Telematics Munich 2012: Day One

Lars Moreke, mobile services, Volkswagen Financial Services, summed up the atmosphere at Telematics Munich when he asked himself and the rest of the industry two crucial questions: "What are we doing? And how are we going to make money doing it?"

Of course, the talk here on the first day of Telematics Munich 2012 is still about the whats and hows of making the connected car a reality. But as connected car offerings continue to grow and splinter among multiple technological platforms, the question increasingly asked is, Who will pay for the whole thing?

Roger Lanctot, associate director of Strategy Analytics, opened the first day of the two-day conference with a provocative declaration: "Can you handle the truth?" he asked an audience of roughly 700 business executives packing the grand ballroom of the Hilton Munich Park hotel. "You won’t make money with apps."

Instead of building Apple-like app stores with thousands of products, something consumers are unlikely to pay much money for, Lanctot advised OEMS to pare down their app offerings to a handful of auto-centric apps and pour the rest of their resources into customer relationship management (CRM) and safety applications.

According to Lanctot, car dealers currently capture only 10% of the $40 billion annual business in vehicle repairs and maintenance in the United States, but could do a lot better with pro-active CRM. The same goes for telematics-enabled safety applications capable of predicting malfunctions and accidents.

“We are going to transform this industry by saving lives and taking care of our customers,” he said. This is, of course, assuming that OEMs are ready to abandon old-school thinking that Lactot called "telematics 1.0" (automatic crash notification, stolen vehicle recovery, remote diagnostics).

Telematics 2.0

What is needed is Telematics 2.0: rich in features like over-the-air updates, CRM, vehicle relationship management (VRM) and advanced infortainment. "Today we have diagnostics; the future is prognostics," Lanctot said.

Lanctot doesn’t want his car to notify the dealer only after the engine fails or the door is on fire, as recently happened with Toyota and led to the recall of 7.5 million cars worldwide. He wants the car to be able to predict the event and make arrangements to mitigate the damage, both to the customer and the OEM.

The 2009 crash of Air France flight 447 into the Atlantic was a wake-up call for the aviation industry, Lanctot said. The industry is now talking about putting video in the cockpit, so next time others can see what is happening. According to Lanctot, the car industry should follow a similar path, particularly as flying is already safer than driving a car.

"It’s important to think big and outside the box,” he says. “I can guarantee that Google is and Apple is. So we need to.”

Big data pipes

The industry also needs to think big data pipes capable of handling all the traffic generated by onboard sensors and featuring enough processing power in the cloud to anticipate and interpret potential hazards in real time.

“We need to think big, big pipe to bring the kind of prognostics and route them through the dealers to achieve higher safety milestones. That big pipe is LTE, dedicated short-range communication, and also smartphones,” he said. "If LTE is too rich for your blood today, you can achieve a lot of these functionalities with a smartphone in the car.”

While the LTE hardware is still expensive and the service lacking, it will be ready in two to three years, according to Lanctot. But the time to start thinking about it is now: “The last thing you want to do is put an old device in the car that’s going to be on the road for 10, 15 years.”

What's next

There is also a lot of talk in Munich about what's next for telematics. Andreas Hecht, GM and VP of automotive, INRIX, talked about using machine learning and predictive analytics to enable value-added telematics services to go beyond routine navigation to provide customized guidance based on a driver's habits and commuting routines.

David Gould, director, product marketing, Monotype Imaging, and Bryan Reimer, research scientist with MIT's AgeLab, gave details of fascinating research into the influence of typefaces on driver distraction. Their ongoing research involves optimizing typefaces to maximize driver information and minimize driver distraction.

Wilhelm Steger, managing director of infotainment and driver interface with Delphi, outlined how smartphone integration can enhance CRM for automakers and improve the driver-dealer relationship. If brands each developed their own ecosystems, he argued, customers would feel confortable sharing the kind of data that would make value-added apps possible without raising privacy concerns.

Jim Nardulli, senior vice president of NNG, a Hungary-based developer of location-aware solutions, discussed the need to merge the growing spectrum of connected services into a cohesive, device-agnostic user experience that is simple, convenient and won’t distract the driver. “Smartphone apps are made to be time sinks,” he said. “In the car we need the opposite experience. We need to manage a cognitive load of almost zero. If we don’t, the bureaucrats out there will legislate us into a corner.”

He predicted that telematics will merge with infotainment and eventually "become a pipe," where the hardware doesn't matter and the content is aggregated from many different sources. "If you are smart, it will be a very rich, very successful pipe," he said.

In a session dedicated to Europe's push to have all new passenger and light commercial vehicles equipped with eCall based on the 112 emergency number, Pierpaolo Tona, chief project officer, European Commission, and Jerome Paris, dissemination manager, European Emergency Number Association, discussed three different models for routing the calls and assured the audience that the project is on track to be deployed across all 27 member states in 2015. Fifteen member states and three associated countries are currently involved in pilots to test and pre-deploy the technology, which is expected to not only reduce response time of rescue services by as much as 60 percent but also accelerate deployment of additional telematics services in Europe.

If the discussions on day two are as productive as on day one, delegates at Telematics Munich 2012 may go home having gotten a lot closer to answers to Moreke's big questions: What are we doing, and how are we going to make money doing it?

Infotainment