Automotive Infotainment Telematics AND - Capital Markets ...?Automotive Infotainment Telematics AND - Capital Markets Day 2017 . ... UX Enhancement ... 2017 Strategy Analytics,

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  • November 6, 2017 Strategy Analytics, Inc 1

    Automotive Infotainment & TelematicsAND - Capital Markets Day 2017

  • RICHARD ROBINSON

    November 6, 2017 Source: Infotainment & Telematics Service 2

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

    rrobinson@strategyanalytics.com

  • AUTOMOTIVE PRACTICE SINCE 1988

    November 6, 2017 Strategy Analytics, Inc 3

    LEADING-NAME CLIENTS ACROSS THE VALUE-CHAIN

    70% of Tier 1 Suppliers

    90% of Major Auto Semiconductor

    Suppliers

    70% of top OEMs

    FIVE SERVICES TO COVER ALL AUTOMOTIVE OPPORTUNITIES

  • INFOTAINMENT & TELEMATICS

    AGENDA

    Next Generation Connected Vehicle Architecture

    Gen. 1.0 Market Status

    Gen. 2.0 Market Drivers

    Domain Convergence - Data Collection/Management

    Gen. 2.0 Data Management Opportunities

    Indirect Direct - Cloud based - AI & Digital Assistants

    Navigation:

    Autonomous vehicle

    Hybrid

    November 6, 2017 Source: Infotainment & Telematics Service 4

  • MARKET STATUS

    Telematics 1.0 business model Trying to monetize the consumer directly Too many de-activated subscriptions Free periods too short

    November 6, 2017 Source: Infotainment & Telematics Service 5

    6 months FREE!

    Only $10 per month!

    Market FAILURE+ =

  • MARKET STATUS

    IN-ACTIVE SUBSCRIPTIONS (CUMULATIVE)

    November 6, 2017 Source: Infotainment & Telematics Service 6

    Source: Strategy Analytics Infotainment & Telematics Service

  • MARKET STATUS

    INACTIVE SUBS = DEAD $$$

    November 6, 2017 Source: Infotainment & Telematics Service 77

    Source: Strategy Analytics Infotainment & Telematics Service

    Over $19 Billion wasted 2011 2017

  • TELEMATICS IS A VALUE ADD

    MORE OEMS OFFERING EXTENDED FREE TRIAL

    November 6, 2017 Source: Infotainment & Telematics Service 8

    To Proprietary

    Proprietary

    Proprietary,

    SiriusXM

    4G LTE

    4G LTE

    2.5G/3G/4G

    2.5G

    4G LTE

    4G LTE

    2.5G

    3G

    2.5G

    * GMs OnStar Basic plan, and Mercedes mbrace Connect plan are free for 5 years with 2016+ GM vehicles and 2016+ Mercedes vehicles.

    OEM

    Typical Players in U.S. OEM MarketCarrier

    6 Months

    4 Years

    6 - 12 Months

    5 Years

    5 Years*

    1 Year

    1 Year

    5 Years*

    1 YearEmbedded telematics is evolving to longer free trial period.

    Free TrialNetwork

    SpeedTSP

    B2C

    B2C

    B2C

    B2C

    B2C

  • AUTOMOTIVE EMBEDDED MODEMS MARKET STATUS

    2017 OEM SHIPMENT ATTACH RATE - EU

    November 6, 2017 Source: Infotainment & Telematics Service 9

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    France Germany Italy Spain UK

    Telematics Status EU - 2017

    Embedded Connectivity No Embedded Connectivity

    Italy: Only 27% of vehicles will ship with embedded connectivity in 2017

    France, UK and Germany: Have the highest adoption with 40% to 42% in 2017

    Spain: 32% of vehicles shipped in 2017

  • AUTOMOTIVE EMBEDDED MODEMS

    GLOBAL ANNUAL SHIPMENTS

    November 6, 2017 Source: Infotainment & Telematics Service 10

    0

    20.000

    40.000

    60.000

    80.000

    100.000

    120.000

    2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

    Un

    it S

    hip

    me

    nts

    (0

    00

    's)

    North America Europe South Korea Japan China India Russia Brazil Rest of World Non Connected Cars

    51% of vehicles shipped will have embedded

    modems

    Telematics 1.0

    Telematics 2.0

  • INFOTAINMENT & TELEMATICS

    AGENDA

    Next Generation Connected Vehicle Architecture

    Gen. 1.0 Market Status

    Gen. 2.0 Market Drivers

    Domain Convergence - Data Collection/Management

    Gen. 2.0 Data Management Opportunities

    Indirect Direct - Cloud based - AI & Digital Assistants

    Navigation:

    Autonomous vehicle

    Hybrid

    November 6, 2017 Source: Infotainment & Telematics Service 11

  • MARKET DRIVERS

    GEN 2.0 TELEMATICS ARCHITECTURE

    November 6, 2017 Source: Infotainment & Telematics Service 12

    Cloud

    IoT

    OTA

    OEMs

    Telematics ECU

    Cloud

    Smart Antenna

    Headunit/

    Cockpit Domain Controller

    Telematics ECUCockpit

    Domain Controller

    Smart Antenna

    Body

    Chassis

    ADASEthernet

    Powertrain

    ADASECU

    PowertrainECU

    Body ECU

    Chassis ECU

    Gen 2.0

  • November 6, 2017 Source: Infotainment & Telematics Service 13

    GEN. 2.0 MARKET DRIVERS

    DATA COLLECTION AND MANAGEMENT

    Driver data Personal account information, personal contacts, payment information, driving behavior data, biometric data, personal preferences data (e.g. HVAC settings, seat position, audio source preferences, etc.), app/feature usage data, microphone data, in-cabin camera data, in-cabin sensor data (e.g. seat sensors)

    Vehicle data inspection/regulatory data, collision/forensic (e.g. EDR) data, diagnostic/trouble code data (e.g. OBDII/ EOBD data), proprietary OEM data, sensor data, parts performance data, emissions data, vehicle security data (e.g. firmware/software security information)

    Content data media (music, video), POI data, other types of data provided and/or owned by third parties

    V2X data Wireless network condition information, connected device information (e.g. smartphones, docked tablets) V2V data, IoT data (e.g. connections to smart home devices or EV charging stations), Location/GNSS data, other satellite connectivity data, infrastructure data (e.g. toll ECU data)

    Environmental data Physical road conditions (e.g. ice, potholes), weather, traffic, road hazards/furniture, outside temperature, available parking spaces

  • November 6, 2017 Source: Infotainment & Telematics Service 14

    Sample Use CasesUX Enhancement

    - Analyze UI usage

    - Analyze in-vehicle app usage

    - Learn driver/passenger preferences

    - Enhance services (e.g. concierge service) based on analysis of usage data

    - Analyze driving style to improve autonomous driving systems performance

    - Monitor wireless network conditions to troubleshoot connectivity issues

    Process Improvement

    - Get ahead of recalls/warranty exposure

    - Make changes on the production line

    - Streamline OEM parts inventories and deliveries

    - Collection of high-resolution location data to enable autonomous driving

    - Ensure compliance with changing global regulatory environment

    - Testing/simulation (potentially in near real-time when 5G networks become available)

    Monetization

    - Direct sale of data to third-parties (e.g. retailers, insurers, government entities, media companies, telecom operators, etc.)

    - Targeted marketing efforts (e.g. dealer CRM, eventually advertising)

    - Provide fleet-related data to third parties (e.g. vehicle load /weight conditions, location, fuel usage, driver/passenger identification, etc.) for direct or indirect monetization

    GEN. 2.0 MARKET DRIVERS

    DATA COLLECTION AND MANAGEMENT

  • November 6, 2017 Source: Infotainment & Telematics Service 15

    Number of Automotive Software-Related Recalls in U.S., 2011 2016

    Source: CX3 Marketing

    GEN. 2.0 MARKET DRIVERS

    SOFTWARE RECALLS

    Typical (Non-OTA) software updates cost between $300 -$600 per vehicle.

    ~ $3 Billion spent by OEMs to do (non-OTA) software updates in the US alone in 2016!

  • OTA OEM IMPLEMENTATION STATUS

    November 6, 2017 Source: Infotainment & Telematics Service 16

    OEM Telematics Control Unit

    Infotainment System

    Powertrain/ Safety

    All ECUs

    2020

    2020

    2020+

    2020+

    2020

    TBDTBD

    2020+

    TBD TBD

    TBD

    TBD

    TBD

    TBD

    TBD

    TBD TBD 2020+

    TBD TBD TBD

    TBD TBD

    TBD

    TBD

    TBD TBD

    TBD

    Wi-Fi

    2017

    TBD TBD

  • GEN. 2.0 MARKET DRIVERS

    OVER THE UPDATE BUSINESS MODELS

    Business Models

    Subscription: Subscriptions are generally annual or quarterly (depends on OEM) and pricing is either per vehicle module being updated or per vehicle. This generally applies when providers are selling to OEM customers. All subscription models include separate one-time NRE for integration and either include upkeep/maintenance fees with the subscription price or charge a separate annual fee.

    Per Campaign: Some OEMs only want to pay per OTA update campaign, but this is less common as most are realizing theyll want to send multiple campaigns. Pricing is per vehicle module. This generally applies to OEM customers.

    Licensing OTA Components: Some companies license their OTA update solution, or specific OTA update platform components/modules, to customers, allowing them to run the platform or components on either the customers or providers servers, depending on preference. The license fee is either a one-time fee or an annual fee.

    Revenue Share: A future model under consideration by OTA solution providers is to share revenue with OEMs that charge for software/feature upgrades.

    November 6, 2017 Strategy Analytics, Inc 17

  • GEN. 2.0 DATA MANAGEMENT OPPORTUNITIES

    November 6, 2017 Strategy Analytics, Inc 18

    Vehicle manufacturers (OEMs) are looking to exploit vehicle data

    Requirement: Understand how people drive an