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Delightful Diversions(HKTDC Electronics, Vol 03,2008)

In-Car Entertainment

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Global consumers surrounded by home entertainment devices are demanding the same cutting-edge appliances in their vehicles

The booming market for in-car entertainment products is increasingly dominated by two key trends - integration of functions and external connectivity of the vehicle.

In-car entertainment products such as monitors, TVs and CD/VCD/DVD players are available as independent units, but there is a trend towards integrating basic functions such as playing music and GPS navigation.

Industry insiders note that integrated units utilise the same speakers, screens and controls, cutting costs and making installation easier for both original equipment and the after-market.

"There is a lot more integration in infotainment products, but this means that multiple sound sources are played through the same amplifiers and speaker system," explains Treefrog Audio Ltd Director of Business Operations Henry Chan. "If users are spending more on integrated products, it makes sense to fit high-quality speakers to output the various sound sources."

Treefrog Audio specialises in loudspeakers and subwoofers for the after-market automotive entertainment system. "Our products include high power full-range loudspeakers, heavy-duty competition subwoofers, an advanced component speaker system, high performance band-pass and bass enclosure systems or high-efficiency-power amplifiers," Mr Chan explains.

On a related note, Shenzhen Oceanstar Electronic Technology Sales and Marketing Director Winfred Liao observes that in-dash DVD players previously had only basic functions such as radio. "Now, integrated models can include Bluetooth, digital-TV and GPS navigation, with touch-screen,

USB ports and SD (flash storage) slots," he says. "The unique selling points have become the basic configuration."

Integration has resulted partly from improved professional services and lower costs from upstream suppliers of components such as software, plastic moulds, metal parts or SMT and PCBs.

"Now, most small or medium-sized companies have no need to establish an in-house R&D department for the marginal advantages it would bring," Mr Liao explains.

"Better suppliers help low-end factories assemble multifunction products at competitive prices, offsetting the advantages of leading companies."

Internet connectivity can be obtained through Wi-Fi hot spots as well as mobile phone GPRS and 3G services, while drivers demanding 100-plus TV channels now use electronic tracking rather than the clumsy external satellite dishes of yesterday.

A third major trend is towards hands-free control of in-car entertainment that seeks to overcome the problem of drivers constantly taking their eyes off the road to dial their cell phone or select an MP4 play-list.

Manufacturers have tried to overcome this spectre ever since the days of the first button radio, and while it may currently be acceptable to press buttons on the steering wheel, voice recognition is the ideal solution.

Last year, Ford created a system called Ford Sync, which uses Microsoft's Auto software to enable drivers to make cell phone calls and have text messages read to them through voice commands.

Drivers can use voice commands or steering wheel buttons to play music stored on portable devices such as Apple Computer's iPod and Microsoft's Zune, as well as other MP3 players and USB flash drives.

Booming business

Developments such as these are essential to meet the demands of a burgeoning in-car entertainment market based on global automobile sales of more than 53 million, with room to grow in Asia and elsewhere.

"The world market for automotive electronics was worth US$79bn in 2004, and will grow to US$108bn by 2010," Gartner Senior Analyst Mike Williams predicts in the Taiwanese PC ODMs Target Automobile Makers in China report.

The largest regional market in 2004 was Europe, with 37% of total worldwide consumption. "Next came the Americas and Japan, with 27% and 19%, respectively," Mr Williams reveals. "The Asia-Pacific region accounted for 17% of total automotive semiconductor consumption."

Asian countries produce a large proportion of automobile electronics, approximately half on an OEM basis and the rest either ODM or own-brand from local producers or subsidiaries of global brands.

Factories on the Chinese mainland and in Taiwan and Korea, send some 40% of their production to Europe, 30% to North America and much of the rest to Japan and other parts of Asia.

Latterly, however, China has fast emerged as one of the world's leading manufacturers of in-car entertainment devices, including DVD/VCD players and TVs, with a supplier base of more than 500 companies.

About 80% of the leading brands have established production facilities in China, with the main supply centres being Guangdong, Zhejiang and Jiangsu provinces and Shanghai.

Accordingly, China has not only quickly become the biggest source of manufactured goods but will soon become the biggest market as well, with the Dongguan government, for example, making great efforts to develop the auto industry as part of its 11th five-year plan.

Guangdong Province as a whole overtook Beijing in car sales in 2007 and private car ownership in the city of Dongguan is the highest on the mainland, at 42 cars per 100 households.

As expected, a new parts industry has grown up to service the demand - although Beijing is still the largest regional consumer market for auto parts in the country, distributing throughout much of northern China.

Further afield, powerful Taiwanese PC manufacturers have reacted to the global slowdown in computer sales by using their R&D technologies and manufacturing skills to tap into the automotive electronics market, according to Gartner's Mr Williams.

Expanding expertise

"The ability to bring to market relatively quickly such new products as motherboards, cellular handsets and liquid crystal display (LCD) monitors, enables ODMs to expand their offerings beyond PCs into new areas, like wireless communications and consumer electronics," he maintains. "Now these ODMs are turning their attention to the automotive sector."

Ultimately, industry experts note that traditional markets for car electronics are strong but competitive. "The US, Europe and South America still remain the major markets for after-market car audio products - however, I do expect an increasing demand in the Asian market in the future," says Treefrog Audio's Mr Chan.

He notes that buyers in the competitive US market demand good quality products at a minimal price. "The European market wants the highest quality products at a good price, while the South American and Asian markets mostly take the lower-end products."

Factory-installed car audio systems are improving, Mr Chan says, but it's still common to find OEM systems with poor speaker placement in a highly reflective environment.

"Often, these poor speakers settle for cheap materials to be cost-efficient," he believes. "Replacing these speakers with better-quality after-market units provides better sound quality."

The main design constraints for vehicle audio products have always been the available space and power supply, Mr Chan admits. "High voltage speakers are generally much larger and may demand an expensive custom installation," he observes.

Treefrog Audio has minimised this difficulty by introducing a super-shallow subwoofer series able to achieve the same excursion levels as the normal-sized subwoofer. "In brief, they can deliver the same deep bass from a very small space," Mr Chan claims.

Screens are also a critical component of most in-car entertainment systems, and as usual markets diverge on price. "The US market demands good quality for prices that squeeze profits to the very minimum," says Shenzhen Oceanstar's Mr Liao.

"The European market requires high quality but pays a better price than the US, while Asians want the lowest prices, similar to Africa and the Middle East."

Oceanstar manufactures in-car TFT/LCD monitors for DVD players and TVs, with panel sizes ranging from 3.5-17 inches. "The price trend is down, even though the US dollar is depreciating and costs of components and raw materials are rising," Mr Liao remarks.

"The pressure from online sales outlets, including eBay, means orders have become smaller and more mixed, with quantities of 200-500 pieces becoming more popular."

Ultimately, he notes, many manufacturers supply in-car entertainment products for both the new car market and the after-market. "The after-market has a lower price threshold for most makers than the new car market," Mr Liao says. "Competition in the after-market creates a high ratio of performance to price."

Which can only be good news for the millions of car drivers all around the world who are seeking the very latest in high-quality in-car entertainment systems.

TEXT BY ROSS MILBURN