HARMAN TAKES ‘CONSERVATIVE’ APPROACH TO CAR OEM BUSINESS
Move by Harman International (HI) to expand its car OEM business to 65% of revenue over next 5 years will be done in “a careful, conservative, very well-prepared way,” Exec. Chmn. Sidney Harman said at N.Y. news conference after our Mon. deadline. News conference came only hours after annual HI investor/analyst conference at which it said key to expansion of car OEM business would be company’s Media Oriented System Transport (MOST) fiber networking bus technology that Harman projected could be installed in as many as one million vehicles by 2006. Harman/Becker automotive division is first supplier of MOST-based navigation and multimedia systems, which already is being used by BMW in its new 7 Series automobiles and will be implemented soon in new vehicles from Audi, Mercedes Benz, Porsche. Harman/Becker developed MOST in conjunction with Audi, BMW, Daimler-Chrysler and Oasis Silicon Systems, and technology now is supported by 17 international car makers and more than 50 key component suppliers, HI said.
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HI also provided in-vehicle demonstrations of MOST systems included in BMW 7 Series and upcoming Audi and Land Rover Freelander models. BMW 7 features what HI called “world’s first application of MOST,” along with first applications of company’s Logic 7 Acoustic Technology and Metal Matrix Loudspeaker Technology. Also featured in car were iDrive Central Information Display and Central Audio System Controller Media Source. Meanwhile, Audi model for 2003 said it would offer Multi Media Interface (MMI) featuring MOST network, Central User Interface, Full Map Dynamic Navigation System, radio/CD/TV capabilities, telematic/Internet online services/traffic information, voice- activated controls, telephone dialing. Land Rover Freelander 2003 model will represent U.S. market introduction of HI’s TrafficPro Navigation System and Harman Kardon audio system. Harman also demonstrated Lexus SC 430’s system that offers first OEM application of Discrete Amplifier Technology from HI’s Mark Levinson brand, along with Digital Signal Processing, Integrated Vehicle Speaker Enclosures, neodymium and titanium speaker technology, audio system AVC-LAN Bus Communication. Also spotlighted by HI was Becker OnLine Pro aftermarket multimedia system currently being sold in Europe.
Harman/Becker Europe CEO Erich Geiger told reporters MOST system is open architecture platform that can conceivably include car satellite services such as those offered by Sirius Satellite Radio and XM Satellite Radio. But company has yet to announce any relationships on that front and Geiger said music was just one small part of technology and other more complex functionality -- namely navigation and online services -- were really what made technology so compelling. Harman earlier seemed to back up that take on technology when he said 2 main reasons why consumers will want to spend extra dollars for such multimedia content -- eventually as much as $800-$1,500 premiums -- was needs for security and navigation/traffic guidance systems in country where roads are often “unmanageable.” He said that with MOST systems, “no matter where [people] are, if they get lost they never have to leave that cocoon of safety” provided by vehicle “to find their way home.” He added: “What is being offered in these systems are functions people want.”
Geiger also said open architecture of MOST allowed for other manufacturers’ components to potentially be included in vehicles: “We are supplying between 80 and 100% of the [parts of these] systems but we never supply all We are teaming up with Panasonic, Alpine, component suppliers” and others. But it was unclear at our deadline if HI actually signed any deals with those or other companies to receive components that are to be included in specific vehicles. We were told during Audi car demo that all components shown were manufactured by HI but optional items for that particular system, including DVD-Video player, would be supplied by unnamed company.
Although HI is looking for MOST-based devices to help it achieve growth in its car OEM business, Harman said “we also see tremendous applications for MOST in our consumer and professional product areas,” adding: “To that end, we have begun a technology transfer program between our European automotive engineers and our U.S.-based consumer and professional staffs. We are focusing this effort in a new engineering facility called NexGen, located on our Northridge, Cal., campus.”