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Harman International Industries' CEO Discusses F4Q12 Results - Earnings Call Transcript

Stocks in this article: HAR

We are on the forefront of developing connected car technologies, with a focus on active driver safety. As you know, we successfully collaborate and integrate technologies from Google, Apple, Microsoft and other partners. Actually as a very good example, just a couple days ago, Chrysler put out a press release, and let me talk about it. Harman just launched a latest infotainment system to Chrysler, it is called Uconnect. This will for the first time connect to a cellular network in the United States without an on-board smartphone. Just think of how many percent of Americans carry smartphone in the car, not too many. This is first in the industry that it is phone [inaudible]. The new technology will debut in the 2013 model Ram 1500 pickup truck and 2013 SRT Viper. This Harman technology will allow consumers to use voice command with a touch button on the steering wheel, to do Bing-powered internet searches, read and write text messages and enter navigation destinations without multiple prompts. Vehicles equipped with this Harman technology will also be able to serve as a mobile hotspot. Chrysler’s infotainment chief, actually, Mario Zenios, called it “one-stop shop and connectivity, online apps and smartphone integration.”

So moving along, car companies have done very extensive research on consumer needs and technology solutions available. Embedded infotainment ranks very high on each automaker’s priority list, principally due to safety requirements and the need for full integration with the car’s sensors and other subsystems in the car. Research validates that embedded infotainment system penetration will continue to grow rapidly, and it will be complemented by smartphones. I remind everybody that only 20% of the cars currently have embedded infotainment systems, and this is likely to go up to 50% within the next five years. In addition, basic telematics and basic connectivity will also grow in the car via smartphone integration. And it’s likely to go from less than 5% today to some 30% in five years. So, these trends really put Harman right in the sweet spot of a big growth opportunity, given our leadership in automotive embedded infotainment system, design and smartphone integration capability.

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