2001 Ad

Automotive Industries,  Feb, 2001  by Paul Hansen

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The buzz among electronics retailers and dealers is rear-seat multimedia entertainment products.

At the mobile electronics exhibits of the 2001 Consumer Electronics Show (CES) in Las Vegas last month, digital radio was getting plenty of play. So was hands-free cell phone docking. But the real buzz among retailers and dealers was rear-seat multimedia entertainment products. Almost every mobile electronics vendor, whether in the security or audio system business, was presenting car-video entertainment products. DVD players were especially hot, particularly those with wireless infra-red-linked headsets. The IR headset allows back-seat passengers to listen to movie soundtracks without bothering front-seat passengers. Of special interest to kids -- the target audience for rear-seat entertainment products -- is that most video systems feature auxiliary connections for video games.

Aftermarket suppliers are delighted that they are finally on to a hot new product category, especially since carmakers have co-opted hi-fi audio and security products for factory installation. Still in its infancy, aftermarket sales in North America of car video -- rear-seat entertainment--grew at 250 percent in 1999 and 66.5 percent in 2000 to $208 million, according to a new study by Frost & Sullivan. For the home, DVD players have been the fastest selling product in the history of consumer electronics, according to the Consumer Electronics Association, reaching 8.2 million units in 2000.

That enthusiasm for DVD players in the home appears to be extending to the vehicle, which is why Clarion's newest version of AutoPC -- now called Joyride -- includes a DVD player for movies. The new name is meant to emphasize the entertainment aspects of the product, instead of the information and personal computing aspects. The in-dash unit can play DVD movies for the backseat audience using IR-headsets, while those in the front seat simultaneously listen to audio programming. The audio source can be either an MP3 file from a 32MB flashcard inserted in the in-dash unit, or from a separate CD changer installed in the trunk. Like AutoPC, Joyride is based on Microsoft's Windows CE operating system.

Computers devoted to navigation and costing around $2,000 were selling poorly when Clarion and Microsoft first introduced AutoPC at the 1998 CES. The two companies reasoned that a general-purpose multimedia computing platform like AutoPC would be more attractive because it could run not only navigation, but also the audio system and information applications such as address book access, e-mail or traffic information. But since 1998 Clarion has sold a total of only 4,000 to 5,000 AutoPCs. The problem was that consumers found AutoPC intimidating; they didn't understand its benefits. But now, says Clarion, dealers have no trouble explaining the benefits of car video, which is why Joyride is being promoted as "The Ultimate Entertainment System."

It's no accident, by the way, that the term "infotainment" is not used here to describe Joyride or any of its information/entertainment counterparts. In a press release issued at CES, Rosen Products of Eugene, Wash., says it owns the infotainment trademark and will pursue infringement within the courts if necessary. Rosen is a leading maker of flat-panel display systems for the automotive and other industries.

Digital satellite radio was also loudly trumpeted at CES by XM Satellite Radio and Sirius Radio, two companies that have exclusive FCC licenses to broadcast via satellite, "CD-like" digital radio programming. The two companies are betting hundreds of millions of dollars on the notion that hordes of consumers will happily pay $10 a month to subscribe to their services, which includes 100 channels of digital radio programming available throughout the continental United States. Both services are scheduled to be up and running in 2001.

PAUL HANSEN is a strategy and market research consultant. He publishes The Hansen Report on Automotive Electronics in Rye, N.H., a business and technology newsletter.

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