Building a new telematics ecosystem

Talk to anyone in the telematics space—OEMs, Tier 1s, telcos, software vendors—and they'll tell you how nicely they're all playing together. Is this kind of polite collaboration enough, or will we see a possibly more disruptive shift?

"If you talk about connected systems, you have many more players you need to work with,” says Dominique Bonte, group director, telematics and navigation, ABI Research. “Connectivity brings a lot of change in the ecosystem. The ecosystem is becoming much bigger and more complex. OEMs and tier 1s have come to terms with it."

Happy talk, however, has not necessarily translated into a thriving web of partnerships leading to actual product on the road. Just look at GENIVI.

"I was at the launch in 2009, and we are still waiting for first implementation," Bonte observes. Supposedly, there will be at least one OEM releasing a connected system based on GENIVI in 2013, but that has not been confirmed.

(For more on GENIVI, see Telematics and GENIVI: Creating more opportunity and Will GENIVI speed up telematics development?.)
Third-generation telematics
Frederic Bruneteau, managing director of Ptolemus Consulting Group, believes the partner ecosystem is about to get a rough shake, leading to what he describes as third-generation telematics. The characteristics of the previous generation services are:

•    Proprietary
•    Closed
•    Not connected
•    Paid-for

By contrast, third-generation telematics services are:

•    Standard or platform-based
•    Proposed, dynamic content
•    Connected
•    Freemium or ad-supported

"We're at a new phase," Bruneteau says. "Their way of doing business needs to change in order for companies to succeed." Telematics companies of every ilk should move toward openness, Bruneteau says.

"In the car environment, there are many constraints. But at the end of the day, it will go toward opening the system to multiple applications."

This will certainly disturb the business models of many entrenched companies, but Bruneteau argues that it's better to open in a controlled manner rather than giving control to PND players or handset vendors like Apple or Google.

(For more on openness, see Telematics and app development: The advantages of open innovation.)

Novel partnerships
The increasing prevalence of aftermarket devices offers what may be an easier way to extend the ecosystem and draw in partners novel to the sector. For example, in August, Hughes Telematics, Inc.

(HTI) announced a partnership with AAA Club Partners to offer connected-car services. The two companies will develop, test, market and launch a tailored telematics solution utilizing HTI’s self-installed In-Drive aftermarket technology.

"The telematics marketplace was originally dominated by OEM players: I bought a new car, and it came with a platform," says Eric Berkobin, vice president of HTI’s after-market engineering. "That's nice, but what about older vehicles?"

The partnership also extends Hughes' telematics activities to include hardware manufacturing. While Hughes is first and foremost a TSP, according to Berkobin, "We do have internal manufacturing capabilities for more advanced hardware needs." That capability will be put to use for the AAA Club device.

This is only the beginning for expansion of the ecosystem, says Kevin Link, senior vice president of marketing for Hughes Telematics: "There are significant numbers of potential partnerships out there for the benefit of industry, as well as the consumer."

For example, telematics providers could work with real estate companies to marry QR code information on a for-sale property with the car's navigation and mapping capability.

"When you think about what you can do in a vehicle and connecting to that consumer experience, there's a significant amount of value not yet tapped," according to Link.

Broadening the ecosystem has advantages for every party, Link adds: "As Hughes continues to stretch the service capability, we broaden the ecosystem so it doesn't burden any one player financially. If you can broaden the ecosystem of who can participate, no one entity is burdened by the cost."

Bruneteau says US companies have three advantages in this regard. Capital is paradoxically loose, thanks to the Federal Reserve's efforts to keep the economy from sliding into depression.

The United States was the first and continues to be the largest adopter of the Internet and Internet services. And, simply, it's a huge market.

We may not see a shakeup; it may be more of a stir, in Bruneteau’s view. The important thing is to hedge your bets: "The story is not written yet about which technical solution will triumph.

It could very well be it’s a PND/tablet that wins, or it could be an embedded solution. Any player will have to have a solution that meets a number of requirements."

Susan Kuchinskas is a regular contributor to TU.

For more all the latest telematics trends, join the sector’s other key players at Content & Apps for Automotive USA 2011 on Nov 29-30 in San Diego.

For exclusive telematics business analysis and insight, check out TU’s In-Vehicle Smartphone Integration Report and Smart Vehicle Technology: The Future of Insurance Telematics.

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