Experts and industry leaders warn OEMs not to cede connected-car services to technology companies. Susan Kuchinskas reports on the first day of Telematics Detroit 2014.
The telematics industry may have gotten away with an initial focus on safety and security, and, more recently, connected infotainment, but these will hardly do going forward, said Thilo Koslowski, vice president and distinguished analyst at Gartner, during the opening keynote on day one of Telematics Detroit 2014, a two-day Telematics Update conference in Novi, Mich.
"Technology will define the future of the automotive industry," he said.
Connecting with the broader mobile ecosystem will be the key, Koslowski added, describing the coming of digital lifestyle convergence, when consumers will finally be able to enjoy their favorite content and services without interruption, no matter what device they use.
Already, the sector sees the emergence of broader, non-automotive-specific business models, according to Koslowski. And some of the consumer electronics (CE) and Internet companies may, in fact, end up dominating some of these business models.
Noting Apple’s recent introduction of Home Kit for the connected home and Health Kit, a new framework for managing a user's health-related information, Kevin Link, SVP & GM China, Verizon Telematics, went as far as to ask: "How long do you think it will be before we see the Car Kit?"
Apple and Google: Enemies at the gates?
But then again, letting Apple, Google and their ilk dominate may not be such a bad thing.
In a study of U.S. vehicle owners completed by Gartner in the first quarter of 2014, 58% of respondents agreed with the statement that "automakers should just let technology companies like Apple, Google or Samsung design and manage their in-vehicle technology offerings instead of developing their own systems."
Already, some automakers have embraced the tech giants. Edward Rhodes, senior group manager, Hyundai Motor America, said that Hyundai is continuing to leverage its relationship with Google and that its point-of-interest search is now powered by Google Voice because, he said, "It's faster and more reliable."
Still, there is the danger of letting the likes of Apple and Google advance too far, said Chris Ruff, CEO and president of UIEvolution. According to him, Internet and CE companies are motivated to enter the automotive space to sell more smartphones or increase usage of their apps. "They're not trying to make a better car,” he said. “OEMs should be careful – but it may be too late."
The hybrid approach to connectivity
Some telematics debates never seem die, and the embedded versus brought-in approach to connectivity is one of these debates.
The majority of OEMs has now put a stake in the sand on one side of the debate or the other. But that doesn't mean those stakes won't move toward the center. In fact, the consensus among experts and industry leaders on day one of Telematics Detroit 2014 was that the hybrid approach will dominate for some time to come.
Philip M. Abram, chief infotainment officer for General Motors, acknowledged as much when he said: "You can't defend a position that's indefensible. It's inevitable, I believe, that people will want their digital lives brought into the car. Right now, that's being defined by smartphones. As automakers, we have to accommodate that."
Nakul Duggal, vice president of product management for Qualcomm, added: "The car will have to have a modem, and there has to be a hybrid model. Apps will have to coexist with things the automaker provides."
In addition, Leon Hong, COO of Airbiquity, noted that even luxury OEMs that were touting fully embedded systems are now starting to implement hybrid solutions. "There are unique vantage points for each type of system," he said.
Looking for unique value
Speaking for the brought-in approach is, for example, the fact that as phone apps become more contextually aware and learn more about individual users' preferences, consumers won't want to go through the learning process again for something in the vehicle.
In a hybrid world – and one in which fast-moving CE players may have the app advantage – OEMs must find ways to differentiate their own offerings if they want to compete.
One idea, according to Ruff, is to approach apps as true features of the car. For example, maps should be a feature of the car because they're so tightly integrated into the driving experience.
Koslowski added: "It's not just about enabling Internet radio in the car – the Apples of the world can do that really well. It's much more important for automotive organizations to embrace the connected driver at all the touchpoints they have – dealership, marketing and engineering."
David Taylor, managing director of AUPEO!, agreed. "The OEM needs to believe it can drive what goes into the car,” he said. “I can't imagine anything more offensive than a Ferrari with [Apple] CarPlay on the dash. The OEM needs to own that experience and look at the automotive-specific use cases. Car companies have to believe they can compete with the Googles and the Apples."
Introducing digital lifestyle
The telematics industry borrowed the concept of the digital lifestyle several years ago, but this year the theme rang particularly loudly – perhaps because of the increasing encroachments of CE companies into the automotive space.
“Without the car, you have a huge gap in being able to link your life experience,” said Tom Gebhardt, president at Panasonic Automotive Systems Company of America. “Consumers don't want to have to change their technology just because they're in the car.”
But that gap is unlikely to close without contextually aware apps and smarter devices that can automatically respond to information about the environment and the user. "We need to move to intuitive services,” said Martin Rosell, managing director at WirelessCar. “Why can't the service know what time I leave the office and what the weather is, and preheat the car if necessary? That's where we need to go. We need to have services follow us, rather than having to call for the services."
Mercedes-Benz aims to do just that with its "predictive user-experience concept," said Johann Jungwirth, president and CEO of Mercedes-Benz Research & Development North America. The goal, according to Jungwirth, is to "create a passionate relationship between customer and car, and immerse the customer in a personalized Mercedes-Benz experience that follows him from one car to another."
The service will launch in Europe in September under the “Mercedes me” brand.
Contextual awareness for the connected car
When it comes to contextual awareness, automakers have an advantage over CE companies, according to Verizon Telematics’ Link.
Automotive systems know where a car is and where it's going, and they can make educated guesses about the intent, for example, if someone leaves home at 8 a.m. on a weekday, it's likely he is going to work. Part of the promise of using context to shape services is that it can help eliminate driver distraction by reducing the need for drivers to interact with the system.
Contextualization can also reduce hassle, for example, by identifying heavy traffic on a standard route and suggesting an alternative. And it can improve comfort, for example, by automatically heating the car.
But carmakers need to get the value proposition just right. "If customers are talking about the technology, we've screwed up,” Abram said. “People don't care about the experience of the connected car; they care if it can make their life better."
In some cases, simpler might actually be better.
AUPEO!’s Taylor noted that there are a lot of very basic use cases in the car that still haven't been adequately addressed – like listening to the radio. "Why do music apps have to have different user interfaces?" he asked. "Before we start on personal, contextual and adaptive, we need to focus on making the simple things simpler, not on adding more features."
One solution to this problem, according to Raj Paul, director – sales & delivery, IoT solutions, LochBridge, is to give consumers more control over what they want to see and how they want to see it.
Panasonic’s Gebhardt added that letting consumers personalize what's delivered in the car reduces the OEM's risk of delivering the wrong thing. "If you let that individual decide, he's 100% satisfied," he said.
(Return tomorrow for our coverage of day two of Telematics Detroit 2014.)
Susan Kuchinskas is a regular contributor to Telematics Update.
For all the latest telematics trends, check out Advanced Automotive Safety USA 2014  on July 8-9 in Novi, Michigan, Insurance Telematics USA 2014  on Sept. 3-4 in Chicago, Telematics Japan 2014  in October in Tokyo, Telematics Munich 2014  on Nov. 10-11 in Munich, Germany, and The Open Mobile Summit  on Nov. 10-11 in San Francisco.
For exclusive telematics business analysis and insight, check out TU’s reports: Insurance Telematics Report 2014 , Connected Fleet Report 2014 , The Automotive HMI Report 2013  and Telematics Connectivity Strategies Report 2013 .