Q&A: What telematics can learn from the consumer electronics industry

Q&A: What telematics can learn from the consumer electronics industry

Ari Silkey, co-founder, vice president and CTO of GreenLight Connectivity Solutions, has led the development and launch of more than 100 devices for Fortune 100 companies in the United States and abroad. As director of product management for Best Buy New Business and other companies, he's incorporated new technologies—and new business models—into GPS, Bluetooth, WiFi and cellular devices. Silkey talks to TU contributor Susan Kuchinskas about what the telematics industry can learn from consumer electronics product development and marketing.

Can you give us an overview of your company and where you are in terms of product development?

Our company is focused around the connected vehicle and aftermarket opportunity, leveraging cellular technology to enable a new customer experience in the automobile. There is a strong trend of more consumer technology entering the automobile. There are a variety of ways we can accelerate that ecosystem, particularly with consumer-centric wireless devices. We provide the product itself, the actual hardware that goes into the vehicle, as well as the database and platform, including mechanisms for taking data from the vehicle into a database to offer a Web and cellphone experience for consumers. We do the entire ecosystem, and we are able to sell through multiple channels, not just through Best Buy. (For more on connected vehicles, see Industry insight: The connected car.)

Do you see your company as a provider of UBI consumer electronics or product for the insurance industry?

We see this technology—devices that plug into the OBD port—as consumer electronics products. We took a consumer electronics product development approach, which happens to be our background, and worked backwards from the consumer using it at the far end. It's more of a product development methodology. Consumer products today are typically built for very high volumes, for the mass market, and therefore they need to be designed from the beginning for the potential of millions of units. A product used for fleet tracking, for example, is fundamentally different. When the entire ecosystem is designed to build consumer electronics, you can optimize all the pieces of the value chain, and that's been our approach, even though the UBI market is not large today. We developed a platform and ecosystem to support the large-scale opportunities we see in the marketplace. (For more on fleets, see Industry insight: Fleet telematics; for more on UBI, see Industry insight: Insurance telematics.)

Tell us more about your product development methodology and working back from the consumer use case.

There are two distinct ways to develop new products or technologies. One is to look at the latest and greatest technology available, and from that, figure out how to morph that into a customer experience that people are willing to pay for. The second is, start with the customer, understand his needs and where you can extract value for the consumer, and then go backwards and figure out what technology there is to enable that. I have definitely used both methods and favor the second; that's what we use at GreenLight.

What about educating consumers when it's a new product in a new category, such as automotive telematics devices?

If customers don't understand the value prop, it's difficult to be successful.  If consumers don’t understand what they are buying, they won't be willing to spend on an appropriate level. The insurance industry is approaching this problem now. When you're creating the product and value proposition, keep it concise and straightforward enough so consumers can digest and absorb the message.

What about infotainment? Is that a cool technology or is it a consumer need?

You could argue either way. There's also the question of need versus want and how to enable the latest technology in all vehicles, not just new cars. The need in the car space is that we have all this great technology in the home or the phone that isn't necessarily replicated in the vehicle. We have got to educate customers enough to fully understand the application of the technology and how it can enable new applications in their lives. Well-informed distribution channels are the key to driving customer adoption of new technology. The education of consumers is what makes or breaks the technology.

What are some lessons you've learned from your experience in consumer electronics?

Taking out complexity is a value-add to the consumer, and sometimes this means less features, rather than more. One of the most important lessons I've learned is that consumers want choice in how they pay for things, and they want to associate value with cost. Often they want to see the value before they pay for it. The more ways you can minimize barriers to entry, the higher velocity of sales you can get of particular product.

For example, at Best Buy we developed an Internet-connected GPS navigation device. We offered it initially with one year of free subscription services. The following year, after a lot of feedback from consumers, we gave consumers the option to pay for the subscription services on-demand and lowered the price of the device. We did this around customer use cases; some people only use the device if they are going on vacation. We morphed our plan to better match those use cases and what we learned directly from customers.

I've learned that you can't change fixed costs, but you can position the consumer to have a less challenging point-of-purchase decision and better align the costs with the value that the consumer is getting from the solution. That's a critical piece of creating a new business model.

Susan Kuchinskas is a regular contributor to TU.

For all the latest telematics trends, check out V2X for Auto Safety and Mobility Europe 2013 on February 20-21 in Frankfurt,Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam, Telematics India and South Asia 2013 on April 16-17 in India, Insurance Telematics Europe 2013 on May 8-9 in London, Telematics Russia 2013 on May 14-15 in Moscow and Telematics Detroit 2013 on June 5-6 and Content & Apps for Automotive Europe 2013 on June 17-21 in Munich.

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

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