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| Stephen Longden, SBD |
Telematics covers services from emergency breakdowns to stolen vehicle tracking, to remote vehicle diagnostics and navigation. Typically, telematics enabled services run with the help of an embedded unit in the vehicle, dubbed the telematics control unit, which has a GPS chipset for location enabling, GSM module for cellular communication, and GPRS module for data transfer between vehicle and outside world, according to Frost & Sullivan. Here, Heather McLean gets the facts on how to sell this exciting technology.
What is key for 2009 is increasing efficiency in order to retain customers, claims Spencer Sharpe, managing director at KTI International. Telematics aids a business in being able to polish management processes, therefore driving efficiencies and servicing the needs of customers more effectively, he states.
There are a number of definitions for the term, telematics. George Perros, senior analyst for mobile wireless at ABI Research, says this reflects the developing nature of this area as a technology and as a service. He explains that telematics is any combination of product and service offerings that has as its objective the acquisition and delivery of data and information to or from a mobile entity.
New lease of life
After the first economic bubble burst in 2000, most vehicle manufacturers who had introduced telematics services promptly withdrew them. Yet since 2006 a new lease of life has been breathed into telematics in the global arena, claims Franck Leveque, vice president and consulting director of automotive and transportation at research firm, Frost & Sullivan.
Perros comments: “For commercial transportation such as over-the-road freight delivery, the value of telematics as a way to manage rolling assets has been clearly proven.” He says that in 2009, sales opportunities will be highly dependent on economic conditions, since reductions in freight volumes as a result of lower economic activity put added pressure on already thin trucking margins. Private fleets on the other hand may view the current downturn as a time to become more efficient by integrating new technology into their fleet operations.
While Leveque says: “Successful packages like OnStar (a telematics services package operated by GM in North America with a subscriber base of 4.4 million at the end of 2008) have redefined the look of telematics for the future.”
He says the global telematics market including the European, North American, Chinese, South Korean and Indian markets is expected to grow from 6.2 million telematics units in 2008 to 16.5 million units by 2013, growing at a CAGR of 21.4% between 2008 and 2013.
eCall initiative
The European market for navigation systems is the strongest in the world, according to Frost & Sullivan, registering a market size of close to 21 million by 2008. But the niche telematics market in the EU is expected to be greatly aided by the EU initiative to install every new car with an eCall (emergency services telematics control unit) to reduce fatalities through accident by 50% by 2010.
Globally, Leveque points to another main reason for growth in telematics; GPS enabled mobile and smartphones. In Europe, mobile phone-based navigation is at a late introduction stage with companies like Nokia aggressively venturing into this space with an aim of enabling more than 90% of its handsets with GPS. There are companies like Telemap, Appello, Destinator, Webraska and also personal navigation device (PND) makers like TomTom in Europe selling navigation software packages for mobile phones.
Stephen Longden, telematics and intelligent transport systems specialist at research company, SBD, adds: “As with most issues in the mobile industry, Nokia is a key player in the field of navigation. Its purchase of Navteq gives it access to a global database of navigable digital maps for its emerging navigation software applications.”
However, the best mobile phone for tracking by far is the BlackBerry, comments Sharpe. He explains: “As BlackBerry handsets are built with complete security in mind you find that most government sectors use BlackBerry’s for tracking the location of employees, as the GPS that is built into BlackBerry’s is by far the most sensitive on the market. It is also a global solution, allowing you to locate employees anywhere in the world.”
In Europe, with respect to the EU driven eCall initiative, there is also a plan of introducing a low cost mobile phone based eCall solution. This solution will work on the driver’s mobile phone and is expected to offer a low cost alternative to an embedded solution, which currently costs more than 1000 Euros on the average (offered currently in Europe by BMW, Volvo, PSA and Fiat). The mobile phone solution is expected to cost only around 50 to100 Euros.
SBD expects that approximately 5% of the vehicles on the road in Europe will be equipped with eCall systems by 2015. This represents about 10 million systems, of which a considerable proportion will be based on the driver’s phone linked to the vehicle.
Auto boom for 2009
2009 is set to be a very exciting year for the telematics auto industry, says Longden. Toyota has announced plans to launch new Safety Connect and Enform telematics services in the US for its Toyota and Lexus brands, and already offers its G-Book telematics services in Japan so many observers are assuming that services in Europe will follow, explains Longden. In Europe, telematics services are expected to continue to grow within the vehicle manufacturers that currently offer services, which are BMW, Fiat, Peugeot Citroen and Volvo.
Longden continues: “The most interesting development in Europe for the mobile industry is the expected emergence in 2009 of location-enhanced emergency and breakdown assistance services based on mobile phones connected to the vehicle. A number of German vehicle manufacturers are planning to use Bluetooth wireless connectivity or cradles to link the driver’s mobile phone with the vehicle for these new eCall and bCall services.”
“Fiat’s Blue&Me suite of telematics services will also be of great interest to the mobile industry in 2009,” says Longden. “Blue&Me uses a Bluetooth link between the telematics system and the driver’s mobile phone to allow handsfree calls.”
KTI’s itrack enables the user to locate vehicles, assets and people all on one platform. Sharpe comments: “This then becomes a complete solution for management, as not only are you able to locate your workforce, but you also provide the legal requirement of Lone Worker Protection and Working Time Directive and are able to use the information for mobile resource management.”
Yet Perros adds: “In enterprise and consumer applications, the value proposition is still evolving,” explains Perros. “For the enterprise sector, company decision makers must be convinced that any investment in telematics will yield a noticeable and measurable advantage in mobile personnel efficiency, productivity, customer service or cost reduction. The new year is likely to be a challenge for telematics sellers as businesses continue to carefully examine expenses in light of reduced spending activity by their own customers.”
How to sell
There is still money to be made in this sector however, Steve Blackburn is European vice president at Navman Wireless. Navman Wireless’s vehicle tracking system uses GPS satellite technology, the Vodafone GPRS network and the internet, enabling businesses to track, message and monitor their fleets for increased efficiency and profitability, and legal compliance.
Blackburn states: “Telematics applications have become increasingly innovative and robust, and business models have become firmly established. While the mobile space has become saturated, telematics is still a relatively young industry and the opportunities in the marketplace are considerable. From a dealer’s perspective, the potential cost savings and productivity benefits that can be enjoyed by the end user from today’s more advanced software systems couldn’t be more attractive than in the prevailing economic conditions.”
Mobile devices, including handsets, phones and PNDs, are becoming more powerful platforms for telematics delivery. Perros states that in the case of handsets, the expected increase in the number of phones using open source operating systems, such as Google’s Android, represents an opportunity for third party application developers, and by extension dealers and resellers.
There are many systems in the marketplace currently, says Oliver Tucker, managing director at Wireless Logic, part of the Phones International Group. “Some suppliers develop their own software and hardware whilst others combine components that have been manufactured or developed by third parties. Cellular dealers would do best to link up with a company that has developed a complete system to include hardware, software, installation and on-going support.”
Sharpe adds: “This is an ideal time for dealers to becoming resellers of these solutions, as not only will the reseller be supplying a essential tool to customers, they will also begin producing a new revenue stream for their company.”
Dealers in the mobile space could do better, says Blackburn: “It is fair to say that currently, many dealers aren’t making the most of selling telematics. The most successful mobile dealers are those that maximise cross selling opportunities and operate with a focused, dedicated telematics resource.”
Dealers are not making the most of the telematics market, states Tucker emphatically. “The telematics market in particular and the M2M market in general is still in its infancy and has real growth potential over the next few years. Dealers have customer bases where telematics solutions could prove to be hugely beneficial. By teaming up with specialists like Wireless Logic we can provide them, or link them up with, solution providers with the knowledge, technology, and support to help them tap this market.”
Yet Tucker adds that the future for telematics is going to be strong. Telematics is a growing market and will continue to be throughout 2009, although he expects to see a consolidation of suppliers in the market. “We will also see more functionality built into and around tracking systems whereby other elements will be monitored such as temperature control, trailer door access, and engine diagnostics. Suppliers will also look to integrate systems more into back end office computer systems so that the information gathered can be better analysed and provide more management information.”