NextWala

Do you want ads in the backseat of your taxi?

I don't know why but I seem to be morbidly interested in how taxis are getting connected (I have a previous post on the Digital Taxi here).  Taxi fleets have been early adopters of connectivity technology for purposes of logistics/coordination and they are pioneering the integration of multiple connected devices in the car for commercial purposes.  And New York City's taxi fleets are the earliest of early adopters, compared to other cities in the US.

Now, this early adopter community is turning to back-seat advertising. I was in New York City two weeks ago and noticed, during my frequent taxi-rides, that virtually every taxi there has an interactive digital screen in the back-set, in addition to a card-swipe to pay by credit card and receive a printed receipt.  The devices have been built by Verifone. 

Turns out there are two competing offerings across New York. One side includes Verifone (Transportation Systems) in partnership with WABC.  The other side includes Creative Mobile Technology together with ClearChannel and NBC Universal.  A New York Times article on this is here.

The real twist in this tale seems to be that cab drivers hate this system with a passion - they have to listen to the same news snippets and advertising jingles over and over again. It drives them crazy!!

Local content (GPS tracking, local weather, celebrity news etc.): This screen has a map with the taxi's location on it (presumably tracked through GPS). Note the tabs on top for news, weather, sports, dining, etc.  Live TV is available (Accuweather news in this screenshot) - New York's local ABC affiliate WABC is running this Taxi TV network. 

Display and video ads: Advertising is a prominent part of the screen real-estate - I noticed a healthy distribution of ads (not just house ads), including ads from the Red Cross, New York Times and others. I called the number listed on the screen and it directs to WABC's ad sales team. The New York Times suggests that all 13,000 of the city's taxi cabs are equipped with some sort of interactive display technology, whether from Verifone or others.  Let's assume each cab is running for 12 hours a day - this amount to 156,000 hours of viewer time per day or roughly 57M viewer-hours per year which makes it a nice little property (a back-seat passenger is somewhat captive and so this viewer-hour may be worth more to the network than the equivalent time spent in front of a TV at home).

The Connected Car (from The Economist)

 
(Photo by Mark Stosberg)

The current edition of The Economist has a nice article, including some thoughts from yours truly, on the Connected Car.  There are a bunch of interesting trends converging in the new few years that you should try out (safely!) - in-car navigation, car-to-car connectivity, traffic data availability, pay-as-you-go insurance, new ways of creating digital maps, asset tracking, wireless diagnostics, local search, electric vehicles etc.  And many of these ideas are available today, including some from Venrock portfolio companies INRIX, uLocate and Aha Mobile.  Some ideas, such as vehicle-to-vehicle connectivity for driving safety are a decade or more out, in my opinion (see my post on Smart Intersections from a few months ago).  Additionally, the auto industry (now that it is reinventing itself) should not forget that mobile phones/devices are going to be an integral part of the in-car experience.

Coincidentally, just a few weeks ago, I met with Rahul Mangharam (mentioned in the Economist article) at the Moore School of Engineering at the University of Pennylvania, my alma mater.  He's conducting very interesting research into traffic congestion, predictive traffic, automotive safety and next-generation automotive electronics.  Also mentioned in the article is the Stanford CarLab (Cliff Nass and Sven Beiker) which we know well. They're doing some exciting work on human-machine interfaces in the car.

An area that I am particularly interested in currently is the idea of using field-generated and user-inputted data (both explicitly-inputted and implicitly-generated) or crowdsourcing for building geographically-defined databases that can then benefit all stationary and mobile users - examples include traffic, maps, points-of-interest, photos, reviews, retail activity etc. 

Electric cars & telematics - no match? (updated)

[April 18 - I've added, to the bottom of this email, comments regarding this post received on LinkedIn]

I originally thought that electric cars would be more naturally inclined to have advanced telematics, including energy monitoring/management and wireless connectivity to web services. Over time, though, I've come to think that there is no inherent technical reason why electric cars are more amenable to telematics than gasoline-powered cars. 

However, the one crucial difference is that electric cars are being designed from the ground up TODAY whereas gasoline-powered cars have decades of legacy components, legacy architectures and entrenched cultures/bureaucracies surrounding them.

Will we see better-than-expected IT/telematics from Chevy Volt, TH!NK's city, Fisker's Karma, Reva etc.?  I hope so, especially from the US-focused companies.  Probably not from the emerging markets-focused companies such as Reva.

And today, I realized that this wish may come true, while watching the Techcrunch video of the test-driving of the Tesla car.  It seems like the upcoming Tesla model has a great screen in the cockpit with mapping and other related functions (I sure hope it's a connected service, as opposed to a pure on-board system).  The company's website certainly does not show anything remotely interesting in the cockpit.  See below for the video of the Tesla test-drive.

April 18 update - I posted a question about the relationship between electric vehicles (EVs) and telematics to LinkedIn a week ago. Here's a synopsis of the many comments that people made there - comments came from Renault, Gragras SAGAsystem, Fleetmatics, Applied Computer Technologies, Hughes Systique, Sirius Satellite Radio, iSuppli, Atlantic Management Strategies, Frost & Sullivan, Mercedes-Benz and VisionSeeds.  Thank you all!

• EVs need to be more proactive/predictive about the remaining miles that the car can travel on its current charge. This is because charging points are sparse and traffic conditions and driving behavior greatly affect the performance of the car.  As a result, traffic and location-based information (such as location of charging points or parking spots), combined with predictive algorithms, could be of great use to EV OEMs.
• Telematics need to be an provided on an open platform for EVs, so that new applications/services can be developed that tie into mobile devices etc. Proprietary approaches such as from Onstar will not survive much longer.  The auto OEM has to make performance data available to 3rd party devices and also enable third-party devices to have some (controlled) effect on performance.  
• There is an even split between people who think that EV OEMs will provide built-in telematics functionality versus those who think that mobile devices will incorporate this functionality and then interface with the cars to take in and put out information. Personally, I think this depends on the type of telematics you are talking about - if it is performance- and energy-management-related, then IMO it will have to be embedded in the car.
  
• Some comments said that EVs will be premium-priced for quite a while and therefore consumer will expect whiz-bang features such as telematics, connectivity, diagnostics, energy management etc. as a standard part of the MSRP.  (Wireless) connectivity should come standard with all EVs, given the initial audience for these cars. But what's the recurring revenue business model that will fit with consumer expectations? 
  
• Telematics is a fuzzy term, incorporating energy management, LBS applications, diagnostics, roadside assistance, navigation, entertainment services etc.  Some of these areas will differ in traction between EVs and gasoline-powered cars, some will not.  I personally think that energy management/predictive intelligence will be key for EVs.  All the other features mentioned above can also be put into gasoline-powered cars equally well - the only difference is the early adopter audience for EVs which will (I think) expect a lot of these features.

Confessions of a Car Salesman

 

(Photo by Roadsidepictures)

I have just returned from Leadscon, which focused on online lead generation and was sold out.  The online lead gen business was worth nearly $2B in 2008 and the key verticals were mortgage, auto and edu with emerging verticals include home improvement, car repairs etc. (i.e. anything that puts off a new capital purchase for as long as possible).  The biggest issues seemed to be trust and transparency between lead buyers and sellers.  I'll write more about my learnings from Leadscon in the next post. 

The experience got me thinking about how the automotive industry is dealing with lead generation, especially with the severe downturn in auto sales. After all, in this industry, 'leads' have historically walked into dealerships, driven mostly by self-motivation but also by large scale advertising on TV by auto OEMs as well as smaller-scale advertisments in local newspapers and other media outlets by dealerships. 

The last decade has seen the Web impact car buying in a big way, putting pressure on dealership margins, as well as enabling a whole new channel for lead generation.  Companies like Edmunds and CarsDirect have emerged as lead gen leaders.

I'll put two contrasting scenarios in front of you, as food for thought. More in subsequent posts:

Legacy scenario: Confessions of a Car Salesman - article on Edmunds.com.  The writer went undercover to work at a car dealership and exposes the inner workings and psychology of the dealerships. Here's an excerpt from how the author was trained to negotiate with a buyer:

"But here's the beauty of this system," Michael said, "these numbers aren't coming from you — you're still the good guy. They're coming from someone on the other end of the phone. The enemy."

Michael returned to his scenario. "OK, so when you give these numbers to the customer you say, 'Here's a pretty good deal for you.' But Mr. Customer says, 'Oh man! Michael, I told you I can only put down $3,000.' So you cross out the $6,000 you wrote and put down $5,750. You say to the customer, 'Is that more what you had in mind?' And you nod as you say this. Try to get them agreeing with you."

This reminded Michael of something and he laughed. "Here's another thing. Never give the customer even numbers. Then it looks like you just made them up. So don't say their monthly payment is going to be $400. Say it will be $427. Or, if you want to have some fun, say it will be $427.33."

While Michael was training me, he didn't ever say, "Here's how to cheat the customer," or, "This is how we inflate the prices." In fact, he stressed that I was supposed to treat customers with respect to build a strong C.S.I. (Customer Satisfaction Index). But manipulation and overpricing was inherent in everything he said. The reason for this was simple — without overpricing we couldn't make a living. What we were selling was profit. Or, as Michael put it, "This is money for you — money for your family."
.

Future scenario: Zag.com got financed last month to the tune of $37.4 million.  Zag is an 'online auto-buying service that saves consumers money when buying cars.'  The keys to its business model include group buying and distribution through affinity groups (such as AAA, Parenting.com and, yes, the NRA).  Imagine hundreds of buyers grouping together to buy hundreds of cars at one shot (no pun intended)... the bargaining power is immense. But the key is that dealers are incented to participate through a fixed price model as well as lead generation over the Web.  How much better is this than going to a car dealership?  Find out more by clicking on one of the links below:

USAA - www.usaa.com/auto
AAA MidAtlantic - http://aaamidatlantic.zag.com
Other AAA clubs - www.aaa.com/autobuying
Upromise - http://upromise.zag.com
Administaff - http://driveyourdream-adm.zag.com
National Rifle Association - http://nra.zag.com
American Express - www.amexnetwork.com/autos
Overstock Cars - http://cars.overstock.com
CapitalOne - www.capitaloneautobuying.com
Parenting - http://parenting.zag.com

Turn-by-turn navigation prototyped on the Apple iPhone

The industry's been talking for over a year about turn-by-turn nav becoming potentially available on the iPhone.  The size of the iPhone screen is as big as many GPS personal navigation devices and, in my opinion, would be more than ideal for in-car nav, when mounted on the car windscreen.

Apple's iPhone SDK Terms & Conditions do not allow turn-by-turn nav - when I ask around, I hear that the reason is probably mostly technical (i.e. background processing on the slow iPhone chip would really eat up compute cycles and potentially interfere with the primary functionality of phone calls and music).  I've also heard that Apple may have designs on the navigation space itself - there have been rumors that all the mobile nav apps companies, including Telenav, NIM and Decarta, have gone through a beauty contest at Apple headquarters in Cupertino

Now we have a prototype of a working turn-by-turn nav app for the iPhone.  Thanks to The iPhone Blog for catching this demo at Mobile World Congress.

 

(Photo by: The iPhone Blog)

I think it will be quite a while until Apple allows this to appear on the App Store, unless the iPhone chipset gets faster. Not only are companies like Sygic interested in the iPhone market, I'm sure many of the GPS device makers such as TomTom, Garmin and (formerly) Dash would be interested. The ad-supported nav vendors that have appeared in Europe over the past year are probably also watching developments on the iPone - these include Amaze and Nav4All.  There are also a slew of consumer-generated (maps+traffic+nav) companies that will be launching soon that will look at the iPhone market.  Stay tuned!

Smart intersections are several years down the road

There has been a steady amount of talk about vehicle-to-vehicle (V2V) communications as well as IntelliDrive/vehicle infrastructure integration (VII) over the past few years. There's a Catch-22 problem here - I don't believe this benefits any startup or even large auto OEMs until every car has it - that won't happen till governments put a large amount of capital into funding the roll-outs. So, IMO, the market is a decade out.  What do you think?

The Wall Street Journal posted a video of this space today:

Here's a scenario from a Gearlog article: "We are traveling at an impossibly high speed along the Autobahn when a stalled Cadillac CTS looms ahead. As if sensing its plight, the Caddy's brake lights and backup lights flash. A warning flashes in my car's dashboard, the seat vibrates, and then powerful disc brakes bring us to a halt just a few feet from disaster—all without the driver touching a thing. The demo actually took place in the parking lot of Giants Stadium at about 20 mph, but one day it could happen on the Autobahn, or on Interstate 80, at serious speeds."

For those of you who've made it this far, here's a fun clip from a motorcycle on the German Autobahn:

Nuance / IBM agreement affects automotive OEMs and value-added voice vendors

This one slipped by my radar but I managed to get to it, almost one month later! This is a pretty significant announcement.  Nuance and IBM are the leaders in this space. Nuance has been on an acquisition spree the last several years and its acquisitions/renamings include ScanSoft, VoiceSignal, Lernout & Hauspie, SpeechWorks, BeVocal etc.  There has been significant litigation in this area as well.

The Nuance/IBM move will have all the downstream providers/buyers of voice ASRs scrambling to figure out how to dual-source their voice technology or just have two viable options to pit against each other for better pricing/terms. Examples of companies hurt by this move could be server-side consumer portals (e.g. Microsoft's TellMe division, Vlingo, etc.) and automotive OEMs (Nuance and IBM have a very high combined market share here).  The only game remaining in the voice ASR space is now outside of the US and Europe.

Nuance and IBM Establish Agreement to Advance Innovative Speech SolutionsNuance to Deliver Advanced Product Offerings Combining Nuance and IBM Technologies

BURLINGTON, MA and ARMONK, NY, January 15, 2009 — Nuance Communications, Inc. (NASDAQ: NUAN), a leading provider of speech solutions, and IBM (NYSE: IBM), a pioneer in speech technology, today jointly announced that Nuance and IBM have entered into a licensing and technical services agreement to enhance and expand innovative speech solutions designed to better serve enterprises, consumers, carriers, and partners worldwide.

With the objective of advancing customer access to speech innovation, Nuance and IBM technologists will cooperate to incorporate IBM technology into Nuance’s speech solutions. Nuance expects the first integrated speech innovations combining Nuance and IBM technologies to be available within two years. IBM will continue to serve its own customers. In a second component of the agreement, Nuance will purchase speech-related patents from IBM.

“IBM and Nuance share a vision to proliferate advanced speech capabilities across a broad range of devices and environments,” said Dr. John E. Kelly III, IBM senior vice president and director, IBM Research. “We recognize that Nuance is a leader in the speech marketplace and we believe this technology agreement will accelerate the delivery of speech innovations to the world’s consumers.”

“We are enthusiastic about this strategic relationship with IBM, building on its rich history of speech research to accelerate the creation and adoption of next-generation speech solutions,” said Paul Ricci, chairman and CEO, Nuance. “Through this relationship, we expect to inspire a new level of technical advancement unprecedented in the speech industry from which the customers and partners of both companies will benefit.”

Financial details were not disclosed.

Ford and INRIX

At CES last week, Ford CEO Alan Mullaly announced the second-generation of Ford's in-car telematics product: SYNC with Traffic, Directions and Information.  Ford is utilizing Venrock portfolio company INRIX's Connected Services (Ford keynote video here, start at about half-way through the video), including:

• INRIX's third-generation routing engine which utilizes both real-time and predictive traffic information to provide routes and avoid traffic congestion. Routing without traffic is just hypothetical, as someone once said.
• Real-time traffic information based on data from a million GPS-enabled vehicles as well as road sensors and GPS-enabled devices.
• Various other services such as INRIX Alerting and Total Fusion Traffic.

A marketecture schematic diagram of the INRIX implementation is described here.

Alan Mullaly mentioned that SYNC-equipped Ford, Lincoln and Mercury vehicles sell nearly twice as fast as those without SYNC.  Also, Ford's entire North American product line will have this next-generation SYNC by summer 2009, which is quite a fast ramp considering the otherwise longer timelines for roll-out of new technologies in the automotive industry.

Alan Mullaly also went on to talk about how, in the future, Ford will provide a service delivery network that would integrate pretty openly with third-party web services.

2009 prediction: User-generated content from the car will gather momentum

Photo by L. Marie

Here're my takeaways from the Navigation & Location 2008 conference:

A number of the major vendors - Navteq, TomTom, Nokia, INRIX, Dash etc. - in the space were talking about user-generated content.  Generally classified into two areas:
1) Passive sharing: location (through GPS probes), mileage, acceleration etc.  TomTom said they had collected 1.8 trillion data points (synched through their PC client).  Dash, famously, uses real-time GPS probe data, in addition to INRIX's traffic data, to create traffic feeds for Dash device users. There are uses for historical probe data as well.

2) Active sharing: speed traps, police cars, incident reporting, map corrections etc.  Trapster, Tomtom's Safety Camera POIs, DriveCam's video capture etc.

Now that these PNDs and navigation software are in the hands of millions of users, these organizations are trying to figure out how to get users to actively input data in return for some value such as free routing information or mobile applications.  Seems like the user feedback is reasonably positive on the idea of active sharing - users are likely to agree to share their data anonymously. Some highly active users are also likely to (Wikipedia-style) correct bad data - one example is Google's Mapmaker software introduction.

Other general feedback from the conference:
- PND market is still growing in unit volume but prices have crashed - Black Friday prices were especially discounted to levels as low as $99.  According to some people at the conference, Dash and Magellan seemed to be exiting the market.  Best Buy's PND entry signals how private-labelled products are coming into the market in a vertically integrated manner, potentially in response to the high customer demand but very low margins available to standalone PND vendors.

- Advertising-supported services are 3+ years out (at scale).  Unit volumes provided by automotive OEMs will never be big enought so support advertising.  Perhaps aggregation of users across multiple automotive OEMs + multiple CE vendors + mobile devices will provide the volume over time. Some speakers mentioned $35-45 CPMs - these CPMs will drop precipitously given that early campaigns are experimental and we are also in a recession for several years.  It was also pretty evident that CE device makers and navigation software makers need to really come up to speed on how media & advertising really works - there were lots of references to the cringe-worthy example of "driving past a Starbucks and getting a coupon pushed to you."

- Vendors are vertically integrating into each others' spaces. Telenav's PND offering is an example.   Best Buy's PND offering is an example.  Decarta, Jentro, Telenav, NIM may all be competing with each other. The mapping vendors are providing several types of value-added data on top of their maps.  Of course, the mapping vendors have been acquired by device makers (Nokia & TomTom).

Hypermiling

Excellent post by Chuck Squatriglia on Autopia within Wired's blog network.  I've used the PLX device to provide me eco-driving feedback and it had a profound effect on how I was driving within a couple of days - it was strangely addictive.

I was especially intrigued by a Ford employee's comment around the emotional connection with the user that they are trying to achieve:

"We wanted the SmartGauge to have an emotional component," [senior technical leader at Ford] Greenberg says. "We wanted something that would appeal to the data geeks, but we also wanted something that would create an emotional response."

I couldn't agree more. Whether it's the game-like gauge on the Prius or these newer displays from the likes of Ford and Toyota, there is clearly a whole new level of value to be provided to users on the emotional level.

I do respectfully disagree with this article on whether this innovation will be brought forward by the auto OEMs or other aftermarket or mobile device/software makers.  Even these supposedly "advanced" displays from the auto OEMs remind me of green screens on computers from the 1980's. My bet is on the aftermarket and mobile software companies.

Some comparison of screenshots:

Toyota:

Photo from Nissan Global

Ford SmartGauge with EcoGuide:

Photo from AutoBlog


Honda Insight:

Photo from Jalopnik

Toyota Prius:

Photo from Nudgeblog