What's Right for Your IVI Systems: Embedded Modems or Smartphones?

November 5, 2015  |  By Michael O'Shea  |       

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As more connected cars come to market, OEMs are wrestling with the best way to make cars part of the digital lifestyle. Today’s car buyers have become used to managing their lives via their smartphones, and they want the smartphone to become part of the connected car experience. So the challenge facing OEMs is identifying the best strategy to provide a connection that creates a branded automotive experience and still meets car buyers’ expectations. At the most basic level, it requires OEMs to decide whether to use an embedded modem to build connectivity into the IVI head unit, or whether to rely on smartphones to support infotainment systems.

According to a research report developed by SBD Consulting and the GSMA, more than 20 percent of vehicles sold worldwide this year will include embedded modem systems, and more than 50 percent will offer connectivity using either embedded or smartphone technology. By 2025, every car is expected to be connected in various ways.

SBD also predicts that by 2018, 21 million cars will be sold with smartphone integration systems. That represents about 18 percent of the market. These systems will use the intelligence and mobile capacity of the smartphone to deliver infotainment to the vehicle’s IVI, providing control over the apps via controls in the head unit interface. What about the remaining 88 percent? Will they deliver connectivity via smartphone, by using an embedded modem, or using some combination?

The Convenience of Embedded Technology

Designing an embedded modem into the connected car offers one real consumer advantage – convenience. Rather than having to rely on their smartphone for data and connectivity, the vehicle comes preconfigured with its own dedicated wireless connection, which is always there even if the driver left their phone behind.

Embedded modems are ideal for for safety and security applications such as safety monitoring, emergency assistance, crash notifications, and diagnostics. Beyond safety applications it is not clear that an embedded modem it is the ideal choice. here is the question of who pays for the connection? Using embedded connectivity is practical if the consumer is willing to pay a premium. Mercedes-Benz, for example, includes the cost of a connection as a value-added service that they charge back to customers. Tesla is offering a free connection with Internet radio for four years, including the cost of the connection in the price of the car so Tesla can deliver over-the-air software updates in addition to infotainment. After the four year period the customer will have to pay for an extra data plan.

Luxury car brands will likely offer value-added wireless services with each vehicle, for a fee, and many consumers will be willing to pay. These OEMs will likely find innovative ways to create a unique, branded IVI experience with music, navigation, and even shopping that makes the service valuable to customers.

However, the majority of connected car buyers are unlikely to be willing to pay for yet another wireless subscription that replicates what they already get on their smartphones. For those buyers unwilling to subscribe to an onboard wireless service, the connected head unit becomes essentially a crippled appliance.

Cellular technology is advancing rapidly. The first connected cars with embedded cellular modems ran on analogue signals. Most embedded modems today are 3G, but 4G phones are already widely available. Cars have a long design life and consumers often hold onto their cars for 8 years or more. The embedded technology designed into the car before it was sold can become outdated a year or two after purchase.

The Argument for the Smartphone Interface

Consumers want their smartphones. Recent research by the Pew Research Center shows that two-thirds of Americans now own smartphones and 19 percent rely on their smartphone as their only tool to access online services. Another study by Mason and Nielsen shows that consumers use their smartphones an average of 195 minutes per day. Automobile buyers want to carry that smartphone experience into the car.

For OEMs, the logic behind embracing smartphones for the connected car is inescapable:

  1. Consumers get to bring the technology they already know and the content they already own. This means that they don’t have to try to configure the same apps on their IVI system using a different interface and unfamiliar commands. The apps on their smartphone merely become accessible via the head unit display.

  2. There is no need to charge for another wireless subscription service – the driver continues to use their own wireless carrier for data.

  3. There is an opportunity to create value-added services that differentiate the automotive brand. OEMs can develop their own proprietary smartphone apps that interface with the head unit to access telematics and provide other information.

  4. The car can be kept fresh and to update by leveraging the latest capabilities and features of the shartphone.
Development platforms such as WEBLINK make it easy for OEMs to develop apps that are compatible with iOS and Android while still retaining control over functionality, look and feel, and branding. We predict that the smartphone and the connected car will maintain a symbiotic relationship for the foreseeable future.

Topics: Infotainment/IVI

Michael O'Shea

Michael O’Shea is the Founder and CEO of Abalta Technologies. He is responsible for all aspects of executive management of Abalta and a direct participant in many client engagements, particularly in management advisory projects.

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