Telematics West Coast – Day 2: The Great Apps Debate

The automotive industry may lag the consumer electronics industry when it comes to innovation, but consumer awareness of automakers' innovation lags just as much. Car companies are trapped in a competition for new features that's largely of their own making, according to Andrew Hart, a director at research firm SBD. That's led to 130 percent growth in the number of automotive apps in the last year alone. Vehicle manufacturers see technology as key to the sales process. But once people buy the car, they don't understand how to use it. The proportion of customers being able to perform basic task, such as finding a radio station, has declined year over year.

And consumers still want the basics. A car dealer identified only as Gaby told the audience that keyless entry is the most-wanted technology, followed by Bluetooth. Even the conference audience validated this. In an audience poll, 52 percent thought that seamless connectivity to mobile devices would be the key differentiator among connected-car systems.

"The pace at which we're pushing out these technologies exceeds the speed at which consumers are learning about the technologies," he said. "There's a disparity between what manufacturers offer in head units and what consumers expect," said Hart. He pointed out that there's a third party adding to the difficulty of selling connected cars to consumers: the dealers.

For various reasons, OEMs deliver multiple head units, meaning dealerships also have to manage as many as 30 different technology solutions – that changes every year.
Explaining them to customers, as well as teaching customers how to use them, is not on. Hart said one dealer told him that if his staff were to complete all the training available, it would be the equivalent of going to medical school.

Add to this staff turnover of 30 to 100 percent a year, and it's not surprising that many dealers brush off questions about infotainment systems. "What's missing," Hart said, "is to have a more focused and ongoing engagement with the technology to help dealers understand the competitive advantages of their system."

Better CRM through data

The industry has long eyed the promise of using vehicle data to improve customer relationships, offer better services and inform product design. Henri LaFrance, technical program manager, connected vehicle, for Volkswagen Group of America, explained how his company is feeding vehicle data to the company's back-end systems, as well as to dealers and service managers.

Car-net was launched in the US market in 2013; in 2014 it went live in Europe and China. "In the last 18 months we've learned an awful lot about a business we thought we knew," LaFrance said.

One big learning was that the customer base is very different in Europe and the United States. "The engineers in Germany had a concept of what people wanted that was different from the brand marketing people in the U.S.," he said.

VW has had good success with sending car owners a monthly vehicle health report. Customers can also request it at any time or access it via an internet portal. They can also choose to have the vehicle health report automatically sent to an authorized service center of their choice. Even if they don't choose that, each report includes a link to a service center. LaFrance said this report has a read rate that's three times higher than any other VW communication.

Should automakers open up?

The value proposition of open source is that it's cheaper and faster to build innovative services on top of a standardized software layer. Scott Burnell, global lead for business development and partner management for Ford, made a plea for adoption of SmartDeviceLink, a technology for connecting third-party applications to automotive systems that Ford has made an open-source GENIVI project. He said it allows app developers to connect seamlessly with cars without having to do custom implementations.

More important, it could help the auto industry stave off the threat from Google and Apple, he said. "Apple and Google are prepared to come in and fix fragmentation. They can fix it faster and better – and that's good for [car] owners," Burnell said. But it's not so good for OEMs, which could lose their branding in the HMI.

Others are telling that story with a different ending. Antti Aumo, vice president of marketing for the Car Connectivity Consortium, the industry alliance of car manufacturers developing MirrorLink, said, "MirrorLink is a vendor-neutral standard. No one has the major stake; it's a number of companies developing it together."

And then there's Linux, which is in a battle for the OS with QNX, according to Rudolf J. Streif, infotainment Specialist for Jaguar Land Rover — and formerly with the Linux foundation. "Trying to displace QNX with another proprietary system won't do any good."

The OS question may be moot. Walter J. Buga, CEO of Arynga, which makes software for ECUs and head units, said that consumers don't care about operating systems; they only care about the end experience.

Said Antti, "The true speed of innovation comes from apps, content and services. Two guys in a garage come up with something great, on the platform provided by Apple or Google. That's why we believe in the smartphone-centric approach."

Connected drivers, connected cities

Connecting cars to infrastructure – V2I or the sexier smart cities – have benefits for both individuals and the cities in which they move. This is something that automakers are just beginning to focus on, according to Robert Gee, product manager, connected solutions for Continental. The concept encompasses not only passenger cars but also traffic, road repair, parking, air quality and even crime. "There are a lot of data sources out there that need to tie together," Gee said. Right now, there's nothing pulling all this data together. But, when there is, it will change the driver's mindset. "It's not just me against the world; it's me as part of the smart city."

Sylvano Carrasco, vice-president of hardware and telematics for GetAround, a car-sharing mobile app, identified the issue of who's going to pay for all this data flowing to and from connected cars. "There has to be value to somebody in the data," he said. "It could be insurance or city infrastructure or dealership. But I'm not convinced that sending all that data has value."

Richard Smith, commercial director of Wejo, a smartphone app that tracks driver behavior, had some ideas. He said that insurers could achieve enough savings by being able to recreate accidents and reduce fraud to pay for the costs of tracking devices.

Data: Privacy, security and utility

With driver tracking, plus the petabytes of data generated by connected cars, come privacy and security concerns. Nissan, with its work in automated driving, electric vehicles and connected cars, has identified many attack surfaces. "It's kind of a nightmare," said Toshiro Muramatsu, director of the vehicle information technology division, Silicon Valley, for Nissan. OEMs need to secure the vehicle systems, backend systems and customers themselves, he said.

Automakers are fighting the security battle in the absence of any established legal precedent, according to Gail Gottehrer, a partner in the law firm of Axinn Veltrop & Harkrider. Gottehrer litigates matters including data breaches and privacy class action suits. Location data is incredibly in demand for all kinds of cases, Gottehrer said.

Meanwhile, the GAO recently concluded that auto companies aren’t adequately informing consumers about the data they collect, nor are they allowing consumers to know how long the data is retained.

Who owns the data generated by the car isn't entirely clear when it comes to telematics.

Automakers should produce clear user agreements that are not buried in user manuals; they should explicitly define who owns the data, what automakers can use it for and what consumers' rights are, she advised.

Even so, data privacy is a moving target that will likely be defined in the courts. She warned, "What's reasonable is a moving target, and it's changing by the day."

(For our coverage of the first day of the conference, see Telematics West Coast – Day 1: Apps Are Not the Answer)

Susan Kuchinskas is a regular contributor to Telematics Update.

For all the latest telematics trends, check out Telematics Munich 2014 on November 10-11 in Munich, Germany, Connected Fleets USA on November 20-21 in Atlanta, USA, the Consumer Telematics Show 2015, January 5 in Las Vegas and Insurance Telematics Europe, April 14-15 in London, UK.