Tuning in to auto entertainment.

Entertainment is one area where consumers have a long history of being ahead of the automakers in their expectations and requirements. Automotive historian Michael Lamm tells us that the marriage of music and automobiles began in the early 1920s when people began carrying their home radio sets complete with wooden cabinetry out to their cars. Unfortunately, they couldn't listen to them when the engine was on because of substantial ignition interference. Aftermarket radio companies got to work to solve the problem, and although automobile radios remained expensive for consumers to buy and install, they began to catch on as an accessory. By 1934, the Detroit automakers were ready to capitalize on the burgeoning consumer interest by offering built-in radios that they bought from a variety of companies. Over the ensuing decades, they improved integration and sound quality, with a particular boost in the early 1980s from Bose's assistance in developing a sound system designed for the automotive interior.

The OEM and aftermarket companies have shared the audio space over the years, but the competition has intensified now that automakers have turned to sound systems as a means of differentiation. The aftermarket has been driven, in turn, to accelerate its product development and expand offerings in order to entice consumers to upgrade from their factory-installed systems. Some of the features that the aftermarket is promoting to overcome the OEMs' incumbent advantage are dual XM and Sirius capability, HD radio capability, or premium speakers.

In-car video has followed a similar path. Back in 1980, one of my co-workers bought a little aftermarket black-and-white television for her car so that she could monitor the soap opera "General Hospital" on her way home from work (foolhardy then and illegal now for drivers in 38 states). In recent years, rear-seat entertainment systems for passengers have been fully embraced by automakers, and are a must-have option in certain vehicle segments, given their popularity with consumers. Aftermarket companies are still pushing the vehicular video marketplace forward, with items such as satellite TV products, and portable storage devices that can hold 25 movies to play in the minivan, so there are leading-edge aftermarket features to satisfy the ultra-users.

The latest repeat of the electronics pattern, 80 years after the first round, has consumers once again carrying their own entertainment and communications devices into the vehicle, this time in the form of iPods, MP3 players, Blackberries and other personal digital assistants, and cell phones. Rather than the specialty equipment aftermarket players, though, it is the telecommunications and consumer electronics companies that are driving the trend. The traditional aftermarket and automakers are struggling to catch up, keep up, and figure out how to play in this space.

At a recent industry conference on electronics and interiors, one of our fellow panelists was Jeff Greenberg, Senior Technical Leader in Ford Research and Advanced Technology. He pointed out that the explosive growth of gadgets like cell phones, iPods, and portable navigation systems outpaces anything in the vehicle, and that this democratization of electronics prompts the question, "What is the role of the OEM when the consumer controls the electronics?" The answer he provided is "integrated HMI (human-machine interface)"--in-vehicle interfaces that will help tame the portable devices. Using automotive design principles, he is optimistic that Ford can make these gadgets safe, and even more effective in the driving environment. But will consumers pay for the integration, given that they do not have to, that they can continue to use all these devices separately? That remains an open question.

Could the OEMs follow the radio model and co-opt these products? The difference in development cycles between the electronics and automotive industries is well-known, so incorporating personal electronic equipment into the vehicle that will remain current in function and features through the development cycle, not to mention the life of the car, would be pretty tough. In the near term, the focus from the OEMs is on nuances such as connectivity, dockability, refinement of controls, customized storage for personal electronic devices, and the like. Over the long term, though, factory-installed equipment usually trumps aftermarket "Velcro upgrades," and multi-purpose devices with extra functionality usually displace single-purpose units. This suggests that the automakers will find a way to take advantage of the vehicular real estate they own and capture more of the profit in the infotainment field, by integrating audio, video, navigation, and the latest--communications--into their realm. It might take a while, but probably not as long as we waited for the automakers to seize and master the audio opportunity.

By Melissa Anderson, Vice President, IRN, Inc. [e-mail]