By now, consumers were supposed to be tooling down the highway, surfing the web, retrieving and composing e-mails, and talking to their dashboards, all with hands-on-wheel and eyes-on-the-road detachment. And the multitude of telematics businesses—suppliers of components, devices, software and services—were supposed to be laboring around the clock, struggling to keep up with soaring consumer demand.At some time after 2000, however, the wheels came off the grand vision for the Internet in vehicles.
So now, it's all but finished. All we need do is sweep the telematics market under the carpet with the rest of the failed businesses from the dot.com boom, right?
Wrong. Telematics isn't dead; it's just taking a nap.
Industry experts acknowledge that automakers have backed away from portions of that grand vision. In particular, they say, automotive executives are keeping the “Internet on wheels” concept at arm's length. But other portions of the purported telematics boom are alive and well. Many automakers, for example, are revving up plans for Bluetooth-equipped phones in their vehicles. Others are pursuing various wireless concepts for in-vehicle navigation. And General Motors hasn't budged on its support of its OnStar Division, despite reports that the division is struggling financially.
Moreover, analysts argue that opportunities for telematics may still be plentiful.
“The last two years, car manufacturers have become very pessimistic about opportunities for telematics,” notes Thilo Koslowski, lead automotive analyst and director of Gartner G2. “But what we are seeing now is an overreaction. They're afraid, and they're not really looking at the true potential of telematics.” Koslowski and others in the industry believe, for example, that the commodity nature of cell phones will force all automakers to deal with wireless connectivity issues. Beyond that, they believe that automakers will ultimately be forced to reckon with the consumer's insatiable appetite for new forms of entertainment.
“In the past, car manufacturers have viewed the vehicle as the center of the universe,” Koslowski says. “In the future, they're going to have to allow consumers to connect their MP3 players and their personal DVD devices. They're going to have to tailor their vehicles to the devices, not the other way around.”
Boom and bust
To comprehend the new vision for telematics, however, it's first necessary to run through telematics' resume, take a peek at where it went wrong, and then offer some potential scenarios in which it could thrive.
Automotive electronics experts agree that telematics met its Waterloo when the vision for it became confused with that of the personal computer. Amid the surrounding hype was talk of web surfing and e-mail. Marketers spun a future vision of an office on wheels, with drivers using text-to-speech to listen to e-mails, then employing speech-to-text to compose their own electronic messages. Wingcast LLC, the failed telematics effort backed by Ford and Qualcomm, went so far as to create videos showing how the company's service would help business executives, harried parents, and even surfers. One video showed how Wingcast's technology could inform a beach boy that the surf was up, so he could get to the ocean on time. “Everybody thought the mobile Internet was the next gold rush,” says Robert Schumacher, director of the mobile multimedia business group at Delphi Delco Electronics Systems. “But the problem is that people's paradigm of the Internet is sitting in front of a keyboard, downloading rich pages of multimedia information.”
The Internet confusion affected telematics in two ways. Marketers offered prospects of office-like cars and consumers scratched their heads, wondering why they would ever want to surf the net and download rich multimedia information while they drove.
As a result, hope for telematics plunged. Ford pulled the plug on Wingcast, and Cadillac shelved its much-publicized Cadillac Infotainment System. Worse, a comprehensive study by The Hansen Report on Automotive Electronics of the in-car communications business warned that telematics success might be as much as eight years away. It even suggested that GM's OnStar Division was struggling to convince consumers to renew their subscriptions. Suddenly, telematics evolved from being a hot vision of the future to being a dead-on-arrival concept from the dot.com days.
“The problem was, nobody could put a business deal together that made any sense,” says Hansen Report Publisher Paul Hansen. “When Wingcast bailed out, leaving unpaid creditors in their wake, it became emblematic of everything that was wrong with telematics. What made it so bad was that Ford executives had publicly said telematics was going to be big, and now here they were bailing out.”
Indeed, Ford's retreat was viewed by many as the straw that broke the camel's back.
“People who are very, very highly-placed in the auto industry still say they don't see telematics taking off in North America or Europe any time soon.”The auto industry's won't-get-fooled-again attitude towards certain elements of telematics isn't putting a complete stop to all parts of the market.
In July, for example, Fiat announced that it's partnering with Microsoft on an electronic reference platform that could, in its simplest form, allow customers to use their own Bluetooth-enabled phones inside Fiat vehicles, and to listen to phone calls over a car's audio system. The Italian automaker says that it will apply the platform across its entire product line, from the high-end Alfa Romeo to the low-end Fiat vehicles. Used together with voice recognition software, the platform will enable users to dial by voice command, merely by calling out a name in an electronic phone book. By employing data portals on cell phones, Microsoft executives says that drivers will also be able to link to a Fiat content provider know as bConnect, which will offer such features as real-time traffic reports and off-board navigation.
For Fiat and Microsoft, the partnership is a groundbreaking one, because Microsoft will work directly with Fiat engineers to define the specification, build a reference design, and then hand off the result to a tier-one electronics supplier for manufacture.
Microsoft argues that the new business model will boost the success of automotive telematics, since it brings the company's knowledge of electronic devices to an industry sorely in need of guidance in that area.
“Ford and General Motors are good at building the vehicle brand,” notes Peter Wengert, group marketing manager for Microsoft Corp.'s Automotive Business Unit. “And the tier-one suppliers are good at putting electronics in the car. But the piece that they're missing is a software company that's good at looking at customer needs.”
Microsoft compares the partnership to its PocketPC business model. While any OEM can use Windows CE on its devices, the PocketPC is described by a defined reference design, the company says.
“Once we finish the Fiat reference design, it will be available for other car companies to look at and use in their vehicles.”
While platforms such as Microsoft's are built for more than mere cell phone access, industry engineers believe that they are destined for success primarily because of their inherent cell phone capabilities. Given the widespread use of mobile phones today, they say, and given the increasing pressure from legislators for implementation of hands-free technology, such reference platforms have an immediate place in automobiles.
“The idea is gaining popularity because customers don't need to have a special telematics service provider, or a special embedded phone, or a special phone number, or a special account,” says Schumacher of Delphi. “If they have a Bluetooth-enabled phone and a Bluetooth node in their car radio, they can use their regular mobile phone hands-free in their vehicle.”
The killer app
Many experts believe, however, that the ultimate telematics application lies, not in hands-free phone usage, but in entertainment.
“Entertainment is the real 'killer app' in telematics,” Schumacher says. “With a WiFi connection in the car, users will be able to download rich forms of entertainment, including music, movies, and game software.”
Schumacher believes that the use of 802.11 (WiFi) technology will be especially important when small businesses–such as gas stations and food marts–begin to offer wireless downloads of music and video.
“The difference-maker in telematics will occur when you have a whole value stream, an end-to-end solution, that allows entertainment to flow seamlessly into vehicles, without the use of pressed disks, such as DVDs or CDs,” Schumacher says. “If you create that solution, digital content can flow almost effortlessly.”
Ultimately, the vision is for users to take music and video from their PCs and send it wirelessly to their cars, or to download it at a gas station when they stop for a fill-up. Delphi representatives claim that the infrastructure for such visions is already being put into place at a handful of businesses such as Starbuck's, which have WiFi capabilities today. As such, Delphi is working with electronics suppliers to integrate automotive-quality disk drives and WiFi interface software into next-generation car radios.
“We're taking consumer electronics technology, bullet-proofing it for the severe environment of the vehicle, redesigning the human interface, and writing all the system and application software,” Schumacher says.
Delphi executives say that their efforts are being well-received by automakers. Earlier this year, Delphi worked with Ford's Lincoln Division on an advanced audio system with 802.11 WiFi capabilities. The new system is the focal point of a 2004 Lincoln Aviator concept car that employs an overhead rear-seat entertainment system and a Sirius satellite radio stream to bring real-time television and audio entertainment into the vehicle.
“The Aviator's main feature is its ability to connect to a remote computer where you store your digital audio content, such as MP3-based music,” says Craig Simonds, vehicle integration team leader in Ford Research. “With this, you could set up your computer so that while you're sleeping, it would wake up the system in your car and download music to it. Then when you got in the car in the morning, your new play lists would come up on your vehicle display.”From a design perspective, one significant difference in the Aviator is its use of a more flexible, more comprehensive, computing platform. Simonds says that Ford has employed a variety of CPUs—including PowerPC, Intel Xscale, and Hitachi SH4—but in all cases the new platform had more computing power than typical dashboard platforms have had in the past.
“This platform is more like what you would see in a PC,” Simonds says. “It has a real-time OS that allows us to develop new applications and features.”
That's a dramatic departure from traditional automotive computing platforms, which employ exactly what's needed at the moment, and not a bit more. Simonds argues that cost-conscious automakers have had good reason for doing it that way in the past, mainly because they've been bound by fiscal necessities.
Still, Simonds and others say that there may be good reason for manufacturers of high-end and luxury vehicles to incorporate more powerful platforms in the future. “Once you have a more flexible architecture in place, you can add features down the road,” he says. “That way, when more gas stations and drive-through restaurants begin offering WiFi capabilities, the electronics platform can enable the vehicle to take advantage of those kinds of services.”
Industry analysts say that the consumer appetite for entertainment will also be met through other channels. One such avenue is the incorporation of on-board vehicle interfaces that would allow consumers to carry their personal MP3 players and handheld DVD players into vehicles, and play them back through onboard audio systems. With that in mind, tier-one suppliers are developing radios with common, open-standard audio plugs, so consumers can connect their devices into their vehicles.
“It's important for the suppliers to do that,” notes Koslowski of Gartner G2, “because future consumers might not want fully-integrated and embedded DVD players in their vehicles.”
Many in the industry believe that such entertainment-driven offerings are the key to telematics success.
“It's been proven that people are willing to pay for entertainment content,” Simonds says. “They've paid big money for rear-seat entertainment and advanced audio systems. We think that WiFi radio will be another one of those high-demand features.” In-car Internet still kicking
Most suppliers believe that very little of their original vision for telematics is dead. Even the “Internet on wheels” idea still lives, they contend, albeit in a different form.
The new tack for the Internet in the vehicle is one of “invisible integration.” In such scenarios, the Internet could silently aid by providing dynamic traffic information to the once-static feature of on-board navigation.
Delphi, for example, is working with Honda on a system called the Honda Information Platform (HIP), which would combine the car radio, navigation system, and digital data from XM Satellite Radio to create “dynamic navigation.” Using a specially-developed decoder, the system decodes a digital information bit stream from XM and provides traffic information from 20 metropolitan areas.
“It's an alternative to using cellular, which is the worst way to do telematics because the air time is so expensive,” says Schumacher of Delphi. “In its place, it uses XM Radio to create a navigation system that will not only find the shortest distance between two points, but will take into account the traffic along the way.”
Semiconductor makers say they're already supplying microcontrollers into similar applications. Freescale Semiconductor, Inc. has put its MPC 5200 microcontroller into applications with Siemens VDO, as well as with automakers in Europe, Asia, and North America. Such design wins are expected to continue as the lines between telematics and infotainment blur over the next few years. In such “line-blurring” scenarios, radios will offer low-end navigation capabilities and Bluetooth phones will integrate entertainment features.
“One of the initial visions was that people would be doing e-mail in their cars,” notes Bill Pffaf, vice president and general manager for Digital Audio, Radio and Telematics at Freescale. “And while drivers won't actively use the Internet for web surfing and e-mail, the Internet will still be there. It's just going to be a little more invisible to the driver than we initially thought it would be.”