What telematics firms can learn from Web 2.0

What telematics firms can learn from Web 2.0

There was a time when the Web was a walled garden.

Once within an ISP’s walls, users became a captive audience for that company's content and ads.

Then came Web 2.0, which is all about photo-sharing, blogging, video uploads, and social networking.

Telematics firms can learn a lot from the evolution of Web 2.0 but, cautions Joe Kennedy, CEO of Pandora, developing for the auto industry is far harder than for the Web.

"Most Web companies don't understand the structure of the auto business,” Kennedy says.

“Web companies are used to dealing with companies that are simpler in structure."

The Web world tends to be casual, with many development shops having flat structures.

The auto and telematics industries are more hierarchical, with multiple tiers of suppliers.

"I might have strategic discussions with the OEM but all the system architecture gets worked out with the tier 1 supplier,” Kennedy observes.

“And they might involve me with the tier 2 supplier to get into the code details.”
So, what exactly can the telematics industry learn from Web 2.0?

Quick beats great

Rather than spending a year or more developing full-featured applications, successful Web 2.0 companies cheaply roll out a feature and let the market test it.

Instead of trying to project consumer demand, see what works.
Ford's SYNC “allows a company like Ford to leverage the ecosystem of third-party developers, even if they're just a couple of guys with a bright idea,” says Dominique Bonte, practice director at ABI Research Telematics.

Allow for iteration

In a quickly moving market, new apps and potential partners constantly emerge.
For Web and iPhone applications, this is easy; in the OEM world, it’s more difficult.

This is an area in which both the auto app store approach and providing an embedded interface to the mobile phone offer car companies a better chance of shifting in response to changing consumer demand.

"The magic of today's Web 2.0 world is the ability to quickly get something out there, even if it's not perfect, and see if it touches a need,” says Kennedy.
“Iterate quickly, and then develop the opportunity. It's hard to see the automotive world really matching that."

Consumer choice rules

MySpace was hot; now it's not. OEMs need to accept consumer demand for applications, pricing, and access modes.

In the evolution of the Web, "mashable" applications and content that enable aggregation have become the standard.

This will likely be the case with connected cars, too.

Google is a huge enabler of mash-ups, because it allows outside developers to overlay its maps with other kinds of data.

With Google's moves in navigation, will it enable a similar array of new, mashed-up services?

Free always wins

While some OEMs hope to get a little lagniappe from paid applications used in-car, the evolution of the Web doesn't support this aspiration.

On the Internet, paid services and content have almost inevitably given way to free ones.

While Hotmail, later purchased by Microsoft, was an early example of free, the free model was pushed primarily by Google.

Google launched free versions of Microsoft's cash-cow products for spreadsheets and word processing, driving down prices and the market for paid productivity apps.

At the same time, its dead-simple service for adding ads to other websites gave startup app makers a plan beyond venture capital.

With Google's entry into telematics, look for free to be just as strong.
"Automakers see a revenue stream from applications, but we're not strong on that,” says Mark Fitzgerald of Strategy Analytics.

“Most apps for the phone are free or very low-cost. It would have to be a very compelling app for the car for people to pay."

For more on the connected car, see ‘Social networking and the connected car’. Click here

For more on Google and the telematics industry, see ‘Telematics: Google in the driver’s seat?’. Click here

Susan Kuchinskas is a regular contributor to TU.

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