Telematics: Google in the driver’s seat?

Telematics: Google in the driver’s seat?

Since its founding in 1998, Google has become a market maker and a market taker.

With its lock on Internet search and advertising, plus its immense market cap, Google has become known as something of a bully.

Search marketers complain that its policies for displaying their ads and charging for them are opaque.

Book publishers and authors' associations sued it when, without notification or permission, it began to scan their books into its database.

The traditional advertising industry watched in dread as it began selling ad space on radio and in newspapers and magazines.

Of course, not all of Google's market extensions are home runs.
Its online exchanges for newspaper and radio ads were failures, at least for now.
Still, with a market capitalization of $168.67 billion, the company has plenty of cash with which to experiment.

And it's seen plenty of success with its free, phone-based navigation offering.

Getting into the telematics market

Google recently instituted turn-by-turn navigation in its Google Maps Navigation product for Android phone users in the UK and Ireland.

The company did not respond to repeated requests for comment, but it is making strong headway in the telematics world, too.

A 2009 analysis by Strategy Analytics found that Microsoft remains the most powerful player in the automotive market.

But in a side-by-side comparison of market and product attributes, the research firm rated Google stronger in four out of eight categories, while Microsoft bested the search goliath in only three out of eight.

And, this September 2009 report doesn't take into account Continental's AutoLinQ, which is based on the Android operating system developed by Google.
"It's clear that Google sees big opportunity in the automotive business," says ABI Research telematics practice director Dominique Bonte.

"They're an advertising company, and they want to increase their reach, so they want to offer on all platforms, including BlackBerry and Nokia."

Bonte points out that the automotive market is much more competitive than the computer desktop or the Internet.

"Google has not and probably will never reach that same level of dominance in the mobile and auto space," he says.

Does free beat good?

More than any other company, Google has trained consumers to expect valuable Internet services to be free.

Basically, its ad-supported, online search bankrolls the company's forays into other industries, including connected car services.

"If they offer a free service, that makes it difficult for other companies to offer paying services that might be a little bit better. People will go for the free alternative," Bonte argues.

Mark Fitzgerald, senior automotive analyst for Strategy Analytics, doesn't necessarily expect Google’s free navigation to destroy the market for premium services.

"While Google's navigation service doesn't quite measure up to the average PND or embedded app, it will soon," he says.

"The only correlation we have is that there's still a market for stand-alone digital cameras, even though every phone has it, because a camera does it better."
Free phone-based services will continue to erode the market, Fitzgerald thinks, but they won't obliterate it.

Broadening the market

Google's free offering may have pushed the price of onboard navigation down, and its awesome brand value means most companies will need to work with it.
Roger Lanctot, director of business development for the global automotive practice at Strategy Analytics, points out that Google is also broadening the navigation market.

"It's a seeding phenomenon," he says. "Free apps increase interest in a potentially more sophisticated onboard system. It broadens the awareness."
The best thing Google has going for it—in this and every other market—is its brand.

In fact, research firm Millward Brown recently rated Google as the most valuable brand in the world.

For example, BMW initially offered an in-car browser with Internet access.
But, Lanctot says, "The attach rate was minimal at best. When they put in Google search, it was easier for people to understand and place a value on it."

Going local

Connecting local information to search in the car could be a big play for the search company.

Makers of PNDs have tried or want to try this, but it's difficult to get and maintain current information, even from large national chains let alone small indie shops.
The Google Places initiative could solve this problem.

It's evolved from Place Pages, launched in September 2009, from the Local Business Center, which lets companies supplement their listings in Google's search index to include hours of operation, photos, videos, coupons, and product offerings.

The latest iteration, which remains self-service, now includes the ability to designate the business's service area and paid advertising.

At last, some monetization for local search: For $25 a month, companies can buy an enhanced locator on Google Maps.

The most intriguing feature for the telematics industry is an expansion of the Favorite Places program.

Businesses can obtain a decal to place in their windows to be scanned with a mobile phone, connecting the user to the company's mobile web page.
There's no word from Google on how this might tie into navigation or in-car search, but the possibilities are clear.

When it comes to finding revenue from navigation and in-car search, Google could be in the driver's seat.

For more on local search, see ‘Telematics and local search: The next big thing’. Click here

Susan Kuchinskas is a regular contributor to TU.

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