State of the automotive app store, part II

Going hybrid

What used to be called the hybrid approach for connectivity – providing an embedded modem in the head unit while also using the mobile phone for some connectivity – has expanded to include the apps themselves. This means a combination of some smartphone-installed apps with other apps and services being available via an OEM-run app store and accessed from the head unit.

Many OEMs contemplate or are already doing this. And many actually think the telematics industry is likely to converge around this dual approach. (For more on this, see Telematics and the hybrid approach to content delivery.)

As could be expected, this model shares some of the advantages of the smartphone and OEM-run app store models, as well as a couple of unique ones:

·         The OEM has a way of tracking activity and vehicle diagnostics

·         The OEM can ensure that safety and security apps and services are reliable

·         The OEM can focus on essential apps while allowing personalization via the phone

·         The OEM can limit the costs of working with third-party app developers

·         The OEM maintains some control of the application interface and branding

·         Consumers don't need to search for car-branded apps on third-party app stores

And there are disadvantages:

·         Extra cost of modem and app development

·         Some kind of data plan must be enabled

·         More difficult for the OEM to capture revenue from apps due to competition from phone-based apps

·         For driver, switching between in-car and on-phone apps can be cumbersome

·         The OEM must implement mobile wallet or other payment method

·         Billing and revenue-sharing for in-car apps must be handled by the OEM

·         Over-the-air software updates for OEM-provided apps must be handled by the OEM

Says Anna Buettner, manager, IHS Automotive: "The general direction everyone is taking is that safety applications should probably be embedded. When it comes to infotainment, if you want a robust solution, embedded is [also] better."

That said, the smartphone app approach will remain important for entry-level and mid-sized car models, according to Buettner. "The people buying those are the ones with smartphones, and [they are] active with apps," she says, referring, at least in part, to younger folks with fancy phones but less money to spend on luxury vehicles.

But there is also a lot of wait and see, especially in Europe, where many OEMs are holding back on making final strategic decisions about safety/security apps until they see how the pan-European eCall initiative plays out.

"It's been so slow," she says. "So the focus in Europe is still mostly infotainment. In Europe, the OEMs have a good idea of what to do when it comes to infotainment. You have your 10 apps that everyone tries to integrate. Pandora, Facebook, Twitter and any other type of radio app seem to be the must-haves, then location-based services. You need to have a really solid POI database, and most seem to tend to go with Google."

(For more on eCall, see Pan-European eCall: Boon or bust? Part I and Pan-European eCall: Boon or bust? Part II.)

Keeping the vehicle data flowing

There's another crucial element of the hybrid approach, Buettner adds. Even with smartphone apps, the OEM should link to them from within the car's systems so that data can flow back to the OEM’s band-end systems. At the minimum, car makers want to prevent recalls or do them early, Buettner says.

Creating a link to the OEM's back-end would also enable customer relationship management (CRM) functions, including alerts when the car needs servicing and alerting specific car dealers that a vehicle needs servicing.

Covisint aims to do just that for Hyundai Blue Link. According to Tim Evavold, director of automotive delivery at Covisint, the battle between smartphone and OEM-run app stores is over. "The answer is both,” he says. “OEMs and content providers need to be able to have a system that supports multiple connectivities."

Creating a software layer that orchestrates various services, as Covisint does, not only supports multiple types of connectivity, it also allows OEMs the flexibility to quickly add services and to let customers choose what they want. "We can tightly integrate to a global app center and provide a regional look and feel, so the OEM can have global standardization," Evavold says.

And he says Covisint's Cloud platform approach can remove some of the challenges of OEM-run app stores, including ease of use and app discovery. With Hyundai Blue Link, "You can manage preferences on a website, tablet or phone, and they're available in the car,” he says. “If I update any of my account information in any environment, it's immediately updated in all of those places."

Because Hyundai customers are connected via a variety of devices, Hyundai can also help with app discovery by monitoring whether certain car-centric apps are being used. If they are not, Hyundai can ping the driver via the phone or e-mail and pop up an offer, such as, "We have your driving analytics report. Would you like to view it?" 

(For more on automotive app stores, see Content and Apps for Automotive Europe: Beyond the app store.)

(Return next week for the third part of the series.)

Susan Kuchinskas is a regular contributor to TU. 

For all the latest telematics trends, check out Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013The Automotive HMI Report 2013Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.


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