While not everyone can ride the Google Shuttle to work and enjoy a free Wi-Fi connection, in-vehicle Internet access for all is not far off as cars roll into the digital age. In-car access to everything from real-time traffic updates to favorite iTunes songs to YouTube videos will transform the driving experience. As Americans own more than 230 million vehicles and spend, on average, more than one hour in their cars daily, the vehicular infotainment market is poised for significant growth. Prospects in this sector can be likened to the strong growth in the home and mobile markets during the last few years.
Just as technology expands mobile and home entertainment capabilities, new features enable in-vehicle infotainment to move beyond devices like radios, CD players and DVD players. In the auto, mobile phones, navigation devices, and MP3 players are beginning to integrate into existing in-car audio and video systems. For example, new Bluetooth wireless technology allows drivers to see incoming caller IDs in the rear-view mirror and use the car’s audio system as a speakerphone. New services that free consumers from the PC, TV, and small cellphone screen and keypad not only enrich the in-car experience, they also improve passenger safety. Looking ahead, emerging technologies like advanced wireless networks and simplified in-vehicle user interfaces will enable a broad range of on-demand in-vehicle infotainment services, including TV shows.
As consumer demand for Internet connectivity and on-demand content accelerates, traditional barriers to competition in the auto sector are breaking down. As a result, auto manufacturers and aftermarket vendors must reconsider how they deliver infotainment to consumers. Meanwhile, new competitors like wireless carriers are now able to extend their services into the auto sector. While in-car infotainment can – and should – integrate into the on-demand world that already exists in the home, office, and mobile environments – it will not be easy. To date, no single company has achieved significant mass-market adoption.
Delivery method
Crucial to success in this burgeoning market is the service delivery method deployed by competitors. Future delivery methods will enable access to entirely new types of in-vehicle infotainment, and they represent a substantial, untapped opportunity for all players. As demand for ubiquitous, on-demand content continues to grow, two distinct delivery methods are emerging, including: mobile radios and embedded, in-vehicle radios.
We are already seeing new products from each model. Using the cellphone as a mobile radio that provides two-way connectivity to the existing systems in the vehicle, aftermarket vendors offer products that allow car stereos to play Web-based and commercial on-demand audio content (e.g., podcasts and mobile music services). Vehicular radios are also evolving. Dash Navigation, an aftermarket vendor, is set to bring basic Internet connectivity to cars this year.
Additionally, Sirius’ “Backseat TV” with Chrysler provides family TV fare in the vehicle through a simple, easy-to-operate video service.
Both models require cooperation between wireless carriers and auto manufacturers or aftermarket vendors. Even though OnStar and Sirius’ Backseat TV service already uses an in-vehicle radio method, the mobile radio may be better able to keep pace with advanced wireless network technology. With either option, the wireless carriers’ existing business places them in a natural position to fill the retail service provider role. Yet, new technologies and internal initiatives may enable the vehicle manufacturers and aftermarket vendors to play a greater role in retail services and capture a greater portion of the revenue.
The car’s physical infrastructure is ideal for a high-quality infotainment experience – ubiquitous audio systems and a growing number of video screens complement a culture that is increasingly viewing the car as an extension of the living room. With substantial growth opportunities within in-vehicle infotainment, market players will likely employ both service delivery methods to some extent. The greatest beneficiaries will be those companies that create a sustainable business model, which satisfies consumers’ growing demand for ubiquitous, real-time infotainment.
Stefan Bewley is a Principal at Altman Vilandrie & Company. Bewley can be reached at bewley@altvil.com.
