror.

You’re acting as a systems integratorthen? I believe QNX is the softwareprovider for the mirror system and Iguess the mirror hardware is beingprovided by a traditional mirrorsupplier?

Yes, one of our mirror suppliers is doing themirror assembly for us.We are the systemsintegrator; we do specify and we have speccedout the design of the entire system includingthe components, the software, everything,basically.Then we handle the branding and thedistribution arrangements and the serviceprovisioning. If we put our brand on it, we'regoing to do it seriously.

But the OnStar service being offered isnot 100% identical to that available atthe OE level if I understand it right?

It's not 100% the same.The portion that isdifferent is that this is not integrated into the

electrical architecture of the vehicle.We'relooking at and targeting older vehicles. So if welook at the broad range of used vehicles, thedegree of sophistication of electricalarchitectures are all over the map. So wewanted to focus in on some of the core things,which were the emergency services, the stolenvehicle recovery, the ability to provide turn-by-turn navigation for people in a very low-costway and then also the hands-free calling serviceas well as the Bluetooth integration.There's avery healthy range of capabilities that we bringfor the customer, and we're getting a lot ofgood reaction and good response on it.

So a customer can just go into a retailstore and just buy this?What aboutfitting – do they pay extra for that?

Yes, there's a nominal charge for that.Theinstallers, the fitting entity set that pricing.

Can it be fitted to all brands and to allages of vehicle?

Yes, it'll go back to many, many old cars.Theoldest vehicle application we have is 1981.Wehave a tool that is on our website where youcan go in and put in the specs of your vehicle;make, model and trim level to see if FMV iscompatible. It's compatible with the majority ofvehicles on the road today.

Is it too early to judge how successfulthis has been?

Yes, it's too early to judge; we're still fillingpipelines, we're still building awareness in themarketplace and so there are several steps inthe process. First, are you aware of the product?Number two, do you assess it’s the time to buyit and is it right for me?Then the third is to goand actually get it and have it installed.We'refine-tuning that whole process.We're absolutelythrilled that we now have this capability and thisproduct to meet the broader range ofcustomers in the marketplace.

On a broader corporate level – did GM’srecent problems have a negative impacton OnStar at all?Were there anyproblems securing sufficient investmentwhich hindered your growth or did youremain insulated from the broaderfinancial problems?

It has felt separate because of the way we'vebeen operating and the way we have amandate to meet the needs of our customers.So even through the proceedings we were stillservicing customers, a couple of hundredthousand calls a day.That didn't change, thatdidn't stop and the ability to continue to fuelthe business wasn't harmed in any way.

Looking at China now - you’ve beenthere since December 2009 and youhave just opened a second call centrethere.What was the thinking behindlaunching in China?Was it just purelybecause of the sheer scale of the marketthere?

Yes, it's a very large market, as you know, andit's growing rapidly.The Chinese consumer isvery anxious and hungry for leading capabilitiesand technologies and services.There is a uniqueaspect of driving in China in that it is the firsttime for the vast majority.The roadways aresprawling and everything is brand new, and allthe roads are not necessarily marked well, sodriving can be a very humbling experiencethere.The notion of being one button pressaway from a knowledgeable, experienced,trusted human to help you through that issomething that our customers are findingabsolutely invaluable.We're seeing that ourcustomers, our Chinese subscribers, interactwith OnStar at a rate of about two, three orfour times as often as our North Americancustomers.

I attribute that again to this notion of it's thefirst time they've owned a vehicle, it's the firsttime they've driven a vehicle.The city iscomplex and it's good to have some help nowand again.

Yes, absolutely, it clearly causes the OEM baseto look more seriously at telematics capabilities.

The other interesting aspect is thesuggestion that it could be extended toplay the role of a catalyst for thedeployment of other types of servicesuch as navigation, roadside assistanceor hands-free calling,making it moreakin to a broader telematics servicerather than just an emergency callfunction.

That's good, that’s interesting. It is howparticipants in the industry are looking at itbecause it's very difficult to deploy just a pureeCall function.A much broader business aroundtelematics is what would be required to make itwork, effectively and economically.

“Yes, it's a very largemarket, as you know,and it's growingrapidly.”

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Are there cons as well as pros in termsof being owned by a vehiclemanufacturer?You obviously have astrong potential market with GMvehicles but if you were independent ofOEM ownership would you have beenable to grow the OE business morebroadly?

When we first started, we actually wereavailable on many OEM applications. In the earlyyears of the business we were available as aprivate-label product on Lexus.We wereOnStar-branded on Acura, on Isuzu, Subaru,Audi, andVW.What happened along the waywas the Federal Communication Commission(FCC) no longer required their cellular carriersto carry the analogue network and so uponhearing that information we quickly transitionedour hardware base to a digital platform. Somany of the OEMs basically couldn't keep upwith that pace of consumer electronic change intheir vehicles and so a lot of them dropped outand didn't want to pursue digital hardware.

In 2006, we introduced the vehicle diagnosticemail.This is where the vehicle collects 1,600different diagnostic codes on a monthly basisand the data are sent to our back office, such astyre pressure and odometer readings.Then weconvert the raw data, which are just basically abunch of numbers and symbols, into meaningfulinformation and knowledge and deliver it to thecustomer in an email from their vehicle that issimple to understand. 99% of the customers geta message that says:“Hey, your vehicle is doingfine; everything is good, everything is in tip-topshape.Your engine oil life is still healthy.Your tyrepressures are all good to go.You don't have anyroutine maintenance schedule requirements.Everything is great'.

Some customers might get a low tyre pressurereading on one of their tyres.As a matter offact, I just got one myself on my wife's vehiclewhere the tyre was perfectly fine and safe todrive on but the pressure was just a little lowerthan it should be and therefore I'm gettinggreater tyre wear and I'm also losing some fueleconomy. It's a good thing to top up that tyrepressure. Every so often there might be adiagnostic code on a small number of vehiclesthat needs attention. So you can click on thatemail and get further information. So this wecalled the vehicle diagnostic email and itbecame something that our customers really,really liked because it just gave them thatadditional monthly peace of mind reminder thateverything is in good shape.

What happened is the automotive OEMsstarted paying attention to this and said: ‘Weneed those data on our own vehicles, too’.Everybody wanted to do their own thing in thisspace. So we saw a greater emphasis over theyears on companies all building their ownsystems and building their own solutions. Manyof them were driving after the diagnosticinformation for quality purposes and many ofthem were discovering that it's costly to do so.Customers were walking into dealerships andsaying: ’Hey, which of your vehicles has OnStar?’A lot of them concluded they could offer asimilar service at some point, so we've seenthat transition.

Is that something you’d call possible orprobable?

Probable.

Is it right that you’ve transitioned fromMotorola to LG Electronics as you’veevolved?Was that part of the switchfrom analogue to digital?

Yes we did. No it wasn’t, Motorola becameContinental - the Motorola automotive unit wassold to Continental.We've worked with manycomponent manufacturers - Continental, Delphiand LG - and we're always very conscious ofcapabilities and cost. It's a moving space. But thedigital/analogue issue wasn't a factor in thatprocess; it was just it was one of the realities ofdelivering a service.

Steve Girsky has talked recently aboutGMVentures investing in businesses thatare compatible with the infotainmentarea and the OnStar business. DoesOnStar have acquisitions on its radar asa way of taking the business forward inthe future?

Well, we've done a couple of these things inprior years where we've either acquired wholly-owned licenses to technologies or we've takenover parts of other companies' businesses thatmeet our service needs. But in the context ofGMVentures, GMVentures looks at a broadrange of emerging technologies and emergingbusiness growth opportunities.We find in a lotof instances that there are unique connectivityaspects to those services where OnStar couldhelp more aggressively deploy in vehicles. Inother cases, we lower the cost of deployingthose capabilities and so there are verycomplementary opportunities that we look atas needed on a one-off basis.

telematics& infotainment

“So this connectivitythat I mentioned

earlier continues topermeate, continuesto become moreexpansive in our

lives, and it's going tobe a fun ride.“

Nick

Puda

r

The cost of connectivity is coming downsignificantly and the expectation of connectivityis increasing, and many people have growingcomfort and trust that location-based servicesdelivered by reputable entities can be valued.There are many new services that you'll beseeing over the coming years in pilots andlaunches. But there's going to be a greater levelof creativity with services that will delight andintrigue customers. So I'll just give you one littlesimple example of something.Although it'sactually quite minor in one sense, whenever Itell this story, I get a lot of laughs and delightbecause it's like: 'Wow, I want this!' So when wefirst developed theVolt vehicle and wedeveloped the mobile application for theiPhone, BlackBerry and android for that originalVolt vehicle, one of the sub-features of theapplication was that you can set the time thatthe vehicle checks to see whether it's pluggedin at night. So if it's 10pm on my phone and thecar is not plugged in, it sends me a text messagefrom the vehicle saying 'Hey, I'm not plugged in'.I was telling my wife this at one point and shesaid, 'Well, I don't have aVolt but what I dohave is a need, when my car gets to a quartertank of gasoline/petrol, I want the car to sendyou a text message so that you can take care ofthat for me'.The notion of a vehicle interveningon your behalf when it's relevant to you, that'ssomething that is going to be very interesting.

So what does that mean?That means that inorder for some services up in the cloud to beable to infer what your needs are, and to beable to deliver to you what's relevant for you,there has to be some persistent connectivitynecessary. I expect to see in the future thatvehicles will continuously stream data abouttheir situation on a regular basis while the car isalways on. In the background up in the cloudthere are going to be these services that areoperating on this virtual basis, monitoring andusing vehicle data, and then rendering newservices, new road information, etc to you in asafe, effective manner. I also expect to see awhole lot more innovation in this space andthings that customers just haven't evenconceived of before becoming second nature.So this connectivity that I mentioned earliercontinues to permeate, continues to becomemore expansive in our lives, and it's going to

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interactive lifeinthecarInterview:

Ralf LambertiDirectorTelematics, Infotainment and Cabin Electric/Electronics,Group Research and Advanced Engineering at Daimler AGBy Martin Kahl

Ralf Lamberti talks to Martin Kahl about Daimler’s investments in theconnected world and its telematics development plans

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

Vehicle connectivity is important because more and more customers want their car to support theinternet.At the moment the car is more or less the last internet white spot. Internet and smartservices can be accessed everywhere, and as one customer said in a consumer study, they want tocontinue their life in the car, so the car needs to be connected. From our point of view, the internetprovides 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 theinternet for greater functionality, not only in terms of entertainment, but also security andinformation.That’s one of the reasons why we feel it will be a very useful feature in the future.

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

Of course the platform has evolved over time, with new graphic processors and hardware. On thesurface it still looks similar, but it’s now connected to the internet.We call it COMAND Online, andit was released at the beginning of 2011.We released the COMAND Online system with the newC-Class and in the SLK in spring, and now it’s also available in the E-Class, CLS, the new M-class andthe B-Class. If you order COMAND, it’s always COMAND Online, which means that we have aback-end server system where we run different applications that are accessible in internet-connected cars.You will be able to browse the internet when the car is stationary, and you will beallowed to use Mercedes apps whilst driving.These apps are tested against all automotive guidelinesand 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 yourwhole route, including different way-points tagged on Google Maps, and send the complete route tothe car ; when back in the car, you can use this route on your navigation system. It’s the first step ofpre-configuring what you are doing in the car, in a more relaxed atmosphere at home.And we willadd new services to COMAND Online - we offer Facebook with the B-Class, as well as GoogleStreetView and Google Panoramio. It’s available in the B-Class and in all cars already on the marketwith the COMAND Online system, because the system and the content reside on the back-endserver, and are delivered to the car through the internet.We can now make changes and deliveranother generation of services every year, so we will de-couple our innovation cycles for internet-related offerings from the very long innovation cycles that you normally have in the automotiveindustry, where you usually talk about four to five year cycles.We will be able to do that as often aswe want. It might not make sense to deliver a new app every week, but we will be able to delivermuch more in the future.

How can you ensure that users will havehigh-speed internet access in theirvehicles?

At the moment, the connection is made usingthe user’s smart phone. If the user has the latesttechnology and the fastest provider, they will getthe fastest access in that region. Of course,access will only be as fast as it is possible for acarrier to deliver in a certain region, like on anyphone.We think this will evolve over time.Wedon’t know if it will take two or three yearsbefore there is full coverage with LTE [LongTerm Evolution], but when we have LTEcoverage, performance will really improve.WithLTE we really get transfer rates which arecomparable with the speeds you have at hometoday when the car is in standstill, and which arestill very good when the car is in motion,because you have different reception qualitywhen the car is moving, especially at high speed.

What is the relevance of the cloud forvehicle connectivity?

With COMAND Online, the in-car applicationsreside in the cloud.You could call it a back-endserver, the more conservative way to refer to it,or you could call it the cloud.We will rely onthat much more in the future.The F 125!concept car that we showed at the 2011Frankfurt IAA incorporates a very strong visionof where we want to go with telematics andinfotainment. In the future we will call it@yourCOMAND, with “@” standing forconnectivity,“COMAND” standing for the goodheritage we have with the COMAND systemand “your” standing for the use case that you as

a customer have.The system is “at yourcommand”, and this relies on four major pillars:one is connectivity - all the applications and allyour content are connected to the cloud andcome from the cloud.

The second is natural handling: the greater thefunctionality, the more you might need differentmeans of handling it in the future.We will relymuch more on speech, which means the speechrecognition software also resides on theinternet.We use speech recognition softwarefrom Google, Nuance or other partners, so yousend the voice stream to the internet, and youuse the computing power of the internet toreturn the result.That will empower us todeliver much more natural speech interaction.In future, for example, and we already have thisin the F 125!, you will be able to say “play mesomething slow from ABBA” instead of havingto scroll through music, artist, ABBA and thenselect a specific track.We will also get moretouch-related interaction, something else whichis available in the F 125! concept.And we arealso thinking about gesture control. In the F 125!you can open the doors with a gesture - it hasa sensor on the side enabling you to open thedoors with a sweep of your hand.We will alsohave gesture control for passenger in-carentertainment, for example.

The third pillar is sensory perfection; that meansthat everything we deliver, whether it is soundor graphics in the car, needs to be perfect andperfectly designed.We will have several screensin the car, including a large screen for theentertainment system and a large screen for theinstrument cluster.As this is the one thing the

Mercedes-Benz COMAND system

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Mercedes-Benz F 125!

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customer will always look at, how we deliver onthese screens will be very important in thefuture. Graphic design, HMI, animations andhow the content changes on the screens will bethe key factor in how the car overall isperceived.

The fourth pillar is what we call remoteconfiguration.We think that when you have somuch functionality and connection to theinternet in the cloud and in the car, you need tohave a digital representation of your car so thatyou can interact with your car remotely.Whatever you use - an iPhone, a BlackBerry, aniPad or your desktop PC - you have arepresentation of your car, and you canconfigure settings such as air conditioning, seatsettings, entertainment and the applications youwant to run in the car, and send them throughto the car.When you return to your car, themusic you want is already there.To do this, youhave to be connected to the cloud. But it’s veryimportant from our point of view that you cando it remotely.

These four pillars make up @yourCOMAND,and it’s not just a case of adding more andmore features into the car - you need to dealwith all these different aspects.That’s our visionfor @yourCOMAND, and how we see thefuture of telematics and infotainment.

Can you provide some time scales forany or all of those applications?

The F 125! concept car takes a big step forward,so from our point of view, a complete fulfilmentof this @yourCOMAND vision could bepossible in 2020. But we will see differentaspects of the F 125! in the cars that we launchbetween now and then.

Do you have a corporate strategy ondriver distraction?

Of course, there are different guidelines outthere for driver distraction, such as theAmerican Automotive Manufacturers (AAM)guidelines, and we have committed ourselves toalways fulfilling these guidelines.And that’s whatwe do with all our telematics and infotainmentproducts. For example, if we deliver a newMercedes app, like the Facebook app in the B-Class, this app runs through the same

certification process as any other system whichis driver distraction-related.We have adedicated Daimler-owned group in Sindelfingenthat tests whether or not these systems distract,and whether they fulfil the guidelines.This is aseparate group which does not report to meand which is mandated to say yes or no.

If we come up with a very complicatedinstallation for a connected service, this groupmay approve some of the functionalitiesaccording to the guidelines, but it may say thatother functionalities need to be disabled whiledriving. For example, if you do a Google searchwhile driving, you will only be able to choosefrom a list of pre-defined searches likerestaurants or parking lots, but you will not beable to enter a long complicated search tagwhilst driving.You will get pre-defined searches,and you will have access to your last searches; ifyou entered a complicated string of wordswhilst the car was at a standstill, this will beaccessible on the log so you can call it up whilstdriving, but you will not be able to exceed 25letters, for example.The same goes for theFacebook application - you will be able to postsome pre-defined Facebook messages, forexample “I’m just driving to...”, and thedestination will be provided by the destinationin the navigation system; but you will not beable to compose any message freely, until wecan do this with speech. It might take sometime before you can define a message withvoice control.

Are you developing all of this in-houseor are you working with partners?

We do this with partners. For example, withthe back-end infrastructure, where theCOMAND Online apps reside, the wholesoftware architecture and the securityarchitecture were done mainly in-house, but theexecution is controlled by a partner.And ofcourse we partner with a lot of contentproviders. If you want Google search in the car,you have to partner with Google; to have aFacebook application, you have to partner withFacebook.We use their APIs (ApplicationProgramming Interfaces) and build on that.Wepartner very closely with Apple - there are a lotof companies in theValley that we work closetogether with; I have a dedicated group thatreports to me in theValley so I have engineers

working in Sindelfingen as well as Palo Alto inSiliconValley, close to Google, Facebook andApple.There we also do a lot of theconnectivity stuff, software integration and soon.

You mentionedApple and BlackBerry.Can any smart phone work withCOMAND Online and@yourCOMAND?

Currently, the connectivity is done through thesmart phone, and it needs a certainimplementation of the Bluetooth protocol.Atthe moment, COMAND Online works withBlackBerry, some Android phones, and someNokia phones.There are other Bluetoothimplementations. For example,Apple hasanother Bluetooth implementation, and we’reworking with Apple and with our own seriesdevelopment department to be able during2012 to deliver an implementation of thisBluetooth protocol. By some point in 2012 wewill be able to talk to nearly all phones.We willalso build some smart phone-basedentertainment and telematics systems in thefuture.And there we see three main so-calledecosystems that we have to support:Apple’sIOS,Android andWindows Mobile Phone.Digital natives - people who use smart phonesfor their personal life - are much less involvedwith the BlackBerry implementation. BlackBerryis losing ground in this private sector, so wethink these other three platforms will be ofmajor importance, and we will have to supportthese platforms in the future.We are alsoworking on an iPhone application, due to bereleased sometime next year with some of thecompact class cars - you plug in an interface inthe car, and the application runs on the iPhonebut delivers the screen content of theapplication to the bigger screen in the car.Youcan then control it over COMAND control andoperate everything on the iPhone.This iPhoneapp will also containTwitter, Facebook, Google,personal music and streamed music - it willoffer a suite of connected features that youbring in to the car on your iPhone.You will haveto buy certain kit for the video connection, andthe application will be downloaded from theiTunes app store.

In terms of making sure that somebodycan get into one of your cars and use theconnected technology, are you workingwith other vehicle manufacturers toensure that there’s some kind ofstandardisation?

In consumer electronics (CE), there are usuallytwo approaches. One way sees manycompanies willing to work together understandards; the other way is the Apple way -most of the time,Apple does its ownimplementation.A lot of other CE device andsmart phone vendors are working togetherwith the automotive industry in the so-calledCE4A (Consumer Electronics for Automotive)consortium, to develop a connection betweenthe smart phone and the car, called terminalmode.The smart phone acts like a terminal, andan app runs the smart phone and also does thesame thing as the iPhone - it sends a signal andreceives commands to control the app. In thisconsortium, we are working together with

other German and international manufacturersas well as Nokia, HTC and other handsetmanufacturers.That will be a kind of standardfor the future. Of course, it would be good tohave one general standard, but we don’t seethat happening, because there are always CEdevice manufactures which go their own way,and then you have to co-operate directly withthese manufacturers.As much as we can, wewill push for terminal mode standards.

Is eCall something that’s already in yourvehicles or is that coming, and will thatrun through COMAND or through aseparate system?

It is in vehicles in the US, where it’s mandatory.There we call it 'mbrace'. In Europe, eCall is notyet mandatory.There are guidelines, but thedeadlines have shifted and moved.We have notpublished any introduction date.When itbecomes mandatory, we will have it integrated,probably somewhere in the COMAND system.

With so much connectivity and relianceon the cloud,what security can youguarantee to the drivers that they’re notgoing to be ‘car-hacked’, for example, orhave their data stolen?

Information security is a very important point.At the moment we are using a Bluetoothconnection through a so-calledVPN connection.This is aVirtual Private Network, whichnormally cannot be penetrated.We own thewhole service structure, and we have dedicatedfirewalls from the servers down to the car.Atthe moment, we think everything that ispossible in terms of security is very well takeninto account.We also have a dedicated groupwhich is doing nothing but security.The group ismade up of experts who build up differentscenarios of what might or could happen, whata hacker might do, and they develop firewallsand infrastructure against these possiblescenarios.This is a dedicated group doingnothing else. It’s very important, as much forgenuine security as for peace of mind for thedriver.

What role can vehicle connectivity playfor driver and pedestrian safety?

This is what we call car-to-car, or car-to-X,which is car-to-infrastructure.The cloud, orback-end infrastructure, and the connectivity ofcars to each other, will play a major role indelivering information in the traffic grid. Everycar has information about its current status andeverything that surrounds it.We also have someother big projects running under the umbrellaof car-to-X.This is not for infotainment andtelematics - it is about safety.

So that comes under the safetydivision’s responsibility?

Yes, we separated that from telematics andentertainment several years ago. Of course,technology-wise there’s close interaction,because we’re using the same network and thesame technology to connect the cars to theinfrastructure and to the back-end, but theapplications and the use cases are more or lesssafety-driven.That’s the reason why weseparated it out. It’s very important, and thereare some big pilot projects running, includingone in Germany called simTD.

At the moment, COMAND Online works withBlackBerry, someAndroid phones, and someNokia phones.

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connectivity landscaping

Interview:

Rick KreifeldtVice President Research and Innovation,Harman International

And on the connected side specifically?

First, we have to understand what engineers orconsumers really mean about being connected.My favourite line is when third party developerssay ’We can help you with connectivity’. I askthem: ’What are you trying to do?’They simplyreply ’connectivity’. But what is that exactly?

So stepping back from that, if you're reallytrying to tap into the customers’ needs, it isworth noting that they don't actually care aboutany one piece of technology.They care aboutwhat they can do with it and what it will do forthem.That's where it gets very interesting forus. Harman has some great examplesconcerning connecting people to their work,including one we showed at the Frankfurt AutoShow.You get in the car in the morning; the carprovides you with your morning commuteworld.What's my traffic like along the way Inormally drive?What's happening in mycalendar today?When's my first meeting and doI need to prepare for it? There is alsoinformation such as SMS and email thatconnects you safely to your work. If you're on along drive for work and you receive an SMSfrom the office, now you can get it read out toyou which obviously has a safety aspect to ittoo. Now you're not reaching for the phone,which is what many people do if they get anSMS.Then you consider the opportunities toconnect to your family and friends.That's reallythinking about social networking and some ofthose worlds. Harman is looking closely at howwe bring social networking safely into the car.Connectivity offers so much. In the old days itwas focussed on POIs, but really re-imaginewhat POIs do if you're connected.This lastpoint links neatly into our Aha activity.

I’m familiar withAha and I was going toask a little about it.Maybe you couldoutline it here.That was an acquisition ifI remember correctly?

That was an acquisition, yes. First, Aha is aboutgiving people the content they want – InternetRadio, Social Networking, Podcasts, and otherlocation services – and delivering it in a verysafe manner. Everything is formatted as a radiostation, so you don’t need to read anything, youjust select the Aha-delivered radio station thatyou want.The best part is that new stations arebeing regularly added into the Aha cloudplatform, and they are instantly enabled for thecustomers with no changes to the code of thehead unit.The customer simply selects the newstation they want to listen to from theirsmartphone configuration app and that stationis instantly available the next time they starttheir car.

I think one of the biggest issues that has to besolved in infotainment today is the idea ofupgradeability.A car is like a ten-year durableitem, but consumers would like something new.The question is how can you have that? A lot ofour discussion right now with OEMs is aroundthe concept of upgradeability. How can peoplepurchase this car and keep it a little bit fresh? Ofcourse, the OEMs don't mind the idea ofpeople replacing their car just to get newinfotainment! But they also don't want unhappycustomers - you have this expensive car andyou want it to remain compatible and relevant.Just to illustrate how stark the problem is, I’llgive an example.We are working on our RFQsnow with 2014-2016 timeframes and Isuggested we go back five years and look atwhat was hot then. Five years ago, the number

To start with, could you just run throughan overview of the connectivitylandscape as you see it?

I've been with Harman now for close to 18years and I've worked in different areas withinHarman, notably on the audio side.The onething that makes Harman unique is we haveexperience and presence in the automotive,consumer and professional sectors.This means Ihave a cross-company role with involvement intechnologies and the opportunities beingdeveloped in all three. In addition, I've beenresponsible for automotive research too.

As regards connectivity we think there arethree main issues.We have the type oftechnology, we have the big themes that arereally driving growth and driving newopportunities for us and finally, what are ourcustomers and the industry in general talkingabout?We think there are essentially three mainareas and they are actually interdependent:connected, green and safe.There’s a lot of buzzaround connectivity, a lot of interesting newideas in ‘green’ and these become particularlyinteresting when they get linked. Safety, withoutquestion is always a primary concern and willcontinue to be so.

Now when we look at a technology or say ifwe are developing something new, we linkthese themes: is there a green angle?What isthe connectivity impact? How is this safe?Wepush ourselves to keep those in mind as we'redeveloping our technologies.Technology isdeveloping so quickly at present but byconsidering its impact within these three areas,our implementations will be more effective.

Harman International supplies connectivitysystems to leading OEMs worldwide. In thisexclusive interview, Rick Kreifeldt,Vice PresidentResearch and Innovation, talks connectivitydevelopment withAutomotiveWorld

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one social network was MySpace. Facebookwasn'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 thePalm Pre.The iPhone didn't even exist.You thinkabout trying to specify something and youknow you’re going to have to take years todevelop it. How do you work through that?That's the problem. So we have a strategywhere different applications can be brought intodifferent areas in the vehicle and in variousways.This is based on two things: one is howfast is it changing and the second one is arethere regional differences? Does it need to belocalised for language or are there licensing andother things that we need, reflectinggeographical differences?

So those are the two big issues, how fastit's changing and is it regionalised?

Correct.You start off at the basic level, justbuilding something all the way in, initiallyignoring the whole connectivity hardware for asecond.This is looking at what can you do.As anexample, for email you can embed it into a carand we have an exchange client and a POP3client built into the vehicle.This is written as anative app in the code because it's stable,international and you can have that installed inevery vehicle and it's not a problem.Then, youstart going beyond this.We've doneconsiderable work with smartphone integrationand the result is we have made our newsoftware platform look more like a smartphoneplatform. Now you've got a section that ispurely a car application and you've got a sectionthat's a specific whole user space.You candownload apps, offer updates and this enablesyou to offer focus for a region for instance.Thisis what you see now rolling out in Europe.

Harman recently launched theTouch and Goproduct withToyota.TheTouch and Go is thesecond product announced withToyota usingour new framework.We supplyToyota EuropeandToyota US with a different application setbased on the localised content.We also haveseveral other OEMs who've adopted thisapproach now.

This is EnTune in the US andTouch andGo in Europe?

EnTune andTouch and Go, exactly. It can betailored more to the market by developing andloading different applications.These apps can beupdated by either a USB stick or by other ways.Crucially, they're totally safe, just like an app ison your phone. So if there are any problems,they don't interfere with the main core of thedevice.Then you start considering smartphone

integration.You go from an app on the car itself,the head unit, to now controlling an app on asmartphone. It is easier to push updates to aphone, so we do a lot of app control. Over theyears we've done a lot of work, mostly withApple. Harman has long been a happy Applepartner and we’ve been at the forefront ofworking with them. It’s also why we were reallyexcited to see the recent announcement onAndroid and OAP.

I saw it, yes, but I didn’t probablyunderstand the true significance of it.

The significance is actually really simple.WithApple iPhones there is a very standard way.Thishas grown up from their accessory world thatwe were also involved in from the start when itwas all about iPod docking both in the car andwith our consumer products.This produced agreat protocol that's been extended from theaccessory side.To all the phone developers, carsare just another accessory, like your speakerdock is, so you're actually dealing with theaccessory engineers. From there, you can nowcontrol the phone and the possibilities that nowoffers are exciting.They’ve developed a veryrich set in Apple, essentially a good ecosystemsystem they’ve put together. Until now withAndroid it’s been a really mixed bag with a lotof different things out there. Harman has beendoing a lot of custom work in Android, becausewe want that to be one of our major phoneplatforms. By releasing this OAP, it gave us areally good ‘plumbing set’ that we knew we'dhave for all Android phones allowing the low-level plumbing to connect up and control anapplication.A lot of what we were doing on acustom basis we now can do over OAP.Thistakes care of a lot of our connectivity, the reallow-level connectivity to the phone. It also givesus the same kind of rich features set that we'vebeen used to having on iPhones; that's veryexciting. It's definitely an ‘engineer nerd’ thing,but what it means to the end customer is youcan have this very rich environment andintegration, so that you can get data back.Thekey really is getting the data. My favouriteexample is the Starbucks app, I love that app.Allyou do is you hit one button and it tells you theclosest Starbucks.And you think about whatdoes that really do? I could pull up GoogleMaps, I could enter in a Starbucks near me and Icould push the zero key to centre it. I can do allthat, or I can just hit the Starbucks app.Thinkabout this in the same context from a car. If youhave the same app on your phone you wantyour car to talk to it and then send the detailsto your sat nav. Because now you're not walkingaround looking at your phone, you're in Londonor in NewYork and you're actually driving. Soit's one thing just to see it on the phone, it's

I guess it’s true to say that Harman hasalways been viewed as a supplier of‘premium’ audio systems for theautomotive industry. Are you having torethink this with infotainment systemsand pitch down to the non-premiummarket?Was launchingTouch and Go ontheToyotaYaris an example of thisstrategy?

Yes, exactly.This is part of another largerstrategy that you've correctly identified. Here,there are two key areas.We've got the audiosystem and the infotainment. In the infotainmentarea, for years we focussed mainly on premiumsystems.We already supply to BMW andMercedes but often it was only their premiumcar line applications. Historically with Mercedes,we wouldn't have had fitments across the range,nothing in its Sprinters for example, only in thecars. It's something that our CTO really set outto change.This is why theToyota announcementwas significant for us; we've really pushed rightacross the platform and not just the luxurymodels.We now essentially offer three levels: anentry system that's a very competitively pricedsystem that delivers connectivity, much more sothan most Bluetooth radio.Then we have amid-system and a premium system. Previouslywe only did premium and that was it. For agiven carmaker, that mid-system might be theirpremium system in their carline. For an OEMsuch as Mercedes, that might be the entrysystem in some of its carlines.You have to put itin their context first - it's much more abouttheir needs and that's been a big change for us. Igo back to it but that's why theToyota win issignificant. It's our first win with the new mid-system. It was initially designed with nocustomer on-board and we made a significantinvestment. Some customers may fear it’s notgoing to hit cost targets but that is becausethey’ve never even seen it. So, we did our owninvestment without a customer and actually putthis together.

That’s an important point.How do youhit cost targets on something like that,especially as commercial applicationsremain small scale? How do youengineer it so you meet cost targets?

The key was we had the capabilities all along; itwas more a matter of focus.We said, ‘Well look,we know what it takes to do this, let's go andsimplify this’.We worked very tightly with oursupplier partners and we hit the price targetsvery aggressively. It's definitely working becausethat's the foundation that has led to the otherwins we've announced.

connectivity landscaping

another one to say, yes, put that data into thenavigation system.You can only do that with thiskind of integration with apps.

If we move one more step, we go to the cloudto take care of the really fast moving data. If anew social network such as Google+ pops up,we can do the integration in Aha. So AhaMobile, now branded Aha Radio, is a cloudplatform that allows us to deliver content safelyto the car. Using the radio metaphor, in thesame way you change radio stations you canchange your content streams. If we look atFacebook, we wouldn’t enable writing repliesbecause of the safety angle. Often when I geton Facebook it's like reading the news, in a way.You just get on it and see what's happeningwith your family and friends, and its privatenews.You're still connected. It feels like a radiostation, you could have a Facebook radiostation.You can have podcasts, which arebrilliant.You get all these podcasts that areavailable and you download them by simplygoing to the radio station and listening to theSunday Post or Financial Times or whatever.

So this is a proprietary system toHarman and allows you to differentiateyourself from others?

Good question. From the Harman side, we sawit as the only way to deal with fast-movingcontent - the Google+ launches, the fact thatTwitter changes its API often. So the only wayto deal with that was to go to a cloud-basedsolution.Aha was a start-up but was veryexperienced and had this technology, so it was anatural acquisition for us. But like we've done inthe past with other things from Harman, this isnot a Harman-only solution.Aha runs as astandalone business unit. So that's how they'reable to do the work with companies such asPioneer. So, yes, they're allowed to work withother tier 1s, but it is part of the overallHarman strategy of having a cloud play.

What does Harman bring to the table interms of distinct competitiveness? Is ityour decades of experience supplyingtop-end audio systems etc?

Well I'd say right now in this area, it's reallyabout having a cohesive connectivity strategy. Ihaven't heard anyone else really talk throughthat with a defined plan in each area.

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What’s the commercial status of thebusiness withToyota? How didToyotaeventually come on board with this?

With EnTune in North America, right now it isbeating expectations, so that's a good place tobe.

We had never developed infotainment forToyota before and they've had other suppliersthat are very good. But we showed them whatwe could do at that price point and it was adifferent approach from what others wereoffering.Toyota said that’s interesting, let's do it.

So is the EnTune system in NorthAmerica much more complex andexpensive than theTouch and Go for theEuropean market?

No, they are fairly similar.

And you mentioned other applicationsin the pipeline for other OEMs.

Yes, we've got several other OEMs in thepipeline that will be announced in the next sixmonths.There is a lot of work ongoing todevelop this platform.

You’ve got a very close relationship withQNX which I guess dates back to whenyou owned the company. Is that going tobe the case going forward? I understandyou’re also active in the GENIVIAlliance. Could you explain what yourphilosophy is in this area?

TThat's a more complicated one for sure. First,on the QNX side, obviously there’s been a longhistory with a good relationship and, for us, it's acompany we can trust.We feel really happywith what we've been doing there and everysystem launched and announced uses a QNXsystem.

Is that going to be the case in the futurethough?

The future's the future, so it's hard to say whatwill happen there, but we felt that it wasimportant from the Harman side to make sureour needs and our customer needs arereflected in the work of the GENIVI Alliance.Should that solution come to real fruition, it'llmeet our requirements and our customerrequirements. It makes sense to be involved.

Would any change like that be driven byOEM customers then?

It varies by OEM. Some OEMs are happy for usto make that decision, trusting Harman’sopinion. Others have a very passionate interestin this field and will make the decisionthemselves.

You previously mentionedupgradeability and that’s obviously reallykey at the moment.How is thatachieved in practice?

This is where I was going with the idea of aframework where you can develop applicationslike you would for a phone and add those ontoa device.You also have this idea of getting your

new feature from a smartphone app. But evenbetter to us is getting a new feature from thecloud. Consider how Aha can work; we'verecently announced the integration with Slacker- now that can be available on the head unit.You can have a new podcast. If they create aGoogle+ integration, you just have a newchannel - Google+ - and it starts working.You've had no change in the head unit, all thechanges were done in the cloud.We move thisinterface, a single interface, from the head unitto the cloud and so that the head unit alwaysstays the same, so we don't need head unitcode changes.

So if I buy aToyotaYaris in the next fewmonths with theTouch and Go systemin it, the hardware will always remainthe same in future but it can beupgraded continuously throughout myownership and beyond?

Yes.That's exactly the idea, in that case therewill be new apps and features developed for itover time. It will also bring in the Aha solutionand then that gives you additional freedom.

What’s the thrust of your developmentin the HMI and safety areas? Is it focusedon voice activation? I noticed you didsomething at the 2011 Frankfurt showthat was called ‘situational HMI’ - couldyou spend a few moments outliningwhere you are on that?

HMI is actually very significant for us.We havespecific designers and user interface expertswho work purely on this.The key issue is to tryto get people away from reading and beingdistracted. So we're spending a lot of timeconsidering interactivity, how interactive is it? If acar speaks to me in an appropriate way I willinteract with it in a natural way. So voice is agood medium, touch is also good in certainsituations. It's really about trying to get to therelevant information you want as quickly andeasily as possible without searching throughmenus and looking at the overall interactivity. Iwon’t tell you what my current car is, but it'snot our infotainment system. But, let me tellyou, if you use the voice on that car you'll neveruse voice again. I'm now convinced it's lesswork to read phone contacts; it's just so poorbut it has nothing to do with the voicerecognition. It recognises my voice but it's whatwe call a speech dialogue system and it’s theinteractivity that lets it down. It's designed sopoorly.

The other things that stood out atFrankfurt were the augmentednavigation and park assistant, both ofwhich use camera systems. Is thatsomething new for Harman - to beintegrating cameras?

That's been going on for some time, but we'renow starting to promote it publicly.We havereceived a lot of interest from OEMs and weare starting to see these technologies showingup on RFQs as the awareness grows. Harman isnow deeply involved in camera-basedtechnologies and again, this forms part of oursafety activity. I think augmented navigation isjust fantastic. If you're hitting a trickyroundabout and you get an instruction fromyour navigation say, take the third exit, you endup being focussed on counting the exits. It's justtoo complicated and it’s so much easier if youoverlay an arrow and say, it's this one. Even ifyou just glance at this you're seeing what's rightin front of your car, you're not missing it. So, tome, that's a much safer way to deal withchallenging intersections than anything elseavailable today.

Does Harman have the cameratechnology in-house?

We're focusing on the image processing andthe algorithms.We have shown applicationswith the algorithms you saw that are runningdirectly on the head unit, or on a secondarypiece/ECU. Harman is really focusing on theimage processing itself. Camera hardware issupplied by an outside company.

You’ve also made an announcementwith Stolman regarding NFCtechnology.Where is that right now? Itseems a potentially interestingdevelopment for Harman - what sort ofapplications have you in mind?

IIn the application of NFC we look at this froma few different angles.The first one is what wecall Touch and Connect and this is really goingto affect people.You would be shocked at justhow few people actually connect theirBluetooth phone to their car.The rates areextremely low. Now we're putting inWi-Fi,which we did first for Audi as well as otherOEMs who are offering these rolling hotspots.

Enabling people to connect a phone by justtouching it to the head unit of the car isfantastic.We also have features forpersonalisation; the idea is that although mywife and I might swap keys once in a while,maybe accidentally, maybe on purpose, wedon't swap phones.The whole concept is thatyour phone becomes a proxy for your

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personality as opposed to your key.You havethe key now and you can unlock the door, yourcar seat moves to where you like it, andeverything is where you like it, your preferredradio stations, etc.That's all fine, but your phoneis an even better proxy for that because youdon't swap those.The next piece of technologyis what we call Touch and Confirm, it's a totalapp download for purchases that are going tocome directly over the air.We think that's agood way to use your NFC as a wallet. Insummary we are offering personalisation andyour first connectivity as well as then confirmingpurchases.

Is that way down the line or somethingthat’s imminent in terms ofapplications?

I would say it’s very imminent.We have our firstOEM programme. It’s moving very fast.

Just a final question regardingAsia.You’ve invested a lot in China andelsewhere inAsia so could you justprovide a perspective on how things aredeveloping in the region?

Asia is hot, it's growing. In China, everyoneknows the numbers are staggering.You need alarge development centre such as Harman hascreated in the market because you have to liveand breathe it.We've put in place a biginvestment to reflect the importance of themarket and you have to create specific solutionsto match the behaviour and market demands.For example, a lot of cars are being chauffeur-driven in Asia and there are considerablydifferent aspects to the traffic there. In most ofthe western world the car owner is the primarydriver. In China, in parts of the Middle East andin Russia that’s not the case and you needdifferent solutions. Just take something like rearseat entertainment. In the US, rear seatentertainment is all about movies for the kids,so that they'll leave you in peace while youdrive. Rear seat entertainment in China is forthe executive to make use of his time while he'ssitting in his three-hour traffic jam.

Are you finding the OEMs in China to bepretty receptive to new systems?

Yes, certainly. I think having a large presencesuch as Harman has developed there helps.Yes,they know that we are there to stay andHarman is a supplier they can depend upon.

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On Call wasVolvo’s first big telematics product and, as the industry has developed,so hasVolvo’s approach to connectivity.Mikael Gustavsson,Director of theConnectivity HUB talks toAutomotiveWorld about the future of connectedtechnology atVolvo

Could you outline howVolvo’s involvement in connectivity originated?

We realised at the beginning of 2010 that we had to work with connectivity in a completely newway.That’s because when you try to introduce or include this new type of technology, you have togo beyond the traditional car manufacturers and bring in inspiration and thoughts from otherindustries, such as mobile communications and so on. So we brought together inVolvo Cars a groupof people with special skills and formed a specific hub or group. It’s the same direction we’ve used inthe past for hybrid-related work and active safety features that are launched almost every year. Wehave quite an established strategy and that's why I was appointed to this job to lead this. It's not aproject but it's more like team work, with members representing all different areas ofVolvo Carsthat have to contribute in some way to make connectivity a reality.That includes of course the R&Dfor cars, but it also includesVolvo Cars IT - the IT Department has so far focused on internal ITinfrastructure but is now also involved in delivering services to customers.Then we are alsoincluding manufacturing, the marketing side, product planning and customer service.All areas have tocontribute in some way to build connectivity - all are important.

How many people are part of this teamat present?

It started quite low, but now, together with thepeople in the different programmes for carsthat are coming in the future we are quite closeto 100 people right now.They are associatedwith different programmes and have very shortperiods in which to work on projects that willbe in the hands of the consumer in four to fiveyears.

Is it correct to say that the HUB’sactivities are a sort of evolution fromthe telematics service thatVolvo hasoffered for some years, such as On Call?

Yes. On Call is today’s platform for connectivitybut it has only been used for safety and security

features so far. It would be an excellent platformfor convenience items as well.We started off onquite a small scale for model year 2011 vehiclesin mid-2010 and then extended applicationsthrough to model year 2012 cars.

For context, could you tell me a littleabout the history ofWireless Car,Volvo’sOn Call provider?

It started up in the late 1990s when we part ofthe largerVolvo Group. It was a joint venturebetweenVolvo, Erickson and the Swedishnational telecom companyTelia.Then the groupwas split in 1999 and we became owned byFord.Wireless Car is now the telematics serviceprovider for us.

Interview:

Mikael GustavssonDirector Connectivity Hub,Volvo Cars

‘When you try tointroduce or include thisnew type of technology,you have to go beyondthe traditional carmanufacturers and haveto bring in inspiration andthoughts from otherindustries, such as mobilecommunications’

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Am I right in saying you have to workquite closely with them?

Yes, but they are classed as a supplier.We arenot part of the same company.

Does the On Call system have any kindof navigation abilities at the moment?

No it doesn't have, all that is close to that isthat we have a caller fix.You also have a journeylog so you get data out from the system into amobile app and then you can export it to Excel,for instance, and make a journey log. But wedon't have the navigation features that you havein the OnStar systems etc.

We offer a navigation system but it's notconnected toVolvo On Call. It's included in theinfotainment centre, it's an additional option.We have an integrated 7inch display in thecentre stack.You can also operate it with voiceactivation.

Are the new apps actually available atthe moment on a specific vehicle?

Yes an app for a smart phone controllingfunctions in the car or just reading outinformation from the car and that's connectedto On Call as an option. In the future of coursewe will include many more customer servicesthat connect to it.

It's available on all 2012 model yearVolvo carsfrom the smallest to the biggest one and wehave also chosen to make it available on mobilephones including iPhones and Android models.So I think we have covered quite a lot ofconsumers out there.

It's a free app and the cost for the consumer isthe purchase of the On Call option.Theestimated recommended retail price is about€700 in Europe for that option, but thatincludes the safety and security features. Newcar buyers get two years free subscription andafter two years they can then subscribe if theywish to continue.

There are several approaches beingtaken with regards to operating systems- what are your favoured strategies atthe moment?

That's one of the most interesting questionsright now.There a lot of people who think thatyou should embed a communication module inyour car.

But having an embeddedcommunication module is somethingthat you do anyway with the On Callsystem?

Yes, we do it with On Call, but that is quiteexpensive compared to what you can achievewith different approaches. It's quite an

expensive component. Of course there are acertain percentage of customers who will pay,but some customers don't want to pay for thattype of equipment.Their approach is to buy agood smartphone that has the capability andthe capacity that is better than this embeddedmodule. So we think that the most flexible, themost customer-oriented way is to have a hybridsolution that the customer can choose. Butthere are also a lot of people who think thatthe mirror link set up or the iPhone way couldbe the best way to do it.A lot of companiesmay go for some sort of all-in system to coverthose areas because they don't know what thewinning horse will be at present.

We have to look at everything because wecannot say today who will be the winner.Probably in the long term there will be acommunication module in all cars because itwill support not only the connectivity part butother things as well.We have to create a newbusiness model and it takes a long time toachieve that.We feel that consumers will have alot of applications in their smartphones thatprobably will not be automotive, but which theywant to bring into the car even if they can’tinteract with them through the HMI. I think theflexibility will satisfy the consumer in the end.

Cost is surely a vital issue here as well.There seems to be a need to try andprovide high technology at the lowestpossible cost.

Yes.

Do you see the growth of smartphonesand what customers want to do withthose as the key driver for changes inthe next few years?

Yes, I think that is one of two things which wefeel are very strong trends. First, consumershave the possibility to listen to music, getinformation or other media wherever they arewhen they have the smartphone with them.Wesee a very clear demand from those sameconsumers to have the same functionality in a

more integrated way in a car infotainmentsystem.You know people sometimes have tospend a lot of time in their car, going to andfrom their work for example, so they would liketo bring that functionality into the car in asimple and safe way. Second, we feel thatconsumers today like to have more effortlessownership, and we think this system could bevery good to create this more effortlessownership for the customer.The advantagefrom our perspective is that we get customersthat stick for longer with our business and toour dealerships and so on for a longer period.

Do you see it as an opportunity forfurther brand differentiation as well?

Yes, I think it is a trend right now to addconnectivity to the car and to highlight it in away that can improve differentiation, butprobably that will switch over to become moreof a commodity in future years.We've seen thetrend with CO2 and emissions.That also led tosome sort of differentiation for some years buthas now become a commodity. It will be a partof brand differentiation for some time but Ithink the most differentiating part of that is tocreate an intuitive HMI as well. As you know,Volvo cars are very much about safety and wethink we have an advantage when it comes tobringing the smartphone into the car and usingit safely to enhance the driving experience.

So what approach are you taking?Are you working closely with specialistinfotainment suppliers and moregeneral tier ones?

The main difference when dealing with this typeof functionality is that you cannot rely on justthe traditional big tier ones.They are obviouslyvery competent in producing hardware andsoftware for infotainment systems, but whenyou come to this type of functionality you are inthe content and the apps area, they are not thenumber ones. I think we can see a quite similarscenario in the mobile phone area. For instanceif you take Sony Ericsson, they discovered someyears ago that they had to completely leave thecontent side because they could not controlthat operation and were not in charge of thecontent that customers want to have in theirsmartphones.They had to focus on selling avery good platform for the consumer with avery good HMI.You see the same thing withSamsung, HTC and especially also Apple withiPhones.The big suppliers have to deliverentertainment platforms that make it possiblefor the car manufacturers to bring in third partycontent in some way.What we are working onright now is to both create these platforms andalso create partnerships with differentcompanies around the world that can deliverthe content that our customers would like tohave in their cars in the future.

Can you use a standard platform rightacross all your models or do you have totake a different approach for eachmodel?

You have to have some sort of standard.Wetalk about the electrical architecture because it’sone of the most expensive parts of cars todayand it will become more expensive if we arelooking at it in terms of the percentage of thetotal cost of the car. However, there will alsohave to be differences because there will becustomers in the upper segments that wouldlike to have the most advanced sorts offunctionality, while in the lower segments thereare those that don't expect that type offunctionality. So we have to do some sort ofsegmentation as well. But the cost of thesystems is the tricky part because they are notcheap, especially when we want to bring inmobile communications hardware and makethem adhere to automotive specifications.Thenit becomes quite costly.The tricky part for a lotof car manufacturers is to create a businessmodel that makes it profitable to do it. I'm not

talking about only selling cars and options - youhave to bring in new revenue streams that havenot been the traditional way of making moneyout of the car business. I can’t give you detailsbut you can imagine what I’m talking about.

One of the other key factors here is thedifferent speed of product developmentfound in the consumer electronicsindustry versus that in the automotiveindustry. If I’m buying aVolvo with astate of the art infotainment systemnow, I want it to be engineered so it’sstill relevant in ten years’ time. Is thatsomething that you prioritise?

All car manufacturers who compete in thissegment have to work on that because thatreflects consumer expectation and consumerbehaviour. Consumers have been conditionedfor some years now that they can frequentlyupgrade their home computers, theirsmartphones etc, so they also haveexpectations about upgrading.We’ve had thepossibility for 13 years or so to upgrade carsand to have software downloads at thedealerships. But that was, and still is, quite acostly way to do.We had embedded softwarethat takes a lot of time and costs a lot of moneyjust to develop and verify. So we have to havesome sort of solution where you can downloadapplications and update customer experienceduring the lifetime of the car. I think that is theexpectation.

So if I buy aVolvo today and want anavigation system,what are the optionsbesides taking a portable unit into thecar?

We offer a navigation system but it's notconnected toVolvo OnCall. It's included in theinfotainment centre. It's an additional option.We have an integrated 7 inch display in thecentre stack.You can also operate it with voiceactivation.

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Are there any differences from aregional perspective that you have totake account of when developingconnectivity solutions?Are there likelyto be different trends in NorthAmerica,versus Europe andAsia or can youengineer a single global platform thatdoesn’t require regional differentiation?

I think that from the function and focusperspective, customer expectations and needsare quite the same, whether it is music,information, the need for updates, etc.Thedifference is that the North American market isalready more used to this type of functionality -it's usually incorporated when you purchase thecar.They have different business models of howto make money out of this.Take for instanceOnStar : in the Chinese market they tend to begadget freaks and like to show off thisfunctionality to their friends.The core value ofthis type of functionality is to be able to listento music and to get information - to get mediawherever you are, to have the internet andhave the functions that you have in yoursmartphone. I think it's the same expectations.

Is your ownership by a Chinese companyrelevant in this area? Do you worktogether with Geely at all?

No not at all.We are completely isolated fromeach other and I think that is the only way todo it because otherwise we will mix brands andthat is not good for Geely.The only relevancereally is that we have a very aggressive growthplan in China.We have plant developments andare right now starting up a product planning,design and R&D centre to the north ofShanghai to develop localisation of the cars andthere is also a special model for the Chinesemarket.We have a plan to sell 200,000 cars inChina in some years from now, so it's quite anaggressive plan and that's good for us becausethen we get scale economies and so on so. Ofcourse, the Chinese owner opens some doorsfor us and it's much trickier for some of ourcompetitors.

We’re starting to see somesophisticated infotainment systemsfiltering into the market here in Europe,that have been available in NorthAmerica for some time.Thecommercialisation phase appears to bewell underway, but where isVolvo interms of this at present?

We are working very hard. I cannot of coursetell you the exact plan, but it will pop up insome years inVolvo cars in Europe and in Chinaof course.

What’s your take on the E-Call systemdebate in Europe at present? Does ithave relevance here?

Yes, of course it has relevance, because if thatoccurs, we will have to put the same module inall cars in Europe and that will influence bothour connectivity and also the technicalarchitecture of the car.We are part of thedialogue and we continuously investigate whatis happening in the European Commission andso on regarding the legal requirements.

They have a huge challenge to build up theinfrastructure with mobile operators, etc. It's avery, very big job to make it happen acrossEurope, in all 27 countries, it's a huge task. Butof course if it happens we are ready.

Are you involved in any of the researchgroups or consortia, for example theCar Connectivity Consortium and theGENIVIAlliance,which are active in thisarea?

The Car Connectivity Consortium is very muchfocusing on mirror link.We are not part of thatconsortium but we are looking at what'shappening and it's interesting to keep abreast ofthings . It will be interesting next year to seewhat's happening with this, whether it will besome sort of standard or if it will die. I reallydon’t know.

Just going back to the HMI issues wetalked about.With theVolvo brand’sreputation for safety and the growingconcerns about driver distraction,especially in NorthAmerica, do you seevoice activation as critical goingforward? I believe the conceptYou carhad slightly more sophisticated systemssuch as HUD and touch screens.

The corporateYou car with the touch screenand so on could be the future ofVolvo Cars,but we cannot promise that will be the case. Ithink that the number one interaction withthese types of systems will be voice, becausethat is the safest way.We then have tointroduce more customer friendly activation,one shot destinations rather than complexmenus.You need a vehicle HMI that can controlthe functionality without distracting the driver -you have to keep your eyes on the road andHUD displays can support that.

There seems to be a need to createsomething like a wireless hotspot withinthe car so that all occupants, especiallychildren, can use connected devicesduring a journey. Is that somethingthat’s coming withVolvo?

I think it will be a clear requirement fromcustomers because they don't like to haveseparate data plans for every device. It’s a clearconnectivity trend that most car manufacturerswill aim to meet through hotspot functionality.

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drive,connect,arrive...

Interview:

Jim NardulliSeniorVice President,Americas and Global Telematics,NNG Kft

Having established a strong position inthe aftermarket you’re transitioningyour business more towards the OEMside.How far has that evolved to dateand what are the growth prospectsoutside of NorthAmerica?

We saw the train coming. It didn’t take a geniusto look around three years ago and say thisPND business is going to change.We looked atthe way the market was consolidating, the waythat the vertically integrated players like GarminandTomTom were eating the market anddropping prices to gain share. So weunderstood the pressures that were coming.While we still see growth in the emergingmarkets around the world for PND, we focusedour company three years ago on automotiveline fit.We did that by targeting tier oneproviders.There’s a reason we did that.

First of all, you have to awfully big to be a tierone and handle the interaction with theautomotive brands because of their massiverequirements. More importantly, we saw acompetitive issue coming up for the tier onesand I really want to get into that later because Ithink that’s a major driving force in our industryright now. So we targeted that level three yearsago and that was our main job - to go out andfigure out how to get us into that business.Wewere reasonably successful - we havecommitments under contract now for over 8million units ranging from Ford cars in Australiaand New Zealand, to theToyota Camry inNorth America and Europe and the SubaruImpreza in North America.We have oursoftware going into Renault cars on their newlow-cost platform. So we were fairly successfulin jumping into that business - in partnershipwith the tier ones.

Now, on the services side, interestingly, we’vemaintained our direct-to-OEM relationshipsproviding on-line services for these units - mapupdates which morph into subscriptions fortraffic, speed camera data etc.That’s becausewe’re one of the only ones with this end-to-endplatform that we built.We’ve been verysuccessful, I think, but it’s been a heck of a lot ofwork.We see nothing but growth over the nextfive years - two model year cycles, CY2013onto CY2015 and even CY2016. CY2015 isalready close to set, so we can see how it’sgoing.We see this as the major growth area forour company.We’ve spent considerableresources in the last five years, learning how todeploy location-based services (LBS) into andwithin our software stack.

Next, we expand to the broader infotainmentsystems of the car so that we can take a wholeproduct approach for the user experience - notunlike the philosophy that drives Apple.Whilewe can’t control the manufacturing spec of thehardware, the more of that user experiencethat we can directly control, the better the userexperience is going to be; the more seamless,the more solid.We just think that the traditionalsystem integrator approach leads to reallylumpy products that don’t give a greatexperience.You end up with a user manual forthe infotainment system that’s longer than thatfor the car itself. And that’s not going to work.

Apple has taught the world that it’s best tocontrol as much of the user experience aspossible.That’s our focus and we think that willdelight consumers at the end of the day.That’sbasically our simple approach to that. I thinkautomotive OEMs are in the midst of a rapidlychanging panorama around them. It’s not as iftechnology has had some kind of radicalbreakthrough; it’s more about evolvingconsumer expectations of what the car offers -the intersection between the geospatialcomponent and the wide array of consumer-oriented applications including social media andthe like.All of those have a geospatialcomponent because it’s about ’where?’. And youcan’t answer the ‘where’ without the map databeing underneath.

Are the OEMs really stumbling about ina dark room in all this?

I don’t think they’re really stumbling about.Theway I look at it is they have a really tough roadto travel. In my mind they’re caught betweenthe customer that responds to highperformance, sportiness, radical new technology- and that’s what sells cars, right?When you or Igo and buy a car we don’t respond to an adthat says this is the slowest accelerating, poorestcornering, safest car in the world because ittakes control for you and assumes you’re anidiot driver.You and I wouldn’t buy a car basedon that scenario. Most car buyers I know buy acar based on aspirations. Look at thehorsepower war that’s going on in theautomotive industry now, it’s crazy. I think theOEMs are caught between the need to havecars that have this radical technology,performance and sportiness and an increasinglypesky regulatory climate where there arepeople in very serious positions in governmentadvocating reductions in speed limits, limits onthe use of technology in the car, autonomouscontrol of essential vehicle dynamics etc.All of

Having established a strong standing in the aftermarket,NNG Kft is making the boldmove of moving into OEM supplying. Jim Nardulli, SeniorVice President,Americasand GlobalTelematics at NNG Kft, discusses the business prospects of OEMs in thedeveloping 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 GPSnavigation.We’ve shipped close to 15 million units. More interestingly, we do complete end-to-enddelivery of content and services. By that, I mean we have a fully deployed ecosystem aggregatingcontent and services from several hundred providers all around the world.We compile that contentand services and deliver them into a flexible commercial environment directly into the embeddedsoftware in the car, which we also control.That’s a link that people don’t appreciate yet. Lots of folksare trying to build that out.We’ve been doing it for three years now and we have over 1.3 millionregistered users.We saw early on that it’s one thing to find content and services but it’s anotherthing to be able to go out and actually deliver those all the way. Not just stop at some point.Wehandle the commercial side on both ends – managing contracts around the world at the wholesalelevel and we manage the e-commerce on the consumer level on the delivery.That’s one of the mainpoints of our company that often gets overlooked.All of this is done on a white label basis - we doit for some of the largest brands on earth.

Jim Nardulli

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these are aimed at safety. I know a tension hasalways existed but I see it deepening right nowand escalating, especially in the US. I see that asa major issue for the OEMs: to try and keep upwith the dual role of dealing with theseregulatory and safety issues and satisfying thecar buyers wants.At the end of the day they’vegot to sell cars.

The argument we hear more is thatconsumers, particularly youngerconsumers, are looking increasingly atfeatures such as connectivity ratherthan performance features, which Iguess is a further challenge for theOEMs?

There was a study that suggested people wouldrather do without a car than connectivity. I’d saywe should be careful not to read too much intothat. If that were true, there wouldn’t be amarket for Jaguar cars, 600hp ChevroletCamaros etc.These are mainstream cars andare going to sell a lot. People that aspire to a carlike the Camaro and can’t afford it will buy astepped-down version. So they can still look likethey have it. It’s very interesting how thepsychology works. People react to things in thesame way whether it’s a car or a restaurant. It’sconsumerism. People will go to a restaurant thatadvertises heart-healthy food and they’ll orderthe fettuccine alfredo.That’s how people are -we should be careful how we review some ofthese studies.

When you spoke at theAutomotiveMegatrends USA 2012 conference inDetroit you were emphasising theimportance of the ‘what’ compared withthe ‘how’, but not many people seem towant to discuss that.

I call this the tyranny of the engineers.We’vedone some projects integrating the smartphoneinto the car with the Pioneer product in Europeand so forth. Our software stack is built on aone technology principle - we port that to allthe major operating systems.We’ve the samecode base for everything, which makes us alogical choice for the smartphone integration.But I don’t see this as an issue that’s abouttechnology. I see the fundamental issue to bewhat I call the complexity problem. I honestlybelieve consumers have lost all tolerance forcomplexity. If the industry can achieve asituation where the user experience is ‘it justworks’, then the smartphone integration storywill be successful.

With the tendency towards Cloud-residency ofcontent apps, does it really matter? If Steve Jobswas right and i-Cloud is where we’re headed -and I think he was - then who cares if you’reintegrating the smartphone, because all yourstuff is on the Cloud. It’s just easier to have aCPU and a SIM card or some kind of cellularradio in the car.And there’s another reason tothink about this. Consider the wirelessoperators.Their main mission in life, as theworld approaches an equilibrium or saturationof mobile devices into the population, is toincrease non-messaging data-side revenue. Ifyou read their annual reports, you’ll find it inevery one of them. It’s the wireless guys’ missionto ship more SIM cards for data only.The voicetraffic is already killing them.We can outfit a carcheaply with a SIM card in a 3G radio that’snon-voice.We can enable, for a very low costper month, quite a lot of stuff. Because youdon’t need big fat bandwidth for in-the-car use.You just don’t.

Someone once taught me ’follow the money.’ Ifthe wireless operators have a significant need toget more of these M2M SIM cards out therethen that’s what’s going to happen, becausethey’re going to handle the pricing accordingly.They’re going to resist tethering and personalHotSpots, and the like, if it is in their financialinterest to do so. So if we can make it moresimple as a user experience, plus make itaffordable, plus keep the wireless operatorshappy then that’s how it’s going to go. Hackingsmartphone apps to the in-dash display is prettybrain dead really.An app designed for use onsmartphone is antithetical to the in-car use case.Jumping through hoops to solve that problem isthe result of leading with the how instead of thewhat. I see this all the time when developersand engineers dream up slideware andsomehow it becomes corporate mantra.Nokia’s mirrorlink is a good example.

I think the point you were making at theconference was that there is a dangerthat no-one, at least the traditional autoplayers,makes any money out of all thisand that there’s a need to define abusiness model.

OK, let’s look at that for a minute.You have tolook at it in terms of the whole value chain.Tierone players face an evolving, and I think afundamentally shifting, competitive landscape.Companies such as Nokia, Garmin andTomTomneed to find growth outside the PND business.Everybody knows that.They have hardware

manufacturing expertise, they provide anintegrated whole product and in the case ofNokia andTomTom that even extends to themap data. So from a competitive standpoint, thisought to provide something for the legacy tierone guys to really watch and think about.By definition, location-aware apps and serviceshave a geospatial or map foundation and thatbrings Google into the picture as well now.While they have no hardware savvy, rememberthey just bought Motorola.As dysfunctional aswe all know Motorola had become, they remaina prestigious, capable hardware company - theyare a hardware powerhouse with loads ofexperience. In a strange way it would be kind ofan ironic twist if, through the acquisition byGoogle, Motorola once again fulfilled on thevision that gave the company its name. It got itsname from the Galvins, who decided theywanted to put a victrola (radio) in every motorcar.The Galvin family, who founded Motorola,decided it was a cool idea to do that and thencombined the two words, motorcar andvictrola, to form the new company name.Thatwas the birth of Motorola. Could it be thatGoogle made that acquisition in part becausethey knew they were going to need hardwareexpertise to become a tier one player in theautomotive business?

Do you think that’s going to happen?

They’ll say no, that Nardulli is crazy, but fiveyears from now I honestly think that thescenario will be that a player like Google will beable to be so massively competitive that the tierones won’t be able to compete because they[Google] have the whole stack.They have themap data, the apps and software and servicesand if they add the hardware part …. Itbecomes a horizontal attack, which is massivelyexpensive to repel.

I think you said in your speech that theyregarded the centre stack as their realmin the future.

They do and it’s only logical because the thingthat Google thrives on is consumer interaction.People spend hours a day in their cars. Ihonestly believe they’ll do that. I think it was agenius acquisition if they go that route. In myview, and I don’t have any inside information,this is just my analysis, I think Nokia thinks thatas well. I think Nokia sees their ability to savetheir company in the location and commercedivision that they created.That includes all thesame assets that Google has, except for theadvertising platform that Nokia is feverishly

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trying to build.They see it as a platform war andthey see players that don’t have all the assets askind of also-rans. Nokia has the software fornav, they have the location based servicesintegration, they have the developer community.Now they’re withWindows.They have thehardware expertise for sure.They can go intoany OEM and basically be massively competitiveagainst anyone else because they can discountthe map thing.That’s the 800lb gorilla thatnobody’s publicly talking about even if they’rethinking about it.

So you believe that’s a threat to thetraditional tier ones?

Hell yes. Put yourself in the position of the CEOof a tier one.You are being outflanked becauseyou’re up against an army that has weapons thatyou don’t have.There’s a reason Garmin hired aguy from Harman and opened an office inFarmington Hills - it’s not just fun and games.

The only way to make telematics widespread isto understand that at the end of the day theconsumer doesn’t pay. In most cases you’re notgoing to pay good money in order to findinformation about where to spend your money.That’s the mission of advertising. I just think thatthe ‘how’ guys have been in the drivers’ seatway too long and it’s time now to get seriousabout the actual business part and makesomething sensible out of this industry.

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