Tuesday, November 16, 2010

Toyota, Ford, iHeart, Pandora, and lemmings

As you probably heard, Toyota issued a teaser news release confirming that they will be integrating iHeart Radio into future models of Toyota vehicles. That is great news. However, the details of exactly how they will do it are still not revealed. Judging from past announcements from Ford about Pandora and Stitcher, BMW about Radiotime, and Smart about the Smart Drive app for iPhone though, it is a safe bet that if it ships in 2011, it will be a tethered solution, requiring the user to "dock" their smartphone with the auto. Now, we all know how I feel about tethering (it is a poor consumer experience that will prevent a truly mass market), but for 2011 it is the only real choice. This is because the car electronics shipping now were defined, at best, 18 months ago and more typically, 36 months ago. At that time, data plans were about $60 per month - far out of band for the typical consumer. Now, driven by the tablet market (thank you again, Steve), dedicated data plans from Verizon, T-Mobile, Sprint, and AT&T are dropping like rocks. The $20 plan for 1GB from Verizon is very reasonable for a dedicated Internet connection in the car. One that would allow the typical commuter to enjoy off-board navigation, local search, social networking, and, of course, Internet radio. This pricing opens real possibilities, but it is unclear how automakers will leverage the potential.

The route that automakers will take in 2011 is not a mystery. They will use tethering to bring smartphone apps into the dashboard. Resulting in some functionality for the consumer but leaving each car looking eerily like the other while they all ape my smartphone. The question really is, what will automakers do for 2013 and beyond? Will they continue to jump like lemmings off the cliff while they chant the mantras of "tethering" and "app stores"? Or will they push beyond to create unique Internet solutions in the dashboard that present compelling, differentiated Internet radio experiences? As I keep saying, the driver needs to be able to power on, turn the knob, and enjoy great music without having to worry about getting their phone set up before they turn the key. This same ease of use needs to apply to all connected services in the car. A combined automotive experience for the dashboard, including Internet radio, will require about 800MB of data per month. $20 per month is pricey, but it is within the upper bounds of consumer acceptance. It enables a new way of thinking about Internet in the car.

Ford seems to be aggressively trying to rebrand their company as a consumer electronics company. Headlining at CES, CTIA and other unusual venues, Ford wants to become associated with those rocketing markets instead of the PR-impaired auto industry. Judging from the relative valuation CE and mobile companies (think Apple) I think that is a brilliant, if difficult, move. The other automakers see this leap and are marshaling their own effort to tap into the content/electronics/mobile/apps enthusiasm. They are all looking for their own "SYNC killer" in the same way that tablet makers are looking for iPad killers. Toyota's announcement, for example, indicates that this is a teaser for CES 2011, showing their own intention to increase their branding in the consumer electronics market. However, desire and intent do not guarantee success. Will automakers deploy "me too" solutions that stagnate on tethering and apps or will they leapfrog the current Ford SYNC and create solutions for the car that are truly tailored to the unique capabilities of the car platform: unlimited battery power, no weight limits, far more accurate sensors, and, of course, great sound.

Will automakers embrace the possibilities and move towards KITT? or will they shrink back give us Nokia terminal mode at 2 frames per second? The future is being written right now.


Jackiewackie said...

I like your post! I have been waiting for internet car radio for some time now because i think my local radio stations are totally boring and too much commercial and talking, plus they don't provide much choices. Satellite radios aren't provided here either.

I really hope to see or have one internet car radio as well as probably the whole internet experience in the car...like say an ipad function in the car (streaming video, maybe gps using the internet, etc). perhaps the car dashboard/device, yeah could be linked to the internet via mobile wimax or iburst technology (i think the latter would be more appropriate for internet for moving objects as it would be based on technology suited for mobililty up to higher speeds). I don't mean to rush the producers but hey i can't wait man for this to happen! that would be so much more exciting :) Well perhaps another option may be to link the car dashboard/device to the internet via bluetooth from the mobile phone *via existing mobile phone data plans would save one 1 extra monthly fees*...they should have built in options yeah!

Unfortunately i don't have an iphone now and i don't intend to buy one currently >.< i would just have to find a way to stream my windows mobile based phone into my car radio for now... :( my phone sucks quite abit. hmm.

Unknown said...

I think you're completely wrong on your comments for what is going on the consumer electronics industry and how it relates to the automotive companies and the Consumer Electronics Association.

"Ford seems to be aggressively trying to rebrand their company as a consumer electronics company. "

Ford's name is actually "Ford Motor Company" ... they sell cars. I live in Ferndale, MI near the center of automotive development. Our company works with a variety of auto makers and we have beers with the engineers that work on these projects. Our company manufacturers internet radios and well as writes software for internet radio solutions in vehicle.

I think you are way off the mark.

The only problem with tethering is the physical cable required to tether. Bluetooth development with stack standard improvements for AVRCP and AT+BVRA will remove these requirements.

At the end of the day Ford is not going to be able to lead CE technology and you're not going to see a Ford branded product in CE retailer anytime soon (or IMO...ever). The best any motor company can (and should) do is develop APIs and standards to allow CE devices to safely and wirelessly connect to the speakers, displays, and safety systems of a vehicle.

CEA in a July study shows that smartphone sales are expected to go from an estimated 2010 $17.6B to $19.6B in 2011. And 48% of US adults that spend time in an automobile plan to by a smartphone in the next 12 months!

Unless our economy does a full 180, there's no way you're going to pull another XM type subscription out of a customer already paying for a data connection on their mobile phone. The best hope is cheaper mobile data coverage like what you can get in Europe or Hong Kong which would allow the data coverage in an embedded telematics solution primarily sold for Onstar "like" safety features that also has entertainment from internet radio.

Tethering is no different that putting your key in the ignition, and the CEA fully supports innovation by Ford, but posting a blog calling them a CE company I felt I had to respond.

If you put in there Pioneer or Kenwood, instead of Ford Motor Company I'd agree more...


Jake Sigal, Founder CEO
Livio Radio