Telematics Munich 2012: Day Two

Krystyna

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30th October 2012

To embed or not to embed, that was the question on day two of Telematics Munich 2012.

The discussion started with Mercedes-Benz, the grand dame of German car manufacturing, and its presentation of a new approach to embedded infotainment with strong reliance on the cloud, continued with Ford, a big proponent of smartphone tethering, and continued to surface time and again as the various speakers took to the podium to discuss everything from advanced vehicle connectivity to emergency calling.

“There is rationale for doing both,” said Paul Hedtke, senior director, business development – automotive and healthcare, Qualcomm. 

The system showcased by Mercedes-Benz is built around an embedded core, but the software layer is no longer a lump of 10+ million lines of code, but rather a modular affair that relies heavily on the cloud for content and increasingly also to run the car’s apps. The advantage of running apps from the cloud is that “no one [has to] go to dealer” any more, said Ralf Lamberti, director of telematics at Mercedes-Benz. “We put [updates] on the back end, and it’s in the car.”

The system, which also allows for the pairing of an iPhone, is part of a trend where devices are increasingly acting as mere windows to the cloud, according to Lamberti, and it matters less and less if these devices are in in-dash displays, tablets or smartphones. Lamberti calls such devices “enabled.”

“We will go down the road from embedded to enabled, devices seamlessly working with the car,” he said. “We will have Web in the car and car in the Web. Web in the car is already there. To put the car in the Web is the next important step.”

Tethered to the smartphone

A few presentations later, Duncan Burrell, connected services and solutions, Ford Europe, made a case for SYNC, the company’s voice-activated connectivity system that debuted in 2007 and is currently being launched in Europe. SYNC relies on the smartphone for both connectivity and, if used in connection with an extension called AppLink, also apps. According to Burrell, tethering is the way to go if mass market adoption of the technology is the goal. According to him, there are already more than four million vehicles with SYNC on the road today, and the number is expected to reach 12 million globally by 2015.

What’s more it spares the company the stress and money of having to produce its own apps. All Ford has to do is make sure the apps are AppLink-enabled and consistent with SYNC’s HMI and driver distraction guidelines. “We are car companies, our primary business is selling cars,” he said.

Half way through the morning, the conversation circled back to yesterday’s topic of customer relationship management (CRM) as a tool to save on costs, enhance customer loyalty and ensure repeat business.

Speaking on the “Customer Relationship Management: Telematics a Key Ally” panel, Tim Johnson, global business development manager with Sprint Velocity, said growing customer willingness to share information was great news for the CRM industry and provided an opportunity to do something “very useful” and “very valuable.”

“Willingness to share information by a customer has changed dramatically,” he said. “It’s the perfect storm of that willingness.” There is another force driving CRM, said Andrei Iordache, advanced product planning, Kia Motors Europe. “The industry is becoming very competitive and very cut-throat,” he said. “It’s not going to be just a fight about capturing customers, but also about keeping them.”

Keeping customers

Still a degree of caution is in order. “We need to understand [local] culture and built-in fear that people will abuse the information that is collected,” said Martin Rosell, managing director of WirelessCar.

A panel called “Vehicle Connectivity: Expectations for the Future” then discussed the the hype surrounding the roll-out of LTE in Europe and what impact it will have on in-vehicle infotainment. One issue raised was that big data means big privacy and security issues. Mercedes-Benz actually employs hackers to probe its vehicles for possible security breaches.

Marcus Heitmann, mobile online services – product marketing, Volkswagen, called implementation of LTE technologies “a bit of a nightmare for us,” particularly when it comes to implementing them globally.

“We are having troubles with frequency allocation,” he said. “The thing is that you have many more frequencies around the globe than you have for UMTS or 2G. But the more annoying thing is the business process behind that. The technical stuff gets worked out, but the business process is what really messes with your head because you have to do it on a global scale.”

Higher data speeds are expected to transform all three cornerstones of in-vehicle infotainment: navigation, entertainment and communication. “When you get to the point when you have 100 Mbit/s pipe into the car, the automakers can actually rearchitect how they implement many of the features by moving many of those processes off board, use the cloud to do the computing,” Hedtke of Qualcomm said.

China and southeast Asia

In a talk on new markets, David McClure, director of consultancy SBD, said that a couple of years ago the BRICs would have been considered emerging markets. Now, they are emerged markets and attention is shifting to China and southeast Asia. SBD sees a rapid adoption of smartphone integration in China, where the telematics ecosystem is still hugely fragmented.

Freemium strategies and couponing are emerging business models, and McClure expects lots of innovation to come out of China, especially since many of the key decision makers are much younger and have less fear, and legacy, of making mistakes. McClure also urged companies to give Chinese consumers, many of whom are buying a car for the first time, time to learn what telematics can do. The right approach, he said, is not to replicate what works in the US or Europe but discover the needs and requirements of Chinese consumers.

In a mid-afternoon panel on the future of EVs, Herbert Halamek of Continental said that the (largely unfulfilled) hype around eMobility helped the industry reach the point of no return for EVs. Nobody knows when the majority of vehicles sold will be EVs, but Halamek and the overwhelming majority of people in the room were sure that point would come sooner rather than later. Olivier Paturet of Nissan Europe pointed out that EVs don't happen on their own; the related infrastructure and ecosystems need to be in place. The EV trend is irreversible, he said, with Halamek pointing out that the most critical obstacle is still price.

Connected cars

As connected car services become more common, billing for those services will become more complex, involving a diverse range of players across the value chain. In a panel on billing, Magnus Lundgren of Ericsson pointed out that OEMs are global and will need to find partners to handle charging in different countries with different payment regulations and payment data restrictions. Global billing will remain a key challenge. The crucial question, of course, is, What kind of relationship with the consumer do you want to have? And as far as the consumer is concerned, Stephane Petti of Orange put it best: Simplify the invoicing experience.

In one of the final sessions of the conference, Jeff Bergquist of IHS came back to what was an underlying theme of the whole event: customer relationship management. For every firm in the ecosystem, connected car services should meet one three main CRM goals: Sell more vehicles, enhance brand image and/or make connected services profitable through an increased connection with customers.