Why telematics firms need to work with wireless developers

Why telematics firms need to work with wireless developers

It seems like every car-maker wants to get apps into their vehicles.

Application frenzy may cause a tectonic shift in the industry's tiered system that leaves everyone scrambling to find their footing.

A case in point is GM's deal with Google to develop mobile applications and features for its Chevrolet Volt electric car.

The application runs on a Chevrolet Volt mobile app on the Android smartphone, letting the driver see the current location of the car on Google Maps.

Drivers can perform a voice search for a destination on the phone and then send that destination to the Volt to get OnStar Turn-By-Turn directions to the destination.

To get this done, GM presumably worked directly with Google, a collaboration between two multi-billion-dollar corporations.

If so, it's a big departure from the traditional model, where technology is specified by the auto company and then passed down the value chain to a tier 1 supplier, which may pull in one or more lower-tier companies to get the job done.

"Every OEM is re-evaluating how they can best accelerate their solutions to market using their traditional suppliers, as well as new technology suppliers," says Scott Sedlik, vice president of marketing for Inrix, a provider of traffic information services.

"In some cases, that means continuing to work with their tier 1 supplier but ensuring who the tier 1 works with. In other cases, it means working directly with technology companies."

Continental and Ford hope to take advantage of the bustling Android developer community that's churning out applications for smartphones.

But at least in the short term, they may need to do a lot of business development.

Says Android development expert Mark Murphy, founder of CommonsWare, "I feel quite confident that if Ford, Continental, or GM wanted specific apps from specific developers ready for their car-droids, just making a few phone calls to those developers, along with promises of product placement and such, will start that ball rolling."

Disrupting the value chain

If the in-car applications market does come to replicate the phoneindustry, this will create ongoing disruption in the so-called value chain.

No longer will there be a clear development path beginning with the car-maker and moving down through tiers of suppliers.

A big contributor to this shift will be what are coming to be known as hybrid systems, where the car's systems act as both connector to and governor for smartphone apps.

According to Praveen Chandrasekar, global program manager for Frost & Sullivan's automotive and transportation practice, the market for this type of solution is expected to grow from about 1 million in 2009 to about 5.1 million by 2015, in terms of unit shipments, in the North American region alone.

That's a tidy market for OEMs.

While they won't be able to gain revenue from applications, many of which are free in mobile application stores, Chandrasekar says, "OEMs can make money out of this by selling specific human/machine interface solutions and asking the consumers to buy this to access their smartphone apps inside the car."

Developer relations

To make this shift, the auto industry has to learn how to work with the Web and wireless developer community.

There's the issue of speed-to-market, which is a lesson car-makers are getting schooled in.

On-phone navigation—and its rapid adoption by consumers—has juiced the whole industry, Inrix's Sedlik says: "It's significantly accelerated innovation across the value chain. The auto industry has never moved this fast before."

But manufacturers will need to provide not only software development kits and application programming interfaces, but also test environments, so that coders can make sure their software works correctly.

Finally, CommonsWare’s Murphy says, they'll need to provide a mechanism to help both developers and car owners report bugs or problems.

This last is critical, according to research firm iSuppli’s Mark Boyadjis, if we want to avoid adding another link to the value chain: lawyers.

"If you run an app in a vehicle and it fails, and you end up getting lost or hurt, it’s the car manufacturer's fault," Boyadjis says.

Car companies must make sure the applications work, are certified and don't distract drivers.

Otherwise, Boyadjis adds, "Lawyers will go after the highest hanging fruit: the manufacturers."

For more on working with Web developers, see ‘What telematics firms can learn from Web 2.0 ’.Click here

For more on mobile apps, see ‘Telematics and mobile apps: Building a big enough market’. Click here

For more on Google, see ‘Telematics: Google in the driver’s seat?’.Click here

To learn more about our Consumer, Services and Mobile Apps 4 Auto Conference, November 30-1 December 2010, San Diego, CA. Click here

Susan Kuchinskas is a regular contributor to TU.

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