How to identify successful telematics applications

How to identify successful telematics applications

“Identification of which markets/application niches for telematics are real, growing and proven profitable for participants is the issue,” says Myles H. Kitchen, automotive electronics consultant/analyst at M.H. Kitchen & Associates. “Much is possible, but few implementations are sensationally successful.” To boost the chances of sensational success, market researchers have identified some characteristics that should be considered by system designers and OEMs. Among the biggest issues to consider is, to what extent do you keep up with standard formats?

Carmakers have traditionally kept up with standard formats. But in some cases, such as Blu-ray DVDs, keeping current can cause problems in the automotive environment. “Blu-ray discs are not backwards compatible,” notes Mark Fitzgerald, senior automotive analyst at market research firm Strategy Analytics. With limited space in the vehicle, only those products that a broad range of car buyers want in their vehicles—or a specific group of buyers are willing to pay a premium for—make sense. For carmakers to add a Blu-ray player, the CD player probably has to go. This could be a difficult tradeoff in 2010, but probably not within the next five years as CDs are eventually displaced by downloads. “Do cars need to have Blu-ray DVD players?” Fitzgerald asks. “You probably don’t need it for the resolution, but it still is a standard format.”

Kitchen has a suggestion for a new billing model for telematics service providers—pay-as-you-go. “I’ve not seen telematics services offered on a pay-as-you-go basis,” he says. “Perhaps that should be investigated.” OnStar offers users the option of adding turn-by-turn navigation on a monthly basis, once clients purchase a basic monthly subscription. This model could easily be expanded and adapted by other service providers for services that are only periodically required. For example, out of town assistance in an unfamiliar city is something many users would need, but rather infrequently. With a prearranged method of payment established, simply pressing a button could get the user this service. The bill would come later. “Not billing until you actually use it might be something to consider to help generate new telematics applications,” says Kitchen.

Earlier this year, TU’s article iSuppli’s Automotive Technology Scorecard [http://social.telematicsupdate.com/content/bmw-7-series-tops-isuppli%E2%80%99s-automotive-technology-scorecard] identified a number of growing telematics applications based on data from market research firm iSuppli. Navigation was the most predominant technology available on 2009 production vehicles. Even though a winner app such as navigation is identified, the implementation may have hidden pitfalls and opportunities.

For example, Google Maps Navigation (For more information, read TU’s What Google’s Free Maps Navigation Means for Telematics. [http://social.telematicsupdate.com/industry-insight/what-google%E2%80%99s-free-maps-navigation-means-telematics]) could be a serious threat to the success of personal navigation device (PND) makers, such as Garmin and TomTom. Both suppliers also offer software apps in the $100 to $150 price range for smart phones. Certainly, the software apps are immediately at risk—but the hardware may not be. “People who need hardware PNDs are still going to buy hardware PNDs,” says Kitchen, adding that pricing below $100 is one way to make a PND more attractive. “In the $79 to $150 area, you can buy a very full-featured PND, and get a system that’s much more friendly to use in the car,” he says.

In addition to price, Kitchen identifies other attributes that will continue to make PNDs a viable alternative to a cell phone-based application: “It should have very good voice recognition. It should have very good text to speech. It should have lots of points of interest and ease of data entry for things like addresses and destinations.” Not surprisingly, the quality of these features and their pricing will determine the success—sensational or otherwise—of a wide range of telematics and infotainment products.

Randy Frank


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