How OEMs Can Benefit from Multimodal HMI and Workload Managers

How OEMs Can Benefit from Multimodal HMI and Workload Managers Apps are now common, focus is more on averting driver distraction with intelligent HMI solutions N Praveen Chandrasekar Program Manager – Telematics & Infotainment 5th April 2012 © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Today’s Presenter Praveen Chandrasekar Program Manager–Telematics & Infotainment Research Frost & SullivanExperience base covers a wide range of industry sectors, forming long standing relationships withsenior executives in the• Automotive Telematics and Infotainment• Automotive Advanced Driver Assistance Systems• IT and Telecoms• Electric Vehicles 2

Focus PointsToday’s Agenda • Gain top level technology and market trends impacting the infotainment market • Provide a comparative overview of what different OEMs are doing with respect to apps, HMI and connectivity in terms of offerings and business models • Understand more in depth OEM and specially supplier activities in the areas of apps and HMI • Analyze what consumers are willing to pay for in terms of apps and HMI • Conclusions and Strategic Recommendations 3

Objectives of the Research Under App Business Models of OEMs and Tap into Revenue Models Analyse infotainment package offerings of OEMs Understand how OEMs are building multimodal and delve into where apps fit here HMI as revenue models to back apps Understand Importance of HMI in the entire Value Proposition Understand driver distraction issues and supplier Understand where each OEMs are headed to in responses terms of HMI mix – to ensure safety Understand the Demand Side of the Equation Understand EU and US Consumer willingness to Understand if tethered, embedded or a hybrid pay for apps, HMI and infotainment packages solution will win over other 4

Major Market TrendsOEM business models for apps are built all around HMI value proposition Several OEMs have joined this bandwagon such as BMW (Connected App Stores App), Mercedes Benz (App Shop), Renault R- Link with dedicated app store NHTSA guidelines to avoid accessing Driver email/SMS on move and Distraction to reduce levels to Regulations access and use voice Emergence E.g. TomTom has risen to of New top tier player in the Suppliers European market also and entering infotainment with EcoSystem the R-Link on Renault Partners Zoe 5

OEM Approaches to Apps and Connected ServicesPremium OEMs are using this opportunity to interface apps at 2 levels – browser based orsmartphone based and tethered into the car Creating HMI Interfaces for Bringing popular third party Creating branded applications Safe Operation of Apps applications inside the car hosted on smartphone (e.g. Pandora) and allowing application stores (e.g. Apple them to be operated using App Store) Vehicle HMI (e.g. iDrive) Revenue opportunity is through Apps are not revenue opportunity, head units and HMI (Using Most of these apps follow fremium its just a crowd puller and HMI is model and are most touch points to Consumer Pull) actual revenue reach out to existing and new customers 6

Recent Announcements and InnovationsHarman’s Aha Radio Platform has had tremendous traction in the last 6 months • Awarded contract to Bouygues • Harman’s Aha radio platform is • Integrating dedicated app store Telecom to develop app store to rapidly emerging as called Mercedes Benz App Shop be launched in 208 model later entertainment hub – assuring with first apps being park finder 2012 – ten different apps safety by voice operation wit h and morning star news for powered by USB key (25/35). customers including – Subaru, stocks and financial information. Some apps- MyPeugeot, Pioneer, Kenwood and 6 other Available with the Comand Michelin Traffic. Available at premium OEMs. EU launch soon Online system and to be annual subscription of 350 Euros with Inrix traffic launched by March end 2012 Harman Aha Radio Mercedes Benz App Peugeot Connect Apps Platform Shop • Showcased at CES 2012 a • Entune for US and Touch and • Fully integrated multimedia concept developed by Kia GO for Europe developed by system with voice and steering engineers over 4 months Harman. In Europe Touch & Go mounted controls on a touch spending almost $500,000 a has MirrorLink access. Harman screen (unit supplied by concept on IVI and user centred recently announced app TomTom) with dedicated apps driving - with widgets, interface for Touch & Go where powered by different players- augmented reality navigation users can access apps through e.g. Coyote Speed camera zone and dedicated app store dedicated Toyota portal warning app Kia Infotainment Toyota Entune & Touch Renault R-Link Concept & Go 7

Is Tethered Connectivity a Sustainable Model?Long term with more apps inside the car will become a challenge but family data plans canchange the landscape As of Early 2011 Operator Unlimited New Plans Extra Usage Tether 8% Data Plans Charges Support 29 % Verizon US Scrapped Max 10GB - $10/GB Yes 2011 $80 Extra 92 71 AT&T US Scrapped Max 2GB - $10/GB Yes % % 2010 $25 Extra Unlimited Data Plan Share of all Vodafone Scrapped 500 MB free $7.5/500 MB Yes smartphone data subscribers EU 2010 O2 Scrapped $60 – 1 GB £10/GB YesUnlimited data plans makes an easy 2010 datacase for Tethered app supportWith more apps – managing dataplan/price is a challenge “As higher the app - Only a very limited part of the smartphone integration with car, higher will be average subscribers are in unlimited data plans in US and Consumes 30MB/ hour data plan usage” EU to play - More apps especially more radio and streaming On average one day type apps consumes more data 30MB/hour leads to 1GB per - Pandora, Slacker, iHeartRadio, Stitcher all are month for Pandora alone streaming music or podcasts apps (each consumer MB/day for just an hour) Excess - High probability that in the future the data usage Data will exceed capped plans - MNO will also keep a keen eye on tethering bandwidth consumption 8

HTML 5 OpportunitiesQNX Actively Pushing it. HTML 5 allows OEMs to bring the focus back on the car Terminal Mode HTML 5 Display of smartphone screen Display of applications in a could distract driver less distractive interface Apps • Separate cost for HMI tooling software OEM designed menu structures • Smartphone screen and application is replicated and user interfaces suitable for to head unit as it is automotive environment • Phone with a web server is connected to head unit with HTML5 engine. • Allows two way interaction, if the head unit also has a web server, allows hosting web pages on the phone. • Allows OEMs to create a separate module where graphics for individual functionality can be made and addition of more features. 9

OEM App ApproachesTethered support for smartphone apps is a common concept with most of them being free MirrorLink Third Party Apps Types of Apps App Related Strategies Bundled Branded Type Support Using Native Supported with Head Applicatio OEM Interface HMI Unit/HMI ns Support packages Browser Smartphone Free Paid Centralized Decentralized Based BasedBMW N Y Y Y Y Munich, Y Y Shanghai, USMercedes Late 2012 Y Y Y N Germany, Y YBenz USToyota Y Y Y Y Y US Only Y YFord N N Y Y N US Only Y NGM N N Y Y N US Only Y YHyundai By 2014 N Y Y N US & Korea Y YKia N N N N N US NA NRenault N N Y Y Y Europe Y N (TomTom)Honda N N Y Y N US Only Y NNissan N N N N N EU, US & Y N Japan 10

OEM App StrategiesStrictly tied with advanced navigation system options which also features HMI options suchas Touch screen and Voice ControlsOEM Apps Supported Package to Access Apps Recurring Total Cost to through Native HMI in Car Cost for Apps CustomerBMW BMW Connected App – Facebook, Free Connected App+ Phone Mog App - US - ~$2500 Twitter, Web Radio (Pandora) , Mog on- Cradle ($250 (US), E150 (EU) $4.99 or $9.99 EU - ~E3300 demand Radio Navigation+iDrive Solution subscriptions ($2150 (US), E3000(EU)) to useMercedes Comand Online Apps - Google Apps, US – Mbrace Package ($660) No Recurring US - $700Benz Facebook EU – Comand Online (E3000) Cost. Focusing EU - ~E3500 Mercedes Mbrace Apps- for US only +Bluetooth (E400) on free appsToyota Entune (US) – Bing™, iHeartRadio US – Navigation System with US -3 years US - $1000 (3 Opentable™ , Movietickets.com Touch Screen ($1000 min) app access Yrs), $60/yr Pandora®, Fuel Prices EU – Navigation System with free then Touch & Go Touch Life (EU) – Nokia touch screen for E500 $12/month EU – E500 (6 car mode app, Garmin Streetpilot, EU – 6 months months), EX/yr AUPEO, Facebook, Twitter free then sub/monthFord SYNC Applink – Pandora, Openbeak, US – SYNC or SYNC with No US - $395 or iHeartRadio, Stitcher, Slacker MyFord Touch $1000GM MyLink/IntelliLink – Pandora, Stitcher, US - required 7 inch touch No US - ~$500 Gracenote screen navigation system with Bluetooth connectivityHyundai BlueLink - Pandora US- available as a part of the No US - $4000 technology package which also features navigation system with Bluetooth and voice 11

North American OEMs HMI PreferencesTouch screen development is favorite closely followed by proximity sensing on buttons andtouch screensHMI Technologies Text to Speech ReconfigurableInstrument Cluster CUE Head Up Display Resistive Touch Screen NA Capacitive Touch Screen CUE Command-based voice recognitionSemantic NaturalVoice Recognition Multifunctional Controller NA NA NADual View Display NA NA NA NA NAProximity Sensing CUE Handwriting Recognition NA NA NA NA NA NAMulti-touch Gesture Recognition Currently Available Expected in Short Term Expected in Long Term 12

Key Suppliers Comparative AnalysisSuppliers such as Delphi are creating a key USP by addressing driver distraction as themajor issue and offering intelligent solutions Driver workloadSuppliers HMI Connectivity and Apps management Magic user interface Autolinq connected platform Prioritization of information via Simplify your drive (cluster modes) with dedicated auto-centric different displays (central, Continental Virtual Key (NFC) apps store cluster and HUD) Voice, visual and haptic offerings Situational HMI (customized information Aha connected radio platform Prioritization of information via display to driver) with personalized content from different displays (central, Harman Expertise in TTS and STT with Haptics internet and apps cluster and HUD) Usage of touch screens, voice recognition, Connected car portal with Workload management text-to-speech, reconfigurable displays, cloud based service and technology to tailor custom Delphi smartphone integration with MyFi delivery powered by Windows information for driver and link connected system Azure with safety systems Reconfigurable instrument clusters Smart phone integration NA Dual view displays solution which allows app Bosch Eco route hosting and cloud services access Instrument clusters Arpeggio smartphone Intelligent HMI manager Remote touch controllers integration solution blocks unwanted information Denso Head up displays Jaguar Connect and view depending on driving situation (replication) Toyota Entune system 13

Renault Case Study More than1.3 Million Renault cars are equipped with Carminat TomTom navigation system currently. Advanced Lane Live services (Real- guidance and IQ time traffic, local routes search and weather) Carminat TomTom successBefore 2009 2009 2010 2011 • More than 1 million Renault cars are equipped with TomTom Navigation system across 20 different models. • Renault has recorded a fit rate of 38% on Satellite Clio, 25% on Traffic and 77% on Scenic Navigation System models. Carminat • 48% take rate of embedded systems since TomTom launch in 2009. Introduction Carminat TomTom • Initially was available only to Clio, Megane, For Clio, Megane, with Live services Scenic, Laguna, introduced Carminat TomTom Scenic, Laguna and Fluence. Currently Fluence and Kangoo replaced by Carminat available with all models except Modus, Latitude, Espace and TomTom Live Laguna Twingo and Wind. All cars except Modus, Twingo and Wind Cost HMI Options 5.8” colour screen • Carminat TomTom Live costs €490. • All models come with a three month free subscription of live services. • Post free trial Live services are charged at €145 for 3 years. • Additional European mapping for long distance travel is available for €120. Joystick Remote control Speech to text 14

Inkanet 3G Case StudyMercedes Benz won’t be the first OEM to introduce SIRI type interface. SAIC has alreadydone with Ivoka on Roewe 350 MG5 Voice cloud driving voice-interactive technology Benefits Future urbanites life in smart Record traffic data e.g. driving CAN-BUS system IVOKA’s Influence interaction Liberation of the drivers With interactive Point of Interest driving experience hands greatly reducing the search having a driving risks considerable learning curve in the Voice input text near future, messaging security umbrella initiative to IVOKA’s definition avoid accidents and incidents IVOKA’s on the relationshipExperience Voice control radio between ‘man and music e.g. InkaNet machine’ will have a Douban music key influence on the library record traffic data for vehicle world wide safety information forward- interactive Voice based looking insight entertainment phone calls market Provides rich entertainment Voice based real-time features with automatic query information check e.g. and selection stocks, weather 15

Preferred Input by Application - HMI Touch Screens are Highly Preferred for Applications such as Navigation and Apps Control Preferred Inputs (N=1,911) Climate Control System Navigation System Apps from Smartphone Vehicle Information 80% 62% 60% 58% 53% 51% 49% 46% 47% 47% 44% 43% 42% 39% 39% 40% 36% 37% 35% 33% 31% 30% 29% 28% 26% 27% 25% 25% 24% 20% 0% Individual Buttons Single Switch Steering Wheel Touch Pad Touch Screen Touch Screen with Voice Activation Controls Physical Feedback Source: Frost & Sullivan.Q8. If the following is/was available in your car, please indicate how you would like to interact/communicate for the following.(Multiple response.) 16

Nokia MirrorLink Type Solution has a close to 50% appeal with willingness to pay close to 150 Euros Preference toward Smartphone Control Concepts in Car (N=1,911) Slightly more advanced solution that connects your smartphone using bluetooth to the car and controls the 52% phone features using steering wheel controls, or single/multi-function switch Advanced solution that completely replicates your smartphone contents in the vehicle display where you can control smartphone features using multiple in-car 49% controls like touch screen, voice commands, physical buttons, steering wheel controls, etc. High Apps Users: 9% Cable that connects your smartphone to the car but still 26% you control the phone by physically operating it Moderate- to-Low Apps Users 58 percent of High Apps Users Control/operate smartphone using smartphone controls 12% prefer an advanced solution using a visual display for smartphone control. 0% 20% 40% 60% Source: Frost & SullivanQ15. Considering smartphone use while in your car, which of the following would you like to have available? (Multiple response.) 17

2012 Apps, HMI and Telematics Voice of Consumer Study European and US Consumers’ Attitudes, Perceptions, and Willingness to Pay Towards Mobility Apps, HMI Concepts and Telematics Services • How often do consumers use their smartphone inside the car?Smartphone Usage • Do consumers dock their smartphone inside the car on a regular basis? Trends – e.g. • Are consumers interested in free smartphone navigation, nominal paid smartphone navigation over other ones Navigation, etc such as PND and OEM? Satisfaction levels if already have a smartphone navigation solution? • Do they consider the smartphone to be a long term information and connectivity source inside car?Interest in Current • What is consumer interest in accessing apps inside car in areas such as parking, augmented reality, and Expected crowdsourced navigation, ADAS, car sharing etc? Satisfaction levels if already access any of these apps? • Are consumers willing to pay for these apps – even a nominal $2-5 as an one time fee? Apps in Entire • What are the future app areas that consumers are interested to see - vehicle to grid, smart charging, integrated Mobility Space parking and EV charging, etc?Attitude, Perceptio • When it comes to infotainment, connectivity and smartphone interfacing what are the HMI input output options ns and that comes to mind to consumers? Satisfaction levels with existing solutions (verbatim and with solutions) • What is the consumer interest to pay for different input HMI options, current and future?Willingness to Pay • What is consumer interest to pay for different HMI output options, current and future? for HMI Options • How important is HMI in brand retention according to consumers compared to other key factors ?Attitude, Perceptio • What is consumer interest when it comes to telematics services such as eCall, bCall, vehicle tracking and ns and mileage based insurance? Satisfaction levels with existing solutions?Willingness to Pay • How much are consumers willing to pay for these services as an option? Do they want these features as standard inside the car? for Telematics • How does telematics features compare to others such as fuel economy in purchase influencer in vehicle Services buying? Tracking Analysis • How has app usage, needs and willingness to pay changed from 2010 results?- Comparison with • How has HMI usage, needs and willingness to pay changed from 2010 results? • How has smartphone usage levels changed from 2010 results?2010 Study Results • What is the customer satisfaction with existing OEM nav, connected nav, connected PND or other navigation Vehicle solutions? Satisfaction & • What brands consumers perceive to have best in class app ready connected solutions?Brand Perceptions • What brands do consumers perceive to be best in terms of having the best HMI input output options? • What brands do consumers perceive to be best in terms of offering telematics services? 18

Mobile AppsDeveloped in a Variety of Fields Impacting Sustainability and New Age Mobility Dynamic Ride Sharing Others – Location-enabled e.g. RelayRides, Carticipate social networking, remote Dynamic Intermodal communication Transport Planning e.g. Foursquare, Viper e.g. Opti-Trans, Anystop SmartStart Augmented Reality Mobility App Parking Management and Applications Categories Payment Solutions e.g. Mobilizy e.g. Parking Dialogue Crowdsourced Navigation LBS Categories – e.g. Taxi and Traffic Application Booking Advanced Driver e.g. Waze, Inrix, Beat the e.g. 1TouchTaxi, TaxiZapp Assistance Services Traffic e.g. iOnRoad 19

Conclusions and Strategic RecommendationsNorth American market is an ideal launch pad for mobile apps. Bundling apps with coolhardware is critical for OEMs to create a revenue stream. Short to medium term focus is on music and social networking related app control through vehicle HMI (Multimodal Mix). Largely US No clear importance for driven trendMirrorLink type interface for smartphone app access inside car (focus on voice control) Q&A!!!!!!!!!!! Tethered connectivity for smartphone apps is a weak model and at the same time users willingness to pay fordedicated data plan is unclear Several OEMs have launched OEM strategies to allow branded applications in line with apps access inside the their connected services package vehicle ties in with package – e.g. Mbrace, BlueLink. This is a options which make sure good free convenience add on (GM revenue add-on are healthy app downloaded over 400,000 (e.g. Ford SYNC applink) times) 20

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For Additional InformationKatja Feick Cyril CromierCorporate Communications Sales DirectorAutomotive & Transportation Europe+49 (0) 69 7703343 +33 1 42 81 22 44katja.feick@frost.com cyril.cromier@frost.comN Praveen Chandrasekar Sarwant SinghProgram Manager, Telematics and PartnerInfotainment Automotive & TransportationAutomotive & Transportation +44 207 915 7843(9144) 6681.4129 sarwant.singh@frost.comcpraveen@frost.com 23

How OEMs Can Benefit from Multimodal HMI and Workload Managers

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