El Segundo, Calif. (Sept. 24, 2014)—The use of smartphones in motor vehicles—already a near-ubiquitous phenomenon—is the most disruptive trend in the automotive infotainment business today, presenting both challenges and opportunities for automakers and their processor semiconductor suppliers, according to a new report from IHS Technology (NYSE: IHS).
The most promising prospect for automotive processors in the years ahead will be in the telematics portal head unit, which can connect with a smartphone for mobile broadband connectivity. Revenue for automotive infotainment processor chips for telematics portal head units will grow to $508 million in 2018, up from slightly less than $128 million in 2013, as shown in the figure below. And while this particular application accounted for only 8 percent of total global automotive infotainment processor market revenue in 2013, its share will surge to 30 percent in 2018.
In comparison, the automotive processor segment with the highest revenue last year, head units for navigation, will shrink dramatically by 2018. Revenue will plunge to $51.0 million in 2018, down from $367.8 million in 2013, as navigation becomes a standard feature provided not only by multimedia and telematics portals but also by smartphones.
“Smartphone use in vehicles has led to two divergent approaches to head-unit designs, one replacing smartphone and the other one embracing them,” said Tom Hackenberg, senior analyst for microcontrollers and microprocessors at IHS. “For the most part, automakers are heeding the call to accommodate mobile devices. This explains the dramatic rise in revenue for telematics portal head units, which address the complexities of the human-machine interface as well as the increasing consumer demand for ubiquitous connectivity.”
To keep up with such consumer preferences, automotive original equipment manufacturers (OEM) are providing systems that are more extensively integrated. Not only will infotainment systems come with features such as networked displays, controls built into the steering wheel and large touch screens, cars will also be able to capitalize on users’ smartphones to connect with the various integrated systems of the vehicle, in order to offer a richer and more up-to-date experience.
The great growth in new features from automotive OEMs is expected to take market share away from aftermarket vendors, which will be hard-pressed to exceed the rich user experience delivered from pre-installed and highly integrated infotainment systems.
Hitting the right mix
Some crucial challenges will face vehicle OEMs when developing media-rich cars. A feature-laden infotainment solution adapted from a consumer electronics design has a potential risk, however insignificant, of introducing previously unknown flaws or clashing with critical systems electronically. This can create a liability issue in vehicle design.
Also, excess or inappropriate infotainment can be construed as driver distraction—another liability for the OEM.
On the other hand, such concerns must be weighed against the potential for an inadequate user experience if car makers offer unsophisticated smartphone connectivity options, which could tarnish brands and make them seem irrelevant. Striking the correct balance—between a safe driving experience on the one hand, and the evolving demands of the connected consumer on the other—is creating a narrow but contentious design challenge for next-generation vehicle infotainment, Hackenberg noted.
The demand for a user experience commensurate with smartphones and tablets has additional implications for automotive infotainment, Hackenberg added. The disparity between the rapid development cycle of multimedia processors and the carefully tested development cycle of automotive OEMs means that the infotainment system designer must be creative in enabling flexible product-line solutions to accommodate a rapidly changing supply chain.
Another hurdle for automotive OEMs is to match consumer expectations of their infotainment experience. In this case, vehicle owners may want their connectivity interaction with the car’s infotainment system to look and feel the same as when they deal with their portable devices.
The problem is especially acute because mobile handsets come and go at a rapid pace, with new models and updates developing and introduced during a period of one year or less. Automotive makers, meanwhile, need to maintain a consistently high standard of quality, and it could take years to implement the new developments in connectivity, such as those related to interfacing with mobile devices like smartphones.
For the premium vehicle market, which is more likely to embrace multimedia and Internet connectivity features by replacing the need for a smartphone, this connotes designing a more modular and costly approach that can evolve at the pace of mobile technologies. For the more mainstream market embracing the smartphone for processing applications, this will mean a constant struggle with mobile device compatibility.
These findings can be found in the report entitled “Automotive Infotainment Processor Report – 2014,” from the Automotive & Transportation research service of IHS Technology.
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