Telematics: Making the most of the app opportunity, part I

Telematics: Making the most of the app opportunity, part I

Greg J. Ogonowski is headed for what he calls a “high-class headache.”
As president of Modulation Index, a two-man outfit based in Diamond Bar, California, he is the man behind StreamS HiFi Radio, a unique audio player capable of streaming high fidelity sound over most EDGE/3GPP cellular networks, thanks to a sophisticated compression technology called High Efficiency Advanced Audio Coding (HE-AAC).

The iPhone app has had an undistinguished run on Apple’s App Store, selling only a few thousand copies over the past couple of years. But it recently caught a big break, when Pioneer added it to its AppRadio, a brand-new aftermarket car radio that integrates smartphone apps.

Encouraged by the Pioneer deal, Ogonowski now wants to bring StreamS HiFi Radio to the wider car industry. And this is where he expects his headache to kick in. “Here comes the staff, here comes a building probably, here comes all the employee problems,” Ogonowski says.

What’s more, here comes a conservative industry that despite its growing appetite for in-car content is only just starting to figure out the preferences of its customers, how and how much to charge, how to integrate the ever-widening array of offerings (smartphone apps integrated with the car’s head unit are a strong contender), and, last but not least, how to work with small businesses like Ogonowski’s.

“He’d probably have more fun sticking bamboo shoots under his finger nails, because in the car industry you are talking about car maker, by car maker, by car maker,” says Roger Lanctot, senior analyst, automotive multimedia and communications service at Strategy Analytics, a technology consultancy.

No common integration standards for in-car content exist at the moment, thus making app development a tedious as well as costly brand-by-brand, even model-by-model, proposition.

For more on common standards, see Telematics, smartphones and the future of connected infotainment and Telematics and EVs: The need for common standards.

“There is no one place to go to get something imported to two or three or half a dozen car makers,” Lanctot says. “If you are lucky, [you are talking about] hundreds of thousands of units.

Whereas, if you head over to the guy making headsets or a wireless carrier, you are talking about millions, tens of millions. So, what is my tolerance for pain?”

Common standards
Absence of common integration standards is just one of the many headaches Ogonowski is likely to suffer. But that does not mean he should quit trying, for the car industry is finally starting to take content and apps seriously.

And now that the argument between smartphone integration and fully embedded solutions has been largely settled in favor of the former, at least for the time being, its looks as though things might actually pick up pace. (For more on smartphone versus embedded solutions, see Telematics and the ‘built-in’ vs. ‘brought-in’ debate.)

“This is a sea change for automotive,” says Jon Bucci, vice president of advanced technology with Toyota Motor Sales, USA. “We really do think that this is going to become one of the top purchase reasons for our customers in the coming years.

We are very engaged now in this new space. It’s not a passing fancy any more.”

Still, given the complexity of the car industry, its emphasis on car safety and sometimes mistrust of companies outside its traditional value chain, the realignment will take time.

“I was at Audi in Ingolstadt in Germany and it’s like the whole city is Audi,” says Dominique Bonte, group director for telematics & navigation with ABIresearch, a technology market intelligence agency. “It’s an incredibly huge organization with very complex structures, very complex procedures and processes.

So it’s very difficult for them to just say, ‘Well, you know, I heard about a new company. We are going to work with them and have their content integrated in our vehicles. They need to go through so many decision making and procedures before they can actually do that.”

When ESPN Audio first started to work with one of the car manufacturers, they were taken aback by having been asked to sign up for the same type of stipulations the OEM would put on a seat belt manufacturer or a window supplier.

They were “all things that don’t affect our business at all,” says Patrick Polking, senior director for business strategy and development at ESPN Audio. “It has been a learning process and still is in some cases for the OEM space.”

There is another catch, according to Bonte. “The automotive industry is traditionally very much concerned with safety, reliability, robustness,” he says. “They can’t just do anything they want. It needs to be reliable; it needs to be tested and certified; and also it needs to be maintained during the lifecycle of the car.

So there are a lot of constraints and limitations that make it more difficult for them to work with a small software developer that may no longer exist in four years.”

Scalable platforms
For Toyota, the top priority was to come up with a scalable multimedia platform that was versatile enough to allow both smart- and feature-phone integration, a platform that was remotely upgradable and that could not only be added to in terms of supported applications, but also subtracted from.

“We needed to make sure we had a really flexible system in play, because this is not something we can just develop and walk away from,” Bucci says. “It’s alive.”
Called Entune, the platform launched last January, featuring five apps (Bing for local search, iHeartRadio with a choice of more than 750 stations, Pandora Internet radio for a personalized listening experience, restaurant reservation service OpenTable. and

It also featured a variety of data services including traffic, weather, sports and stock quotes.

Only then was Toyota ready to start looking at ways to grow Entune’s offerings. But that did not mean throwing its doors open to the entire developer community.

“First of all, it’s a logistical nightmare to administer all of the activity that creates,” Bucci says.

“One of our competitors tried that and they were overwhelmed by the responses.”
Instead, it chose a measured approach that starts with learning about the customer’s preferences and then taking them through a set of increasingly fine filters to determine which feature to bring next.

“We are not in the business of counting who has got more apps than the next guy,” Bucci says. “It’s got to make sense for the customer and it’s got to make sense for the vehicle environment.”

(For more on working with app developers, see Telematics and app development: The advantages of open innovation and Why telematics firms need to work with wireless developers.)

BMW is taking a similar approach. Even though it recently established three AppCenters—in Munich, Shanghai and Mountain View, California—to coordinate new app and content development (some of it happens in-house; some of it comes from outside developers) and bring more speed, flexibility and personalization to the whole process, the German automaker is also proceeding with caution.

“You have to be very careful with the system of the car,” says Eckhard Steinmeier, head of BMW ConnectedDrive.

“We plan to make [things] more and more open, but there are limits of course. The car must be very safe.”

Jan Stojaspal is a regular contributor to TU.

For more on apps, join the sector’s other key players at Content & Apps for Automotive 2012 on April 18-19 in Germany.
For more all the latest telematics trends, visit Consumer Telematics Show 2012 on Jan. 9, 2012 in Las Vegas, V2X Safety & Mobility 2012 USA on March 20-21 in Novi, MI, and Telematics Detroit 2012 on June 6-7, 2012.
For exclusive telematics business analysis and insight, check out TU’s reports on In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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