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Harman Plans Aftermarket Sales Of OEM Infotainment Upgrades

1/31/2013 07:57:00 AM Eastern

Stamford, Conn. – Harman plans to market OEM-infotainment hardware and software upgrades and streaming services through automakers, car dealers and aftermarket retailers.

Chairman Dinesh Paliwal said during an investors’ conference call on their quarterly financial report, today, “For a car bought three years ago, the [OEM infotainment-system] technology is antiquated. We know where the wiring harnesses and connectors are,” he said of the potential for selling 4G/LTE-connected head-unit upgrades for Harman infotainment systems currently on the road.

The company will also sell multiple Cloud-based services to the car, including subscription-based services and services that can be purchased for a lifetime. Harman will also offer customer relationship management (CRM) services for automakers using vehicle-specific aggregated data.

Harman would be the first OEM-infotainment supplier to offer such a program, Paliwal said.

Automakers will want to be part of the program, Paliwal said, but he also expects the multichannel distribution through car dealers and aftermarket retailers of various stripes.

“Automakers will definitely like to be part of this. [Their] current infotainment-systems business model is not increasing penetration,” he said. “I think they’re pragmatic and starting to realize it.”

 When Harman brings such products and service to the aftermarket, he noted, the company will reap higher margins than it does now in its OEM products.

The disclosure was part of the company’s announcement that it plans to launch a Harman Infotainment Services business to leverage the installed base of more than 15 million vehicles on the road with OEM infotainment systems built by Harman.

"The launch of our Infotainment Services business will create a new revenue stream less dependent on automotive production cycles and drive consistent revenue with two to three times higher margins than the current Infotainment systems business," Paliwal added.

The company expects the new business to grow fivefold within the next five years from current levels of around $100 million, which includes navigation-system map updates and its Aha Cloud-based infotainment service for OEM and aftermarket radios.

Harman’s Aha service aggregates multiple services, including music services such as AccuRadio, Deezer, Rdio, SomaFM AOL Shoutcast Radio, Radio.com, Live365, Mog, Rhapsody and Slacker. Aha also offers podcasts.

 Aha services are streamed via a free app for iPhone or Android. When the phone is connected to a compatible in-vehicle entertainment system, a user’s favorite Aha stations become radio preset buttons.

In another announcement, the company said it would eliminate 500 jobs in high-cost countries and transfer them to “best-cost” countries. About 100 of the jobs are in manufacturing, and the rest are in such areas as engineering and applications development. Harman hasn’t identified the countries that would be affected. All told, the company employs about 13,900 people worldwide.