Automakers Grapple with New-Age Dilemma: Software or Hardware?By Bill Visnic May 17, 2010
Over the decades OEMs have gone their separate ways on a number of big strategic matters that ended up becoming major determinants of the industry's winners and losers. Front-wheel drive or rear-wheel drive? Unionized or non-union factories? Global mega-merger or not?
Automakers likewise are diverging around the question of how to approach the onboard "infotainment" revolution. Platforms including General Motors' OnStar, Ford's Sync and Mercedes-Benz's mbrace represent early commitments to widely varying answers.
And Hyundai's recent announcement of tie-ins between iPad and the company's upcoming 2011 Equus luxury sedan is further indication that every OEM believes the procurement, packaging and presentation of wireless content and connections going into, coming out of and bouncing around within vehicles can make a huge difference.
"It's the next big battleground in the industry," said John Wolkonowicz, senior auto analyst for IHS Global Insight, a market-research firm in Lexington, Mass. "It is addressing what people under 50 years old today find absolutely mandatory in their vehicles."
That's because "the car is becoming the fourth screen" after the TV, the PC and the mobile phone, especially for younger Americans, said Fran Dance, development manager for BMW North America's infotainment platform. "We have to do this very, very carefully."
"You're starting to see two general camps emerging," said Robert Policano, product manager for Mercedes-Benz's mbrace infotainment system. "There's a lot of uncertainty, and everyone's approach is ever-evolving."
For each OEM, the basic decision about infotainment is this: whether to "embed" most of the enabling hardware and software for wireless communications into the infrastructure of the vehicle, essentially creating their own mobile devices -- or to minimize such integration and concentrate on producing the best possible interfaces with cell phones, smart phones and other devices consumers already are using and bringing into the vehicle.
Ford sits more or less at one end of the spectrum with Sync, whose strength on a practical and marketing basis seems to be that the system makes it easy to use already-favorite wireless devices and programs in Ford's cars. Ford recently said 80 percent of potential customers report a Sync demonstration improves their opinion of Ford and 70 percent are more likely to consider purchase. And outside analysts are convinced Sync has become a big sales driver for hit models such as Ford Fusion and Focus.
"We're connecting you to 'apps' you already know and love," said Julius Marchwicki, Sync product manager for Ford. "We want to integrate that connectivity into your vehicle."
On the other end of the scale is GM, which committed itself mainly to an embedded strategy nearly two decades ago with OnStar, building the service into its vehicles -- and basically has stuck with that approach since then.
OnStar requires a subscription fee but handles everything for users on a voice-activated basis and, when required, with live human beings, from turn-by-turn navigation to help in a locked-out situation to emergency-services notification after a subscriber's accident. And OnStar doesn't require customers to carry anything with them into the vehicle or even do anything but press that magic OnStar button.
"We hold a unique place in the market in terms of understanding of communications within the vehicle," said Andrew Young, OnStar's marketing director.
To Build a Platform
Most other automakers say they're building infotainment platforms that include elements of both the "tethered" and embedded approaches.
Toyota, for example, has established a robust embedded platform to fuel the Safety Connect system, similar to OnStar, it launched last year as an option on many vehicles. Yet the company remains committed to creating interfaces that work with the communications and entertainment devices consumers bring into its vehicles.
"We're really happy with our direction because we think we've cracked the best of both worlds," said Jon Bucci, vice president of advanced technology for Toyota Motor Sales USA.
BMW has been a leader in embedded communications for several years in its BMW-branded vehicles. But with its new Mini Countryman, it will use the iPhone as the interface for accessing a menu of wireless services that will be called Mini Connected.
"The future offers a merged view of these things," BMW's Dance said. "The customer doesn't really care which way we go. They just want their functions -- whether it's safety and security or Internet access -- and things that work."
In setting its strategy, each OEM is wrestling with the following realities:
> The demographics of the customer: Unanimously, OEMs see interest in heavily embedded devices and systems being stronger with older people and higher in luxury segments.
Conversely, the younger a customer, the more interested he or she is likely to be in a tethered approach. That's partly because generations X and Y are much more comfortable with digital handheld devices than boomers and older generations, and partly because such "decentralized" systems tend to be less expensive, and available in lower-priced vehicles.
"There was a reason we launched Sync on Focus instead of a $60,000 Lincoln," Ford's Marchwicki said.
Doug Newcomb, senior editor, technology, for Edmunds.com, said, "Sync significantly shifted the car-infotainment paradigm in several ways, making it affordable, upgradeable and by using a driver's own mobile device to deliver content instead of an embedded system. And with the exception of Kia, to me it's amazing that, three years on, more automakers haven't copied it or introduced something similar given Sync's success and popularity.
"While tethered systems have their drawbacks, I think for the consumer it boils down to cost vs. benefits. Sure, you can get more reliability by paying OnStar every month for a subscription, but Sync's 911 Assist is free and is a value-added proposition, even if it may not be as robust and reliable."
> The rate of change: Automakers have long had difficulty keeping up with the incredibly fast pace of change in digital technology compared with the relatively slow speed at which new systems and technologies take root in vehicles and with the overall product cycle of cars. But now the tension is getting worse.
"We need to become more nimble, because what's happening in consumer electronics in general and the digital lifestyle is impacting people's expectations of what we can do," said Mercedes-Benz's Policano. "Traditionally we've run on a 7- to 10-year product life cycle, but that's an epoch in the consumer-electronics field."
"All one needs to do is look at the success Ford has had with Sync", Newcomb said, "and how quickly and frequently the company has been able to roll out new applications for the system - to realize that it's the winning formula.
"And leveraging the mobile devices that drivers bring into vehicles, and that they change so frequently, is a great strategy for staying current technology-wise, as opposed to relying on embedded systems that can easily become outdated and aren't as easy to upgrade."
The ubiquity of mobile devices: Seventy percent of mobile-phone use occurs inside vehicles, according to Toyota, so "a responsible OEM" must consider how consumers interact with handsets and other peripherals in the vehicle, Bucci said.
Yet smart phones -- those Internet-connected devices such as the iPhone and BlackBerry -- at this point comprise only about 20 percent of the mobile-phone market. "So making apps that are for smart phones only is somewhat limiting," Bucci said.
> The tyranny of apps: Consumers increasingly expect to be able to use all their favorite websites and apps on their smart phones in the vehicle even if it isn't safe for them to do so while driving. If an automaker's embedded infotainment system tries to limit these desires, then consumers will favor systems that instead help them -- or they'll simply work their fingers over their smart phones without a boost from an onboard system.
The resulting challenges to OEMs are profound. "We're trying to make our focus not, 'How do we avoid reinventing the wheel by re-creating systems in the vehicle?' but, 'How can people most effectively use these services?'" said Policano of Mercedes-Benz. "If you're talking about Facebook and LinkedIn and other social-networking services, for instance, how do you interact with them in a productive and efficient way while driving?
"You can easily provide Internet service in the vehicle. But you are not going to be browsing while driving if you're a typical user. So how do you adapt these services to the driving environment and make it safe?"
> The issue of redundancy: One of the big advantages of a tethered system is it doesn't require users of onboard infotainment services to subscribe to another wireless service, such as OnStar or Safety Connect.
"As their own devices gain capabilities, consumers can choose to pay for them if they want, and we at Ford don't have to charge them a premium when they bring them into the vehicle," Marchwicki said. "And they can keep the devices and accounts that they already have."
> The robustness of onboard systems: For what safety services promote and offer, they really can't depend on brought-in mobile devices. The reliability of mobile phones, for example, can vary greatly depending on the type of device, the carrier, variances in signal strength by location, and even interference from within the vehicle.
As cellular-communications systems become more demanding in themselves -- such as with so-called "4G" capabilities that will replace today's much-discussed 3G systems -- external antennas on vehicles will become more important for optimizing such systems, some OEM executives said.
Toyota's Bucci argued, "the ability to deliver reliable safety and security services can only come through an embedded device in the vehicle. So we've got an SOS button and an air-bag-deployment notification system that works on its own, via well-tested and stringent engineering and certification - as opposed to relying on the customer's cell phone. We believe we have to step up to that, but it costs Toyota no small coin for us to deliver on that."
Meanwhile, automobiles have become some of the most complex and powerful digital systems anywhere, with the overall computing and communications firepower and sophistication available to infotainment systems dwarfing what even a smart phone brings into the vehicle.
BMW has even obtained a grant from the federal government to test a "severe-injury algorithm" under its BMW Assist system that would use data from an accident to determine whether -- based on the type and severity of the accident -- the occupants of the vehicle in the crash likely would require trauma care. Then the system would make a 911 call automatically. The subscriber would have 10 seconds after hearing the call being initiated to cancel it.
"If you're relying on a Bluetooth-connected device like Sync," Dance said, "that device may or may not be available to make that emergency call - and certainly doesn't send this kind of crash data."
Dance also asserted plug-in hybrids and all-electric vehicles, with their requirement of drivers to monitor battery levels, will be better candidates for embedded than tethered infotainment systems.
For example, he said, drivers may be able to "call" their vehicles at recharging stations and find out their state of charge. "How many miles do you have left that you can go based on the charge in the car?" he said. "Without embedded capabilities for the car to be able to respond to these kinds of questions, with electric vehicles you're done."
OnStar may be proving Dance's point while seeming to nod to the tethered world. When the Chevy Volt rolls off production lines later this year, owners will be able to use the OnStar Mobile App on their smart phones to access charging information -- and control certain electrical functions -- away from the car. So while this is clearly a move by OnStar to work sensibly with portable devices, the fact that OnStar is an embedded system may have made this app easier to create.
> The role of safety: The issue of how infotainment affects driver and passenger safety is on everyone's lips. "There have to be restrictions applied to these applications or we're going to create an environment in the vehicle that is downright irresponsible," said one auto executive.
Some, for instance, argue safety concerns remain one significant drawback of Ford's Sync, despite its obvious other advantages. "Directionally, overall, it's better to have a lot information flow through the car where it's accessed and visible to the car rather than having drivers fumble around with different devices," said Brad Stertz, a spokesman for the Volkswagen Group.
OEMs agree one of their priorities should be enabling e-mailing and texting to and from vehicles because drivers already are doing it. "We need more text-to-speech and speech-to-text applications that are more forgiving, and more accurately and quickly interpret what people are saying and writing," Policano said.
Some companies are considering managing the content available to drivers via embedded systems based on what maneuvers the driver is performing at the time. Volkswagen, for example, is researching the possibility of limiting access to e-mail and other types of content when a driver is about to make a lane change or going into a series of curves.
"Though we want people to be able to bring their own devices into the car, we're always going to make the car intelligent enough to manage in the best way to bring information to the driver," said Chu Hee Lee, head of infotainment for Volkswagen Group's electronics research laboratory in Palo Alto, Calif. "But if there's a more relaxed driving condition, where you can spare the driver's attention on more than driving, you can open up a little more so you can deliver more contents and information."
Such concerns, however, aren't stopping OEMs from delivering still richer, more interesting, more distracting capabilities within the vehicle. They plead they're simply meeting rising consumer demand for enhanced infotainment capabilities - and trying to provide them in the safest way possible.
The Power of the iPad
Hyundai's gambit with iPad is interesting because it brings the buzz surrounding Apple's newest, form-breaking device into the vehicle environment.
Not only is Hyundai planning to throw in a free iPad as an incentive on every Equus purchase, but also the company is loading the vehicle's owner's manual onto the iPad. And owners will be able to use the device to schedule service appointments with Hyundai dealers, among other functions.
Hyundai declined through a spokesman to elaborate on its iPad ploy or infotainment strategy.
But it was difficult for executives with competitors to figure out how iPad -- even with some really cool apps -- could end up mattering much in the infotainment arena even over the long term because of the device's own limitations. "Right now, iPad isn't high on our concern list," Policano said.
However, iPad connectivity could significantly enhance the back-of-the-vehicle experience, where passengers in many models already can access the Internet wirelessly -- when they're not watching different movies on separate DVD screens.
"I can imagine having an iPad [dock] somewhere in the back seat for children or other passengers to enjoy its capabilities," said VW's Lee.
And in the end, predicted IHS' Wolkonowicz, the strategy of working around existing devices such as the iPad and smart phones - whatever it is consumers are carrying into the car - will win out over the embedded approach.
"I'd put my money behind Ford's approach," he said. "People have their own devices to begin with, and they want it to integrate with the vehicle, and it's less expensive for them that way. Everyone will end up going in Ford's direction."
Edmunds' Newcomb agreed, and further noted, "I think we'll also see apps play a more important role as automakers move towards an open-source software platform, which Ford is doing by making the Sync API open to developers and BMW, Delphi and others are doing with Intel and Wind River.
"Just consider how much the capabilities of smart phones have changed since Apple introduced apps for the iPhone just two years ago," Newcomb said. - Dale Buss, contributing writer
Photos by automakers
1. Ford's Sync currently is the most advanced infotainment system in the industry. A new feature called AppLink will make Ford the first automaker to be able to voice-control smart-phone applications inside the car. The first application partners are Pandora Internet radio, Stitcher 'smart' radio, and OpenBreak, a Twitter client.
2. General Motors' OnStar has become the iconic embedded system, but its engineers are adapting its electronics to communicate with smart phones and other devices to monitor tire pressure, fuel level and engine-oil life. And some cool OnStar apps will debut with the Chevrolet Volt this year, enabled via smart phones and the new OnStar Mobile app.
3. New Mercedes-Benz owners are finding a telematics system called mbrace replacing the brand's Tele Aid system. Enhancements include location-based traffic and weather reports and on-call "customer-service specialists."
4. Lexus treats its luxury owners to several layers of infotainment, including Lexus Enform, which overlays the navigation screen's visual traffic and weather reports onto the ability of a live operator to send the driver customized points of interest.
5. MyFord Touch is an extension of Sync functionality to include new features and controls made possible when integrating with a central 8-inch touchscreen display and two smaller ancillary displays in the gauge cluster. MyFord Touch debuts with the 2011 Ford Edge and Lincoln MKX.