Telematics: Competing with Apple and Google

The current telematics landscape is fragmented among content and app providers, data aggregators, infotainment system manufacturers, safety and roadside assistance specialists, personal navigation device suppliers, real-time map and traffic-update purveyors, fleet management providers, insurance telematics device manufacturers … The list goes on.

The prevailing assumption is that, as the telematics industry becomes mainstream, mergers, acquisitions, and consolidation are inevitable. These players, at least the ones with valuable solutions, will all collect some piece of the overall pie, even if they get subsumed along the way.

But there’s another possibility: Individual telematics companies and the telematics industry as a whole could be outflanked by an entirely different set of players that swoop in and render the past 15 years of telematics investment obsolete.

“This could be a $0 billion-dollar business for a lot of us,” said Jim Nardulli, senior vice president at NNG, in his keynote address at this year’s Telematics Update Detroit conference. “If you’re trying to compete with someone not in your business but offering the same services you have, you have a massive disadvantage.”

Captive audiences

By “someone not in your business” Nardulli is, of course, referring to the arrival of big companies like Google, Nokia, and Apple in the automotive space, along with wireless providers like Verizon Wireless and Sprint.

The chief prize all of these companies are vying for is captive audience time. Americans alone drive 1.5 trillion miles per year, which breaks down to 50 billion hours at 30 miles per hour, or about 250 hours per vehicle per year.

“If you need consumer attention, that’s a hell of a lot of captive audience time,” said Nardulli. “That’s what’s driving this war.”

Calling the present environment a “war” may be a bit strong, but there’s no denying that big players are starting to sharpen their weapons. Just this summer, Apple announced its own mobile mapping service, plus an agreement with eight auto OEMs to integrate Siri, Apple’s automated voice concierge, into vehicles starting in 2013. The list of OEMs included many of the heavyweights, from BMW to GM to Toyota, Honda, and Audi.

Additionally, Apple has said that a spoken mapping function will be integrated into the next generation of its iOS platform, suggesting that anyone with a mobile Apple product may have a free Siri turn-by-turn navigation specialist (plus POI provider) guiding them down the road in the near future.

That, of course, means that Apple will be vying for ownership of the in-car experience in a way previously reserved for OEM platforms like Ford SYNC, Audi Connect, Mercedes mBrace, and Chrysler Uconnect Access. (For more on Apple, Google, apps and the telematics space, see Special report: Telematics and apps.)

The big player advantage

Not to be left behind, Google demoed an autonomous car this summer; Nokia teamed up with Ford to advance smart and connected cars; Verizon made the $612-billion acquisition of Hughes Telematics; and Sprint partnered with Chrysler for Uconnect and unveiled integrated, end-to-end UBI services, a first for a wireless provider.

One advantage big players have over smaller telematics companies is that they don’t necessarily need to charge for products, whether it be in-cabin connectivity, navigation, or services. Reason being, they may be able to leverage mobile ad revenue to negate the costs.

“A lot of people think they know why they’re coming, but I think we mistake why they’re coming,” said Nardulli. “We think they’re in our business, but what if they’re not? Can location and commerce pay for connection in the car? And what if map data is all of a sudden free? How do you compete with free?”

For telematics companies to succeed, Nardulli suggests one key is to offer customers untethered services, so they can pursue whatever they wish in the vehicle, barring safety concerns.

“We cannot say to people, ‘You’re connected to the Internet but you can only do these four things,’” he said. “That fails every time. We cannot imagine what people need to be connected to when they’re mobile. It’s as diverse as the number of drivers.” (For more on connected lifestyles, see Special report: Telematics, electric vehicles and the connected home.)

Andrew Tolve is a regular contributor to TU.

Coming up in 2013: Consumer Telematics Show 2013 on January 7 in Las Vegas, V2X for Auto Safety and Mobility Europe 2013 on February 19-20 in Frankfurt, Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam, Insurance Telematics Europe 2013 on May 8-9 in London and Telematics India and South Asia 2013 on June 5-7 in India.

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

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