Auto-Parts Makers Eye In-Car Multimedia and Navigation Market

For a long time' the application of 3C (computer' communications' and consumer-electronics) devices to transportation vehicles was a dream for the general public and an expensive option for the rich. Today' thanks to the popularization of 3C technologies' the dream of having mobile-office/entertainment/navigation functions in the car has become affordable for just about everybody.

One result of this development is a boom in the in-car multimedia and navigation market' which is expanding rapidly into both the aftermarket and original equipment (OE) market sectors along with the maturation of technologies and infrastructure (optical-storage media' Bluetooth communication' global-positioning system navigation' etc.).

These market sectors' however' cannot be penetrated easily by 3C and auto-electronic manufacturers in general because of the high technical threshold involved and the requirement for both auto and 3C know-how. The problem is that the environment for in-car devices is different from that for home equipment in terms of climate' heating' shock' power' etc.

A number of large auto-parts makers in Taiwan have been trying to get into this new field during the past few years' pouring in large amounts of capital and working hard to upgrade their technology. Most of those that have succeeded are those that were already established in the auto-electronics line' while 3C manufacturers have not done so well.



Multifunctional Platform



One successful example is provided by Mobiletron Electronics Co.' which is listed on the Taiwan Stock Exchange and is a leading maker of both electric hand tools and auto-ignition parts. The company aims to achieve "the integration of optoelectronic and electrical equipment" in its "Easy-go" multimedia rearview mirror.

The company's target market is cars that have original stereo systems and drivers who want GPS navigation and reversing safety. It is not pinpointing in-car multimedia entertainment' although its rear-view mirror can also display audio/video programs through connection with input sources.

The Easy-go versatile rearview mirror' which is now in its third generation' acts like a multimedia platform with a number of functions. A four-inch thin film transistor-liquid crystal display (TFT-LCD) screen and a set of Hi-Fi speakers are built into the mirror' under a special surface coating that allows it to serve not only as a high-quality anti-glare mirror but as an information-display and monitoring center as well. It can display images transmitted by a charge-coupled-device (CCD) camera mounted at the front and/or rear of the car' a DVD or VCD player' an in-car camera to keep watch on a baby in the rear seat or goods in the trunk' or a global positioning system (GPS) receiver. The mirror display is controlled by a hands-free unit.

The mirror's functions can be further expanded to include a wider angle of view (achieved by using wide-angle cameras) and night-vision capability' an image recording capability (by using a digital video recorder' or DVR) that can supply evidence in case of an accident or crime' a tire-pressure monitoring system (TPMS) using wireless sensors in the tires' and an electronic compass. Mobiletron's ultimate goal is to offer a mirror that serves as a multimedia platform and replaces all in-car entertainment' security' and navigation devices.

Mobiletron's senior director' Brian Hsieh' reports that his company developed the first generation of its mirror in 2002 with only one function: a reversing image. Since that time the firm has worked vigorously to expand its functions. The effort goes on' and the company will announce U.S and European GPS navigation versions of the device in the third and fourth quarter of this year' respectively.

The senior manager says that Mobiletron has won both E-mark and Federal Communications Commission (FCC) certification' and that it has passed the most stringent head-on impact testing standards of tier-one auto-parts suppliers.

The company has won an order from Taiwan's largest express parcel-delivery company' which plans to install the rearview mirrors on all of the vehicles in its fleet' as well as a trial order from a leading European auto-electronics supplier.



Related Businesses



Hsieh reports that his company is mapping out new strategies for the development of businesses related to the multimedia platform' and that it has invested in the wholly owned Mobiletron Optoelectronics and in Asia Pacific Microsystems Inc.' a leading maker of micro electrical machinery. The former company is tasked with the development and manufacturing of CCD cameras' and the latter for TPMS products. The senior director says that Mobiletron Optoelectronics is now able to produce over-250'000 pixel CCD cameras that are water- and shockproof.

"The multimedia rearview mirror business is expanding rapidly because it offers the advantages of easy installation' adequate display size compared with handheld navigation devices' low cost' and high compatibility with other A/V applications'" Hsieh comments. "We didn't see a single rival at the Specialty Equipment Market Association (SEMA) show in Las Vegas in 2003' but the same event had more than 10 of them in 2004."

Hsieh claims that Mobiletron's advantages in this business lie mainly in its in-house production of CCD cameras (which keeps costs down)' its QS9000 quality certification' its long-term involvement in the auto-electronics line' its established worldwide sales channels and service bases' and competitive prices that attract major American and European brands to place OEM orders.

The senior director estimates that global demand for multimedia rearview mirrors will reach 200'000 units this year' with Mobiletron commanding a share of 10% to 15%.



The Competitiveness Step



Another leader in the industry is E-lead Electronic Co.' also listed on the Taiwan Stock Exchange' which is Taiwan's top supplier of hands-free cell-phone car kits and a prominent maker of consumer-electronic products. The company began its transition into the auto-electronics business in 2002 by focusing on in-auto multimedia and communications products' and this year these products (plus navigation devices) are expected to account for over 80% of the firm's revenues.

Cupit Hsieh' the global car channels director in E-Lead's marketing division' says that the company aims to become a leading global maker of both original equipment/design manufacturing (OEM/ODM) and own-brand ("Sharperia'" created last year) communication' navigation' multimedia' and other auto-electronics products.

"In the next few years'" Hsieh reports' "E-Lead will concentrate on both the OE and pre-dealer install (PDI) markets' where we've already gained some success including the supply of products to many international auto makers' tier-one parts brands' and auto dealers worldwide."

As a first step in its overall development plans' the company will further strengthen its global competitiveness by providing dual-interface--Bluetooth and non-Bluetooth-capability and modularizing its in-auto hands-free products. Hsieh says that all of his company's hands-free products will become dual-interface models so that they can work with all cell phones' and that designs will be modularized. This will accommodate the interior-equipment designs of different carmakers' and will greatly reduce redevelopment cost for new products.

Recently' the company introduced the EL-820 top-end in-auto navigation/entertainment system' which integrates all functions into a two-din system with a 6.5-inch TFT-LCD monitor and functions that include GPS navigation' Bluetooth hands-free device' MP3 player' DVD player' and digital-TV tuner.

In addition' Hsieh continues' E-Lead will continue to develop its unrivaled cost advantage and quality that is parallel with or even better than that of leading global brands such as Pioneer' Panasonic' and Bluepunt.

In pursuit of this strategy the company has tied up with Sharp and Sanyo of Japan to use Sharp TFT-LCD panels and Sanyo DVD loaders for its in-auto multimedia products. Hsieh predicts that he will ship about 150'000 of these products to the U.S. this year' further boosting its economic scale and enhancing its competitive advantage.

The company's third strategy is to become a major supplier of low-cost navigation systems' and a pioneer in the popularization of such products. Hsieh claims that thanks to its strong technical and system integration capabilities as well as innovative design concepts' the firm has reduced the overall cost of a GPS navigation system by 30% to 50%. He cites a newly designed interface that requires only three simple steps to retrieve navigation information' and the adoption of flash memory cards (instead of the previous DVD player-based system) to store electronic-map data and' if desired' MP3 music and digital-image data.

E-Lead has also boosted the convenience of updating electronic map data in its products by setting up its own website.

"In the past there was a big gap between the auto electronics and 3C sectors' due to different product requirements and design concepts'" Hsieh notes. "E-Lead's successful integration strategy has allowed us to play the role of a bridge between these businesses." This is why E-Lead today is a leading supplier of in-auto navigation' communication' and multimedia products. Of its Taiwan staff of about 500' over 25% are R&D specialists.



Secure Prospects in Security



Dah Jiing Enterprise Co.' Ltd. A major producer of auto security-system products' has also developed into a leading supplier of auto navigation and multimedia systems. These systems now account for over 60% of the company's total revenues.

Company chairman Lee Wan-hsiang says that Dah Jiing was one of the first two Taiwanese companies to become involved' about six years ago' in the development and production of in-auto multimedia products. Over 80% of its output is exported to automakers and dealers in Japan' Europe' the Middle East' and Southeast Asia' while in the domestic market it is an OE supplier to the manufacturer of Suzuki cars.

Lee says that his firm has a strong development capability supplied by 20-person R&D team. Thanks that that team' Dah Jiing developed Taiwan's first flash memory card-based in-auto navigation system' the GM-8100.

Today the company supplies a comprehensive range of products including 7- to 10-inch TFT-LCD monitors (one- and two-din types' for dash or roof mounting) and a variety of combination systems. In mid-2005 the firm will introduce a new all-in-one multimedia/navigation system with a DVD player navigation function' digital-TV tuner' and disk changer.

Lee attributes his company's smooth transition into the auto multimedia/navigation market to the system-integration capability it accumulated over long years of experience. "At a time when different companies are situated at different levels and positions in the division of labor'" he explains' "the biggest difficulty in the auto multimedia/navigation system business is not production but the good integration of technology' capital' market information' and customers. To achieve successful integration' a company has to follow market trends closely.

"To achieve the best quality and greatest stability' Dah Jiing uses only DVD loaders supplied by Matsushita (Panasonic) and disk changers made by Sanyo. Dah Jiing itself concentrates on system integration and the development of MPG cards' interfaces' and related parts and accessories."

The working environment for in-auto multimedia and navigation systems is much more challenging than that for general consumer electronics and home appliances' Lee notes' which is the main reason why the former has a higher technology threshold and can command higher prices. A maker of completed products such as Dah Jiing' for example' has to overcome shock-absorption problems for its DVD systems' and the company has done that by developing both mechanical and electronic shock-absorption methods.

The company shipped about 80'000 multimedia/navigation systems in 2004' and expects the figure to reach 100'000 this year.

Along with its in-auto multimedia and navigation business' Dah Jiing has also found another niche product: mini-size CCD cameras. It recently developed a thumbnail-size bumper-mount color CCD/CMOS model' and immediately received a hot response from customers all over the world (among which was Japan's Toyota).

The company is now planning to integrate reverse sensor and distance-display functions into its multimedia products.

"Beginning six years ago'" Lee stresses' "Dah Jiing's transformation strategy has focused on constant R&D. We pour an average of NT$100 million to NT$200 million (US$3.1-6.3 million at NT$31.9:US$1) into R&D work' including the development of molds and dies' every year."

Some of Taiwan's auto-parts trading companies are also rushing to tap the in-auto multimedia and navigation market. Among them is Shiniest Industries Inc.' a leading trader of tuning parts and accessories.

Shiniest always seeks out new products that can provide a sustainable' high-margin operation. The company is more than a trader; it also invests heavily in the development of optoelectronic parts and accessories.

Rocky Lin' the company's managing director' reports that Shiniest began concentrating on in-car entertainment systems in late 2004' after a full year of evaluating and selecting suppliers in the Greater China region. Now it offers a very wide range of products' from high-level to budget models.

"Our goal is to trade in a full range of in-car entertainment and navigation products with reasonable prices' good functions' and state-of-the-art design'" Lin comments. "During the past year we've selected about six suppliers' and we've been strengthening our partnership with them in order to maintain close and stable ties in the future."

Lin feels that the market potential for in-car multimedia products is strong' in both industrially advanced and developing markets. In its most important market' the U.S.' the aim is to boost competitiveness with superior design styling and' of course' stable quality.

The managing director notes that some Taiwanese and mainland Chinese manufacturers are striving for technological breakthroughs' especially in the new DVD format' in a bid to strengthen cost competitiveness. Also' he continues' more functions are being added' such as touch-screen operation and card reader-based navigation.

Lin reports that his company is forming a professional team to handle the in-car multimedia business' and that the team will serve as a bridge between suppliers and customers in the commercialization of products needed in the market. (Feb. 2005)