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Carmakers Face Choice Between Connectivity and Built-in Capabilities

01 June 2009

As they strive to remain on top of trends in infotainment and personal electronics, global automakers and their suppliers are struggling to identify the ?ne line that divides the hardware that they provide in their vehicles, and the outside products brought into cars by motorists, according to iSuppli Corp.

The need for cars to be flexible enough to support new infotainment applications and services that may arise during their lifetimes is bringing fundamental changes for carmakers and their leading suppliers. Illustrating the difficulty of finding the dividing line between inside and outside electronics, many car manufacturers still prefer to offer built-in legacy infotainment devices like CD changers, while eschewing highly-flexible wired and wireless USB and Bluetooth connectivity for connecting consumer devices, like the iPod.

Viva la Revolutioné
Car manufacturers are facing a consumer revolution, with the creation of new business models based on hardware and software designs that support connectivity with other devices. As illustrated by devices like Amazon’s Kindle and Apple’s iPod, this new business model is based on consumers interacting with their branded supplier during the life of the product.

The year 2010 will mark the beginning of an era for consumer electronics devices when recurring revenue from service subscriptions actually become more important and valuable than the one-off sale of a device. With these devices able to extend their capabilities to other products via connectivity, this new business model is expanding to markets beyond consumer electronics, including cars.

As recent history proves, the consumer electronics world is highly creative and adaptable. However, carmakers and their suppliers traditionally have been much more conservative in adopting new technologies and services.

To participate in the consumer electronics connectivity revolution and avoid having their products quickly become obsolete and require jury-rigged upgrades, car makers now need to be part of the consumer device integration solution, iSuppli believes. An example of such an upgrade was the Portable Navigation Device (PND) platform, which came a reaction to the high-priced in-dash navigation solutions of 2000 to 2008.

iSuppli believes the in-dash navigation agenda now is being driven by a multitude of smaller European manufacturers that covet a very lucrative navigation revenue opportunity that has been hijacked by PNDs. These manufacturers intend to seize the initiative this time around by offering low-cost in-dash solutions that are able to improve on the PND experience.

But the decision to support lower-cost navigation is also strategic, as the inclusion of a multifunction touch screen system opens up opportunities for drivers and passengers not only to view but also to interact with off-board data and services. The changing approach is creating opportunities for non-traditional navigation device vendors to enter the market.

Euro Silicon
The European influence on next-generation design also is being felt at the semiconductor level with companies such as the Franco-Italian semiconductor giant STMicroelectronics. In 2008, STMicroelectronics had design wins with silicon architectures such as Cartesio, a combination general-purpose media processor that includes baseband GPS functionality.

Read More, Infotainment Outlook 2009, When Will the Auto Engine Start Again?



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