Infotainment & Telematics 2.0 OEMs get your house in order! July 11, 2016 Copyright Strategy Analytics, Inc. 1

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1 Infotainment & Telematics 2.0 OEMs get your house in order! July 11, 2016 Copyright Strategy Analytics, Inc. 1

2 RICHARD ROBINSON Director Global Automotive Practice Previous: Alpine as HMI lead on Navigation and Infotainment Design July 11, 2016 Source: Infotainment & Telematics Service 2

3 20-YEAR ANNIVERSARY OF ONSTAR THE BIRTH OF TELEMATICS Automatic Crash Notification Good Samaritan Turn-by-Turn Navigation Hands-Free Phone Live Assistance Contextual Awareness Waze/Crowd HERE, TomTom, Garmin, Googlemaps Bluetooth/IOT Nuance/Servers March 2015 Strategy Analytics, Inc. 3

4 WHAT HAS CHANGED? Smartphones! 2. Shift from: Reaction Anticipation/Prediction On-board and off-board systems will be gathering and interpreting data to determine: Hardware and software integrity of the car Mood, physical health, attention of the driver Identification of driver and passengers State of the roadway (around and ahead of the car) State of surrounding vehicles Weather and traffic User interfaces driver needs voice, eye/facial tracking, gestures March 2015 Strategy Analytics, Inc. 4

5 INFOTAINMENT & TELEMATICS DESIGN TRENDS $$$$ 2nd Generation $$$ 3rd Generation $$ 4th Generation 2010 Device Connectivity ECU OR Telematics ECU Display Head unit Head unit & Display Display Head unit CD Changer Navigation Navigation Device Connectivity ECU OR Phone ECU Sat Radio Amplifier Telematics ECU 3G 4G Amplifier Distributed BUS Architecture e.g. MOST Headunit Integration Native and Phone based apps Hybrid solution July 11, 2016 Source: Infotainment & Telematics Service 5 Cloud

6 4 TH GENERATION IVI ARCHITECTURES BY OEM EMBEDDED MODEM OEM S PLAYING CATCH-UP Headunit with Telematics ECU C 4 th Gen D Headunit with Embedded Telematics Display Display Wireless Modem Bluetooth USB Head unit Telematics ECU Wireless LAN Bluetooth USB Head unit Modem 3G 4G Cloud 3G 4G Cloud GM: OnStar (1996 ) Audi: Connect BAIC: NovaLink BMW: Connected Drive Chery: Cloudrive Hyundai: BlueLink (1 st gen) Jaguar Land Rover: InControl Remote/Protect Ford: SYNC Connect Mercedes-Benz: mbrace Nissan: NissanConnect Services Peugeot: Connect Toyota/Lexus: G-Book/Enform Volvo: OnCall/Sensus Connect Volkswagen: Car-Net Subaru: Starlink SAIC: Inkanet Citroen: etouch Hyundai: Blue Link 2 (2 nd gen) Fiat-Chrysler: Uconnect Access July 11, 2016 Source: Infotainment & Telematics Service 6

7 INFOTAINMENT/TELEMATICS SERVICES: Weather, Stocks, data, News Eco-Driving Location based services Internet radio PAYD Usage Based Insurance Road tolling EV Charging and billing Workflow Management/Fleet High Definition Traffic Music Streaming Basic Traffic Remote Diagnostics Video Streaming HD Video Download Stolen vehicle tracking Remote Door unlock/heat ecall - Automatic Crash notification Connectivity Suitability: Embedded Modem Tethered Smartphone July 11, 2016 Source: Infotainment & Telematics Service 7

8 HARDWARE IN MARKET (CUMULATIVE) OEM EMBEDDED TELEMATICS 1.0 BIZ MODEL Units (000's) 180, , , , ,000 80,000 Hardware in Market 60,000 40,000 20, July 11, 2016 Source: Infotainment & Telematics Service 8

9 ACTIVE SUBSCRIPTIONS (CUMULATIVE) OEM EMBEDDED TELEMATICS 1.0 BIZ MODEL Units (000's) 180, , , , ,000 80,000 Hardware in Market Active Subs 60,000 40,000 20, July 11, 2016 Source: Infotainment & Telematics Service 9

10 IN-ACTIVE SUBSCRIPTIONS (CUMULATIVE) OEM EMBEDDED TELEMATICS 1.0 BIZ MODEL Units (000's) 180, , , , ,000 80,000 Hardware in Market Active Subs Inactive Subs 60,000 40,000 20, July 11, 2016 Source: Infotainment & Telematics Service 10

11 INACTIVE SUBS = DEAD $$$ OEM EMBEDDED TCU S (UNITS/REVENUES) Over $4 Billion wasted in 2017 alone Over $12 Billion wasted July 11,

12 OEM TELEMATICS 1.0 ACTIVE VEHICLE SUBSCRIPTIONS BY REGION Global Active Subscriptions = 31 Million in : Global Vehicle Sales = 420 Million units Market Dominated by North America Little consumer understanding of the value of Telematics: B2C July 11, 2016 Source: Infotainment & Telematics Service 12

13 Telematics 2.0 NEXT GEN CONNECTED CAR DESIGN DOMAIN & BUS CONVERGENCE 2018 Display Cloud Body ECU Smart Antenna Telematics ECU Head Unit Telematics ECU Smart Antenna Headunit Chassis ECU Safety Ethernet Body Chassis July 11, 2016 Source: Infotainment & Telematics Service 13

14 OTA - OEM IMPLEMENTATION SCHEDULE OEM Telematics Control Unit Infotainment System Powertrain/ Safety All ECUs Late TBD TBD TBD TBD Late Late 2016 Late 2016 TBD TBD TBD Late 2016 TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD July 11,

15 CONNECTED CAR ECOSYSTEM TELEMATICS Privacy Telematics Liability Security Safety Convergence Recalls Connectivity Infotainment Smartphone Connections Convergence Infotainment Telematics Safety Body Chassis July 11, 2016 Source: Infotainment & Telematics Service 15

16 COMPLEX CRITICAL SYSTEMS NEED RAPID UPDATE CYCLES Example is Safety - There is increasing reliance on: LIDAR, RADAR Cameras Contextual awareness with the objective of collision avoidance most of these systems have COMPLEX software July 11,

17 TELEMATICS IS A VALUE ADD MORE OEM S OFFERING EXTENDED FREE TRIAL Players in U.S. OEM Market OEM Connectivity Solution Network Speed TSP Carrier Free Trial Audi Audi connect BMW ConnectedDrive Chrysler Uconnect Ford SYNC Connect LTE FDD LTE FDD EVDO LTE FDD 4G 4G 2.5G/3G 4G Jasper Wireless, Raco Wireless WirelessCar To Proprietary WirelessCar, Airbiquity Proprietary AT&T AT&T Sprint AT&T 6 Months 4 Years 6 Months 5 Years B2C B2C GM OnStar Hyundai Next-Gen Blue Link Infiniti Infiniti Connection Mercedes-Benz mbrace Connect Toyota/Lexus Safety Connect LTE FDD LTE FDD GPRS CDMA EVDO CDMA EVDO 4G 4G 2.5G 3G 2.5G Proprietary, Convergys Hyundai Autoever America SiriusXM Verizon Telematics SiriusXM AT&T Verizon AT&T Verizon Verizon 5 Years* 1 Year 1 Year 5 Years* 6 Months B2C B2C B2C Embedded telematics is evolving to longer free trial period. * GM s OnStar Basic plan, and Mercedes mbrace Connect plan are free for 5 years with GM vehicles and Mercedes vehicles. July 11, 2016 Source: Infotainment & Telematics Service 17

18 OEM EMBEDDED TELEMATICS - SUMMARY ACTIVE VEHICLE SUBSCRIPTIONS BY REGION Telematics 1.0 Global Active subscriptions will exceed 250 Million by 2022 Leading Regions: North America: Market Driver Early Adoption Europe: Market Driver ecall China: Market Driver Biggest Global car market July 11, 2016 Source: Infotainment & Telematics Service 18

19 NEW VEHICLE OWNERSHIP PARADIGM Connected Car = Always fresh = Reduce Risk A B Content Apps High buyer Priority: Safety Transportation as an App. C E G D F Maps Feature/function addons, updates All Domain OTA Updates July 11, 2016 Source: Infotainment & Telematics Service 19

20 INTRODUCING TELEMATICS 3.0 Telematics 1.0 On demand Reactive Proactive Telematics 2.0 Telematics 3.0 Hybrid Phone/Embedded July 11, 2016 Source: Infotainment & Telematics Service 20

21 CONNECTED MOBILITY (TELEMATICS 3.0) IOT AND THE AUTO INDUSTRY Volkswagen: BUDD-e concept, partnership with LG Electronics Hyundai: Smart Home R&D effort as part of Connected Car Roadmap Ford: NEST integration Mercedes-Benz: Pebble Smartwatch July 11, 2016 Source: Infotainment & Telematics Service 21

22 CONNECTED MOBILITY (TELEMATICS 3.0) CAR-HAILING AND RIDESHARING Two Business Models: Car-hailing and Ridesharing Source: Zipcar Car-Hailing: Vehicle available for short-term rentals, such as hourly or daily. Arranged via mobile app or website. Company Examples: Zipcar, car2go Source: Uber Ridesharing: Private car owner shares rides for payment, similar to taxi service. Arranged via mobile app. Company Examples: Uber, Lyft 7/11/2016 Source: Infotainment & Telematics Service

23 CONNECTED MOBILITY (TELEMATICS 3.0) THE DISRUPTERS Mobility solution companies are at the intersection of the gig economy, sharing economy, rental car, and fleet industries. Transportation Network Company Examples Market Valuation >$60 Billion Revenue Growth 40%/Quarter July 11, 2016 Source: Infotainment & Telematics Service 23

24 CONNECTED MOBILITY (TELEMATICS 3.0) OEM S FIGHTING THE DISRUPTION More automakers launching, and investing in, car sharing, multi-modal apps, ridehailing, and other mobility ventures due to concern about predictions of collapsing sales over the long run. July 11, 2016 Source: Infotainment & Telematics Service 24

25 TELEMATICS 3.0 IS ABOUT DISRUPTION GOOG/ALPHABET, TESLA Automated driving No steering wheel, pedals, driver, ownership Scanned road + sensors No dealers No fuel No service Software updates (add features, functions post-sale) Free lifetime connectivity

26 IN CONCLUSION What is the motivation for getting connected? 1. Architecturally: It makes sense in a software defined future 2. OEM: Reduce ongoing maintenance/update costs 3. Social: Save lives 4. Environment: Reduce traffic & Emissions 5. Efficiency: Save time Major Reason: Make cars more pleasing, easier to own & use (and of course to sell more) July 11, 2016 Strategy Analytics, Inc. 26

27 THANKS FOR YOUR ATTENTION! Contact: Richard Robinson Director Global Automotive Practice Strategy Analytics July 11, 2016 Strategy Analytics, Inc 27

28 July 11, 2016 Copyright Strategy Analytics, Inc. 28