Telematics and mobile resource management: Boosting the bottom line

Krystyna

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3rd February 2011

In June 2010, cell phone penetration in the United States surpassed 90 percent, according to the CTIA.

In most Western European countries, it’s as much as 130 percent.
In this kind of saturated market, it’s not surprising that wireless network operators are fired up about machine-to-machine communications, or M2M. (For more on M2M, see ‘Telematics and M2M communications: The next step for the connected car’.)

These firms are finding a ready market in mobile resource management (MRM), which includes tracking and communicating with employees, vehicles, and heavy equipment.

According to consulting firm C.J. Driscoll and Associates, the number of fleet management units deployed in commercial fleets in Europe will exceed 4 million by 2014.

“2010 was a very good year for a number of the larger, well-established suppliers in terms of growth, despite the weak economy,” says Clement Driscoll, founder and managing partner of C.J. Driscoll and Associates.

In a recent report by Yankee Group research associate John Keough, partnerships are key for both network operators and solution providers.

“Partnerships can give carriers expertise-by-association in key verticals, while solution providers get greater visibility for their products and services as well as billing support,” Keough wrote.

Carriers should focus on providing secure and efficient management systems, he suggests, letting solutions providers take the lead with customers.

To that end, AT&T has partnered with Jasper Wireless on the AT&T Control Center for M2M communications, while Verizon and Qualcomm created the joint venture nPhase.

Both aim to make M2M and MRM applications seamless for vendors and their customers.

New growth opportunities

Commercial vehicles have been the earliest adopters of these technologies, according to Macario Namie, senior director, marketing for Jasper Wireless.
“Compared to other industry verticals, it’s on the more mature side,” he says.

“It’s not about massive growth. We see other telematics services on the passenger side showcasing explosive growth opportunities over next three to five years.”

Global markets vary a great deal when it comes to mobile resource management.

According to Driscoll’s analysis, the US market is the largest but it is also very homogenous, with fleet tracking of service fleets, including trucking and government vehicles, predominating.

The European market is quite large as well, but it varies from country to country while showing the same predominance of tracking services.

The Latin American market is quite different from the US or Europe, and there is also a lot of variation among countries.

“In countries like Brazil, Argentina, and Venezuela, the biggest issue is security of the vehicle and the cargo,” Driscoll says.

Because the rates of theft tend to be high in these countries, the major focus of MRM tracking solutions is security of vehicles and cargo, with logistics or productivity playing a secondary role.

Driscoll thinks this is going to change: “We’ll see increasing penetration in the developing world, not just of trucks but also service fleets, utility vehicles, et cetera.”

The Asian market, especially China, is in the early stages of development, still very fragmented, with a lot of small companies. (For more on telematics in the developing world, see ‘Emerging telematics opportunities in Brazil’, ‘Emerging telematics opportunities in China’, ‘Emerging telematics opportunities in India’, and ‘Emerging Telematics Opportunities in Russia’.)

New revenue streams

Who is primed to enter this market?

The US market has reached a level of maturity that makes it difficult for new entrants to crack without substantial resources.

Solutions providers that sell into the fleet market already provide these services as extensions to existing offerings.

“That’s a reasonable play to make even in a mature market,” says Driscoll.
“We also see private equity firms buying up companies in the space, both in the US and Europe.”

Meanwhile, Namie sees all passenger vehicle manufactures embracing embedded wireless technology and MRM solutions in the 2013 and 2014 model years.

Mobile carriers are far from the only companies that can expand their revenue through MRM, according to Namie.

He points out that with embedded modems in all manner of equipment, mobile penetration could easily reach 1,000 or even 2,000 percent.

Device manufacturers that embrace this technology will find extra revenue not only from hardware but also often from services.

“In MRM, there are whole categories of companies designing solutions and selling to trucking and delivery companies,” Namie says.

“They sell not only hardware but an ongoing service that includes connectivity, tracking, diagnostic information, and reporting on driver behavior. We’re starting to see it with passenger vehicles as well.”

The result: Many more suppliers may not get recurring revenue but can still boost the bottom line.

Susan Kuchinskas is a regular contributor to TU.

For more on mobile resource management, join the industry’s key players at Fleet and Asset Management Europe 2011 on April 4 and 5 in Amsterdam.