Thilo Koslowski, vice president and Automotive Practice Leader of Gartner Inc., will give the keynote presentation at Telematics Detroit this month.   Event director Abbie Badcock prompts him for a heads up on his chosen topic: “ Enlightenment to mainstream – Telematics market update”.

TK :   The automotive and telematics industries are at a turning point this year.   Approximately seven years ago, we developed the telematics hype cycle that outlined how the telematics industry would evolve, and we predicted that around now–   2007/2008   –   the industry would finally be at the point to make telematics work; understanding what consumers really want , having a sufficient network of vendors and developing the right solutions swiftly.  

The automotive industry is now embracing telematics more than they ever did in the past. A realistic understanding of the   needs in order to turn telematics into something that makes sense for vehicle manufacturers and consumers is what will drive telematics forward.



AB :   Has the time come when telematics is going to be embraced by all?

TK :   Absolutely.   Pretty much every vehicle manufacturer is at least putting together a telematics strategy. How and when it will be executed will be decided over the next couple of months, but the majority of OEMs will have offerings by 2010/2012, and now is the time for automotive companies to formulate their strategies, partnerships, and so on.



AB:   What recent developments have you seen unfold?


TK :   The most recent developments have been focused primarily on enabling consumers to put portable devices into vehicles. This has increased overall acceptance of telematics and pushed OEMs across the board to concentrate on these systems, both for competitive reasons and in terms of product appeal. It's increasingly important not just to provide a great car, but also to offer the kind of features that will increase the daily appeal of a vehicle to consumers, such as the ability to use portable devices safely and easily in the vehicle.

Suppliers have also been developing more competencies in this field, and that's going to be the key success factor for telematics. In the past, the big challenge for OEMs was developing the hardware, the infrastructure, and putting together the resources in order to make telematics work. That's a very expensive adventure, and many of the early adopters gave up on telematics because they didn't see how it could work for them.

We now have a more sophisticated, more experienced infrastructure of suppliers and providers, and it's becoming easier for automotive companies to develop the right products to stay in the game and still operate within a sustainable business model.


AB :   What are the key trends that will become apparent in 2007/2008?


TK :   The most important trend will be strategic business partnerships, with OEMs collaborating with other companies on developing a full telematics offering, along with the flexibility to enable OEMs to add more functionality and services to that specific offering over time.  

Differentiation will become more and more important.   It's not about just having to check off the telematics feature box on your product spec sheet; it's much more important to develop specific functionality and value that will set the product apart from its competitors and add real value for the consumer. The point is that OEMs should be looking for the right partners instead of doing this work in-house.



AB :   Do you think that flexibility, functionality and empowering the consumer are the most exciting areas for the industry?


TK :   I think these are some of the most important and exciting areas of the industry but they're also some of the most challenging because they've pushed the envelope for automotive companies quite a bit.

Despite having gained more experience in the area of telematics and vehicle-centric information communication technology, OEMs are still automotive companies at the end of the day.   They produce cars; they are not media or services companies.  

And that's what will present most of the challenges:   successfully partnering with different types of companies, understanding how the value chain for delivering services will change, and deciding who will share the benefits and revenues.

In addition to focusing more on specific applications and services that offer value and flexibility for the consumer, I think it's very important for the industry to form new, innovative value chains that provide customers with the feature set they're looking for and fit into the automotive industry's existing business models.

There's a lot of creativity required in this work, and whilst creativity is always exciting, it's almost always a challenge to find the most effective partner network.



AB :   Which global regions do you think will develop their telematics services the fastest?


TK :   We have to go back ten years to see changes based on geographies. Europe and Japan were the first major regions to actually push for telematics solutions.   The US was a laggard.

Now Japan is a very different market in terms of consumer preferences and technology offerings. Europe is probably closer to the US market now, and, over the last couple of years, the US has become more and more pro-active in pursuing telematics strategies.

A lot of the European OEMs were reluctant to take on any risk in providing services that might not have been successful. However, it's very difficult for European automotive companies to have different strategies, partnerships and suppliers for different geographic markets. It makes more sense to consolidate partnerships and have a common global strategy with a few subtle changes according to local cultural differences, political requirements and consumer needs. The automotive industry is beginning to move closer towards this global view.

It's all about standardising, and I believe that the US will become a thriving force in the market, and will probably develop faster than some of the other regions.  


AB : In terms of consolidating partnerships, are you talking about co-ordinating strategies in order to reach the global market rather than just specific regions?


TK :   Absolutely.   It's too costly for the automotive industry to consider specific geography-based strategies, especially when we're talking about emerging market opportunities like telematics, which require investments and dedicated resources to find and manage the right partners.

Ultimately, suppliers and service providers need to develop global offerings as well so that it's easier for a specific manufacturer to select one of these partners and then to collaborate with them.



AB :   Possibly the most notable development outside the vehicle is the mass deployment of GPS technologies. How will this affect the automotive industry?


TK :   It had a significant impact, and it's one of the key contributors for accelerating   the telematics market.

The main reasons for this are (a) consumers have become more exposed to those new technologies, which is a good thing, and (b) it took the automotive industry by surprise which resulted in a renewed focus on the entire telematics topic.

Navigation solutions didn't meet a lot of consumer demand initially, especially in the U.S. , but now they're very much in demand, and the automotive industry doesn't have to do a whole of lot of educational work to help consumers understand how they can leverage a navigation application in their daily life...

The challenge for the automotive industry will be to choose: either partner with companies that have the right technology and development resources, greater visibility and a strong market presence for portable navigation solutions; OR develop superior embedded solutions that justify a high price premium.



AB :   In the rapidly changing telematics marketplace, which areas will be the most lucrative?


TK :   There will be a variety of revenue opportunities throughout the   telematics value chain, although who will earn how much has yet to be determined.

There are opportunities for many companies to develop new revenue.   For example, vehicle manufacturers can generate revenues by offering a media-hub solution for the car, that allows consumers to integrate portable devices or stream multimedia content.


Telematics requires the automotive industry to look at a more holistic way of spreading revenues.. Future service offerings must be delivered as a package. One application in itself is difficult for consumers to justify ongoing subscription fees in addition to paying for the hardware. It will depend on how well these packages are put together and how well they are marketed.

the automotive industry will not be the sole beneficiary. Ultimately it will largely depend on how well the automotive companies can co-operate with the telematics technology developers, suppliers and service providers to come up with what the consumer really wants.


This is an exciting year for the automotive and telematics industries. This is the year that telematics is becoming real .



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The Telematics Update Team

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