Many strategies for fragmented telematics market

  • 09-Jul-2008 04:25 EDT
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“Thirty-three states have emissions inspections,” said Kevin Link, Vice President of Hughes Telematics (Hughes system is shown). "It’s ironic that you have to drive the car in to be tested, creating more emissions. With telematics, you could report continuously without going into the inspection center.”

­Telematics appears poised for a solid market takeoff, but most industry representatives say that success will hinge on putting together a mélange of services that a­ppeal to customers. The market will be fragmented, making it challenging to determine which features consumers will pay for.

Panelists throughout the May Telematics Detroit conference all predicted that the market will have huge potential, but there was no consensus on what services will drive that growth. OEMs and service providers will have to combine offerings to get owners to pay ongoing fees.

“There’s not one killer app," said T.C. Wingrove, Senior Innovation Manager at Visteon. "Suites of applications will drive the market."

The combinations are expected to spark a major transition in the market. General Motors’ vehicles comprise most of the telematics usage today with OnStar, but analysts predict that wireless links to the outside world will be common by the end of the next decade.

“By 2015-2020, most autos sold will have two-plus communication links,” said Phil Magney, Principal Analyst at Telematics Research Group. Among the most likely are embedded links to the automaker, mobile device solutions for consumer electronics carried into the car, links to roadway infrastructure, and car-to-car communications, he added.

One of the key selling points for telematics appears to be safety, which centers around making emergency calls when accidents are detected. That is a proven strategy for GM and one that most panelists agree is important. But questions about safety’s marketability accentuate the uncertainty in the marketplace.

“Customers are fragmented,” said Joe Berry, Sync Business Development Manager at Ford. "The 22-year-olds that buy Sync for iPod control don’t need safety because they’re invulnerable, while many older customers feel safety’s quite important."

That is prompting many service providers to expand their offerings. For example, Inrix started by offering predictive traffic information, but it is now providing much more data related to traffic.

“We’re becoming a content aggregator, offering fuel prices, movie times, and other information,” said Scott Sedlik, Marketing Vice President at Inrix. “When we do that, we want to keep bandwidth usage down, only providing information in the nearby area or along your planned route.”

Other vendors are augmenting basic information with other types of data. For example, Dash Navigation offers basic navigation using Inrix data and other inputs.

But its systems also provide Internet connectivity, so users can constantly gather data they need. For example, apartment hunters can set parameters using their home PC, then get the latest new openings in their cars, when they have time to see one, using the navigation system to get them there.

“Once you put in, say, apartment search on Craig’s List into our system, you don’t need to go back onto the PC again until something changes,” said Robert Acker, Senior Marketing Vice President at Dash.

Billing will be a key aspect for success. Most speakers predicted that bundles of services will be offered. While the rate is open for question, there is agreement that invoicing must also be consolidated.

“Consumers will want one bill,” said Randy Giusto, Group Vice President for IDC Mobility Computing.

"While independent companies race to provide useful information, automakers and insurance companies are looking at ways they can use data sent from the vehicle. Carmakers can benefit from data gathering, and they can also upgrade firmware using telematics links, reducing the cost of updating programs.

They will also be able to pull diagnostics data from cars, using it to help them control warranty costs. Gathering this diagnostics information can also help build consumer loyalty. For example, telematics could save owners time by sending data to emissions inspection stations.

“Thirty-three states have emissions inspections,” said Kevin Link, Vice President of Hughes Telematics. "It’s ironic that you have to drive the car in to be tested, creating more emissions. With telematics, you could report continuously without going into the inspection center.”

Insurance companies are also looking at ways to use telematics data. Many panelists feel insurers will gather data from consumers willing to send information if they get a discount for providing data on their driving.

“The insuran­ce industry sees tremendous value in getting odometer readings,” said Erik Goldman, President of Hughes Telematics. "They don’t need to know where you went or even what speed. We feel insurance rates will soon be based on sharing information."

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