July 11, 2016 Copyright© Strategy Analytics, Inc. 1

Infotainment & Telematics 2.0 …OEMs get your house in order!

RICHARD ROBINSON

July 11, 2016 Source: Infotainment & Telematics Service 2

• Director – Global Automotive Practice • Previous: Alpine as HMI lead on Navigation and Infotainment Design

• rrobinson@strategyanalytics.com

20-YEAR ANNIVERSARY OF ONSTAR

THE BIRTH OF TELEMATICS…

March 2015 Strategy Analytics, Inc. 3

• 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

1996 2016

WHAT HAS CHANGED?

1996 2016

• 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

1. Smartphones!

2. Shift from: Reaction Anticipation/Prediction

INFOTAINMENT & TELEMATICS DESIGN TRENDS

July 11, 2016 5

2nd Generation 1998 2006

Display

CD Changer

Head unit

Navigation

Phone ECU Sat Radio

Amplifier

Distributed BUS Architecture e.g. MOST

$$$$

Display

Device Connectivity ECU

Head unit

Telematics ECU

OR

Native and Phone based apps – Hybrid solution

Cloud

4th Generation 2010

3G 4G

$$

Device Connectivity ECU

Telematics ECU OR

3rd Generation 2005 2010

Head unit

& Display

Navigation

Amplifier

Headunit Integration

$$$

Source: Infotainment & Telematics Service

July 11, 2016 6

GM: OnStar (1996 )

Audi: Connect

BAIC: NovaLink

BMW: Connected Drive

Chery: Cloudrive

Hyundai: BlueLink (1st gen)

Jaguar Land Rover: InControl Remote/Protect

Ford: SYNC Connect

Headunit with Telematics ECU

Headunit with Embedded Telematics

SAIC: Inkanet

Citroen: eTouch

Hyundai: Blue Link 2 (2nd gen)

Fiat-Chrysler: Uconnect Access

Display

Telematics ECU

Head unit

Cloud

3G 4G

Wireless Modem Bluetooth

USB

Display

Head unit

Cloud

3G 4G

Modem

Wireless LAN Bluetooth

USB

4TH

GENERATION IVI ARCHITECTURES BY OEM

EMBEDDED MODEM – OEM’S PLAYING CATCH-UP

C 4th Gen D

Source: Infotainment & Telematics Service

Mercedes-Benz: mBrace

Nissan: NissanConnect Services

Peugeot: Connect

Toyota/Lexus: G-Book/Enform

Volvo: OnCall/Sensus Connect

Volkswagen: Car-Net

Subaru: Starlink

INFOTAINMENT/TELEMATICS SERVICES:

July 11, 2016 7

Connectivity Suitability:

Embedded Modem

Tethered Smartphone

Stolen vehicle tracking

eCall - Automatic Crash notification

Remote Diagnostics

Remote Door unlock/Heat

Basic Traffic

Video Streaming

Music Streaming

HD Video Download

Weather, Stocks, data, News

Location based services

Internet radio

Eco-Driving

Workflow Management/Fleet

PAYD – Usage Based Insurance

Road tolling

EV Charging and billing

High Definition Traffic

Email

Source: Infotainment & Telematics Service

HARDWARE IN MARKET (CUMULATIVE)

OEM EMBEDDED TELEMATICS 1.0 – BIZ MODEL

July 11, 2016 Source: Infotainment & Telematics Service 8

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2011 2012 2013 2014 2015 2016 2017 2018

Un

its

(00

0's

)

Hardware in Market

ACTIVE SUBSCRIPTIONS (CUMULATIVE)

OEM EMBEDDED TELEMATICS 1.0 – BIZ MODEL

July 11, 2016 Source: Infotainment & Telematics Service 9

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2011 2012 2013 2014 2015 2016 2017 2018

Un

its

(00

0's

)

Hardware in Market

Active Subs

IN-ACTIVE SUBSCRIPTIONS (CUMULATIVE)

OEM EMBEDDED TELEMATICS 1.0 – BIZ MODEL

July 11, 2016 Source: Infotainment & Telematics Service 10

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2011 2012 2013 2014 2015 2016 2017 2018

Un

its

(00

0's

)

Hardware in Market

Active Subs

Inactive Subs

INACTIVE SUBS = DEAD $$$

OEM EMBEDDED TCU’S (UNITS/REVENUES)

July 11, 2016 11

Over $4 Billion wasted in 2017 alone Over $12 Billion wasted 2011 2017

OEM TELEMATICS 1.0

ACTIVE VEHICLE SUBSCRIPTIONS BY REGION

July 11, 2016 12

• Global Active Subscriptions = 31 Million in 2015

• 2011 2015: Global Vehicle Sales = 420 Million units • Market Dominated by North America

• Little consumer understanding of the value of Telematics: B2C

Source: Infotainment & Telematics Service

NEXT GEN CONNECTED CAR DESIGN

DOMAIN & BUS CONVERGENCE

July 11, 2016 Source: Infotainment & Telematics Service 13

2018

Telematics ECU

Headunit

Display

Head Unit

Telematics ECU

Cloud

Smart Antenna

Smart Antenna

Body

Chassis

Safety Chassis ECU

Body ECU

Ethernet

Tele

mat

ics

2.0

OTA - OEM IMPLEMENTATION SCHEDULE

July 11, 2016 14

OEM Telematics Control Unit

Infotainment System

Powertrain/ Safety All ECUs

2020

2020

2020+

2020+

2020

Late 2016

Late 2016 Late 2016

Late 2016

2017

2020+

TBD TBD

TBD

TBD

TBD

TBD

TBD

2017

2017

2018

2017

2020+

TBD TBD TBD

TBD TBD 2017

2017 2017

TBD

TBD

TBD TBD

TBD

Late 2016

Convergence

Convergence

Infotainment

Telematics

Safety

Body

Chassis

CONNECTED CAR ECOSYSTEM

TELEMATICS 1.0 2.0

July 11, 2016 15

Connectivity

Infotainment

Smartphone Connections

Privacy

Security

Liability

Safety

Recalls

Source: Infotainment & Telematics Service

Telematics - 2.0

July 11, 2016 16

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…

COMPLEX CRITICAL SYSTEMS

NEED RAPID UPDATE CYCLES…

AT&T

AT&T

Sprint

AT&T

AT&T

Verizon

AT&T

Verizon

Verizon

Jasper Wireless, Raco Wireless

WirelessCar To Proprietary

WirelessCar, Airbiquity

Proprietary

Proprietary, Convergys

Hyundai Autoever America

SiriusXM

Verizon Telematics

SiriusXM

4G

4G

2.5G/3G

4G

4G

4G

2.5G

3G

2.5G

TELEMATICS IS A VALUE ADD

MORE OEM’S OFFERING EXTENDED FREE TRIAL

July 11, 2016 Source: Infotainment & Telematics Service 17

* GM’s OnStar Basic plan, and Mercedes’ mBrace Connect plan are free for 5 years with 2015+ GM vehicles and 2016+ Mercedes vehicles.

Audi Audi connect

BMW ConnectedDrive

Chrysler Uconnect

Ford SYNC Connect

GM OnStar

Hyundai Next-Gen Blue Link

Infiniti Infiniti Connection

Mercedes-Benz mBrace Connect

Toyota/Lexus Safety Connect

LTE FDD

LTE FDD

EVDO

LTE FDD

LTE FDD

LTE FDD

GPRS

CDMA EVDO

CDMA EVDO

Connectivity Solution

OEM

Players in U.S. OEM Market

Carrier

6 Months

4 Years

6 Months

5 Years

5 Years*

1 Year

1 Year

5 Years*

6 Months

Embedded telematics is evolving to longer free trial period.

Free Trial Network

Speed TSP

B2C

B2C

B2C

B2C

B2C

OEM EMBEDDED TELEMATICS - SUMMARY

ACTIVE VEHICLE SUBSCRIPTIONS BY REGION

July 11, 2016 18

• 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

Source: Infotainment & Telematics Service

Telematics 1.0

NEW VEHICLE OWNERSHIP PARADIGM

Source: Infotainment & Telematics Service 19

A

C B

D E

F

Content

Maps Apps

Feature/function add-ons, updates

High buyer Priority: Safety

All Domain OTA Updates

Connected Car = Always fresh = Reduce Risk

G Transportation as

an ‘App.’

July 11, 2016

INTRODUCING TELEMATICS 3.0…

July 11, 2016 20

On demand Reactive

Hybrid – Phone/Embedded

Proactive

Source: Infotainment & Telematics Service

Telematics 1.0

Telematics 2.0

Telematics 3.0

CONNECTED MOBILITY (TELEMATICS 3.0)

IOT AND THE AUTO INDUSTRY

July 11, 2016 Source: Infotainment & Telematics Service 21

• 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

Car-Hailing: Vehicle available for short-term rentals, such as hourly or daily. Arranged via mobile app or website.

Company Examples: Zipcar, car2go

7/11/2016

Ridesharing: Private car owner “shares rides” for payment, similar to taxi service. Arranged via mobile app. Company Examples: Uber, Lyft

Two Business Models: Car-hailing and Ridesharing

Source: Zipcar Source: Uber

CONNECTED MOBILITY (TELEMATICS 3.0)

CAR-HAILING AND RIDESHARING

Source: Infotainment & Telematics Service

July 11, 2016 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

Source: Infotainment & Telematics Service

Market Valuation >$60 Billion Revenue Growth 40%/Quarter

July 11, 2016 24

CONNECTED MOBILITY (TELEMATICS 3.0)

OEM’S FIGHTING THE DISRUPTION

More automakers launching, and investing in, car sharing, multi-modal apps, ride-hailing, and other mobility ventures due to concern about predictions of collapsing sales over the long run.

Source: Infotainment & Telematics Service

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

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)

Strategy Analytics, Inc. 26 July 11, 2016

July 11, 2016 Strategy Analytics, Inc 27

THANKS FOR YOUR ATTENTION!

Contact: Richard Robinson rrobinson@strategyanalytics.com

Director Global Automotive Practice

Strategy Analytics

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