2013 Global In-Vehicle Infotainment Industry Leadership Award

Frost & Sullivan’s Global Research Platform

Frost & Sullivan is in its 50th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company’s research philosophy originates with the CEO’s 360-Degree Perspective™, which serves as the foundation of its TEAM Research™ methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2013 Global Industry Leadership Award in In-vehicle Infotainment to HARMAN.

Key Industry Challenges

Going forward, evolving industry dynamics indicate significant revenue-generation opportunities in the “connected car” domain. Connectivity can be defined as a convergence of automotive, consumer, and computing technologies. With the obvious influence from the consumer electronics industry, connected infotainment services and applications have become one of the major drivers for the in-vehicle infotainment market. Cloud-based data delivery and technologies, like HTML5 and MirrorLink, have been instrumental in setting the platforms for such connected systems. Connected location-based services and multimedia streaming are becoming a commodity. Drivers in the U.S., on an average, are expected to spend more than 40 minutes in their cars on a daily basis, thereby presenting attractive opportunities for the Original Equipment Manufacturers (OEM’s) to offer an array of services. Many infotainment systems, today, rely on the smartphone for connectivity. Most of them, like Ford Sync and Toyota Entune, have custom-built applications that are difficult to both develop and upgrade due to their partially closed architecture. There still exists a lifecycle gap between Consumer Electronics (CE) and cars, and hence, the services and applications are guaranteed to become obsolete.

Infotainment systems have evolved from a closed loop of technological limitations to a partially open ecosystem. One of the major challenges today is the integration of apps into the infotainment system. While top OEM’s, like Mercedes Benz and Toyota, in Europe are working on bringing apps through MirrorLink, it is difficult for OEM’s, like Ford in the U.S., to operate in a similar fashion in order to add new apps to their platform as it involves a huge investment. Thus, developing a suitable and safe user interface still remains the biggest challenge for connected automotive infotainment designers in the face of escalating concerns about driver distraction issues. The non-existence of standardized platforms and the presence of different SDK’s and API’s necessitate developers and content suppliers to customize their solutions for different platforms. Therefore, increased production costs and faster time-to-market are two of the challenges facing the OEM’s and the Tier 1 suppliers.

Another key challenge is to enable the usage of these connected services within the car. The design of a non-distracting user interface (UI) is a critical parameter. The UI has to be designed keeping all driving use cases in mind, which could intelligently differentiate between critical and non-critical data. Additionally, customization that blends into different driving environments is the key when it comes to designing an intuitive interface. Dynamic changes in technologies and services are driving the need for API’s to change/accommodate those changes; and hence, OEM’s and suppliers are offering scalable and flexible platforms to make their systems future proof. This is where rapid prototyping and reusable technologies come into limelight. HTML5, OpenGL, and CSS support components are expected to trigger the next-gen infotainment systems.

In the case of OEM’s that rely on cloud-based connected systems, there are many challenges, such as security risks to the user data and an increased need for interoperability for a two-way communication. Additionally, with the entry of new participants, like telecom operators, third-party app and content providers, the revenue stream for OEM’s, and Tier 1 suppliers are shrinking.

For any product or service, applications aimed at the bottommost of the pyramid, i.e. mass market continues to augment growth towards realizing increased market share. Thus, Tier 1 suppliers are focused on broadening their product portfolio, which could cater to multiple vehicle segments. The main focus is to develop a scalable and flexible platform which could be used for multiple vehicle segments.

Best Practice Award Analysis for HARMAN

The Frost & Sullivan Award for Industry Leadership is presented to the company that has demonstrated excellence in capturing the highest market share within its industry. The Award recognizes the company’s leadership position within the industry in terms of revenues or units, as specified.

HARMAN’s Performance in In-vehicle Infotainment

HARMAN, with its core expertise and rich experience in developing premium-branded Audio and Infotainment Solutions for OEM’s in the luxury and the mass markets, has carved a niche for itself in the in-vehicle infotainment segment. It is Frost & Sullivan’s opinion that the expertise demonstrated by HARMAN in the market is clearly reflected in the loyalty and satisfaction levels reported by OEM’s with which the company has tied up with. HARMAN’s strong commitment to meet customer demands and strengthen its market positioning is clearly evident from the product awards it has received from OEM’s, such as Toyota, Lexus, Subaru, and BMW for its audio and infotainment systems. HARMAN has witnessed strong revenue and unit sales growth across the global infotainment and branded audio segments for year-to-date starting in 2012, and Frost & Sullivan expects it to sustain similar growth levels in these areas in the future. With net revenues of $2.3 billion in the Infotainment division, $1.3 billion in the Lifestyle division, and $0.6 billion in the Professional division, HARMAN is the global market leader in all these three segments. HARMAN, apart from its leadership position in these segments in both Europe and North America, has noticed rapid growth in the BRIC countries. The company in 2012 won a $600 million contract with OEM’s, like Tata Motors, Geely, BAIC, and JAC in India and China. The company launched its Aha platform radio at the end of 2011, which is expected to cater to the need for connected services, irrespective of the vehicle segment. With a clientele covering more than 80 percent of the global automotive manufacturers, HARMAN dominates the premium audio and the in-vehicle infotainment market segments.

Key Performance Drivers for HARMAN

Factor 1: Vertical Penetration and Diversification of the End-user Segment

HARMAN’s ability to address the needs of the vehicle segment of the mass market with its connected radio platform has strengthened its market positioning. HARMAN’s innovative connected radio platform, which brings web based services through smartphone integration features, integrated Aha radio, turn-by-turn navigation through a smartphone app, and hands-free calling through Bluetooth. Additionally, it supports a range of external user devices, including USB, SD, and MP3 players, including iPod, along with a wide range of smartphones based on iOS and Android platforms. HARMAN has partnered with Ford, Porsche, Chrysler, Kia, Honda, Subaru, and Acura over the last one year to offer Aha radio in the proprietary infotainment solutions and has been very successful in delivering connected content. HARMAN, in January 2013, launched a service business unit, an industry first approach, to take care of Aha and LTE upgrades, as well as to offer upgrades for already existing connected head units.

HARMAN announced the launch of its Android-infused infotainment platform which features car-centric applications and services, as well as a customizable and intuitive interface that meet the needs of the smartphone-oriented generation in a safe way at CES in January 2013. HARMAN also announced its partnership with Volkswagen in 2012 to offer a scalable infotainment platform for Golf, similar to what it offers to Audi. The company, through its scalable approach, aims at achieving an increased level of integration of its designs and tools into new vehicles in an effort to reduce research and development (R&D) overheads and lower the product’s time to market. This, in turn, has helped the company deliver state-of-the-art audio and infotainment systems at attractive price points to the OEM’s. Frost & Sullivan believes that HARMAN’s partnership with Toyota in 2011 to offer Touch & Go in Europe clearly demonstrates HARMAN’s commitment to target the mid segment vehicles and grow in the in-vehicle infotainment market.

Factor 2: Brand Recognition

As the preference for audio systems, infotainment services, connectivity, and HMI are becoming key standards of consumer purchase, a significant factor (in terms of the marketability of a solution) is also dependent on the brand awareness. From the OEM perspective, infotainment systems and HMI are the brand differentiators in the market. Brand perception, while aiding in capturing the attention of OEM’s and generating sales for the company, also reflects the success of the solution in the long run.

Frost & Sullivan’s competitive analysis confirms that amidst several market participants in the field of infotainment, HARMAN has successfully maintained its reputable brand image in the market. The company has pioneered a continuous series of improvements in its automotive offerings, like audio, navigation, infotainment, and connectivity, along with other driver security functions. The company’s automotive division designs, manufactures and markets audio, electronic, and infotainment systems for vehicles. Apart from its legacy in premium audio systems, HARMAN owns award-winning brands like AKG, HARMAN Kardon, JBL, Infinity, Lexicon, and Mark Levinson.

In a situation where OEM’s are looking at infotainment solutions that offer connected services, keeping driver safety and brand differentiation in mind, HARMAN excels in design, development, and integration of state-of-the–art systems with multimedia entertainment, information, and communication, coupled with premium audio, 3-D navigation, speech recognition, and telematics solutions.

HARMAN works with leading OEM’s, including Audi, BMW, Chrysler, Ferrari, General Motors, Hyundai, Kia, Mercedes Benz, Lexus, Toyota, Hyundai, Subaru, Porsche, and Rolls Royce. In 2012, HARMAN announced the production of Volkswagen’s scalable platform, launched the connected radio platform for the mass market segment, and introduced the Android-based infotainment platform with features like interactive HUD, augmented navigation, and gesture control. HARMAN has clearly demonstrated its global leadership in automotive audio and infotainment with it having secured awards worth $800 million from major automakers, including BMW, Ford, and Volvo.

Factor 3: Leveraging Innovative Excellence and Targeting New Markets

Building on its innovative excellence in developing luxury in-car audio, navigation, communication modules, driver-assist technologies, and innovative infotainment platforms, the company showcased its QuantumLogic system, which features 25 speakers and is the industry’s first 3D surround-sound system. The company is looking at measuring the potential of acceptance of its 4G-LTE-connected head unit upgrades for the HARMAN systems on road. It also has in its pipeline the multiple cloud-based solutions with subscription-based and lifetime services. Additionally, with vehicle-specific information from the installed systems, HARMAN plans to offer customer relationship management services for OEM’s. HARMAN is focusing on the emerging markets, including India, Brazil, China, and Russia. In China, HARMAN is working with JAC, BAIC, and Geely to develop. HARMAN has partnered with Tata Motors in India and has also in late 2012 opened a development center in Pune, India. HARMAN’s growth excellence strategy, thus, outlines the effective leverage of its operational excellence to explore new markets and promote its growth in those areas, along with the launch of future-proof product lines which would enable the company to establish its strong leadership around the world.

HARMAN, having taken pioneering initiatives to offer advanced solutions in the premium audio and infotainment domain, has paved its way to success, and entered into partnerships with most of the leading OEM’s in the market. Frost & Sullivan’s research clearly shows that HARMAN not just merely competes with other infotainment and audio system suppliers across the globe, but it sets a benchmark in the industry in terms of both technology and innovation. These aforementioned achievements have made it the deserving recipient of the 2013 Frost & Sullivan Global In-vehicle Infotainment Industry Leadership Award.


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