Elegant Report - University of Washington



UniveRsity of Washington – Bothell

ECOMMERCE, DR. SANDEEP KRISHNAMURTHY

TELEMATICS

JENNIFER GREGOR

Randy SErroels

Telematics

Telematics is the integration of wireless, location, speech, and computing functionality to provide automobile drivers with a variety of personalized voice, data, and internet mobile services based on where and what drivers are doing. Information presented and utilized relative to location allowing more direct internet marketing than ever before[1]. Telematic solutions allow automobile drivers to access applications and services via a PDA, cellular phone or in-dash system. The only other requirements are a wireless service and a location-sensing technology like the Global Positioning System (GPS)[2] to determine the location of the telematic device. Once these connections are established, drivers can access applications and services optimized for the mobile environment. Most solutions combine these technologies with a call-center that can match a user’s location with various informational databases (e.g. emergency response agencies, roadside assistance providers, hotels, restaurants, etc.).

Current telematic services include remote diagnostics, automatic maintenance scheduling, automotive safety systems, real-time traffic advisories, and audible/visible turn-by-turn navigation. The most popular telematic applications today are emergency calling, stolen vehicle tracking, automatic crash detection and response, route assistance, and concierge services. See figure 1 for an example of current telematic product offerings and their segmentation within the vehicle.

[pic]

Figure 1: Telematic Market Segmentation[3]

The Telematics Industry & Market Opportunity

The telematics industry is a new and growing market, and predictions of its future size vary greatly. A study by Forrester Research, McKinsey, and Deutsche Bank predicts the worldwide telematics market place will grow from $5B in 2000 to nearly $25B in 2005[4]. There’s no doubt that consumers have become comfortable using mobile devices such as cellular phones in the vehicle. Various studies have shown that a majority of wireless airtime is used in the automobile, with some estimates as high as 70 percent of all wireless calls occurring in the car[5]. The question remains what telematic applications consumers will consider a significant value-add and how much they will be willing to pay for them.

OnStar helped jump-start the telematics industry when it launched in 1996 as a dealer-installed system in cars, offering subscribers emergency and security services through a call center. Today, OnStar is standard equipment in 32 of GM's 54 models. In February, General Motors Corporation announced plans to add real-time trading and financial market data to its OnStar system. The voice-activated system partnered with Fidelity Investments allows users to ask the onboard computer for information which checks the latest market quotes then reads back the data. The telematic system also includes access to a 24-hour-a-day service and assistance center, voice-accessible email, and customized news services. BMW of North America announced in August that it would also offer wireless location, emergency, and information services that leverage the global positioning system (GPS) -- as an option on all its 2003 model vehicles.

The companies positioned to benefit the most from the growth of telematics will be those that provide services and connectivity. Because telematics provides the auto industry another way to differentiate their products and increase sales, they also have the potential to benefit significantly. Telematics can be used as an incredible CRM tool for the auto industry. Using telematics, automakers will be able to have frequent contact with their customers, enhancing customer loyalty, enabling remote diagnostics and easily communicating future service offerings.

The current telematics supply chain is shown in figure 2. Telematic Service Providers (TSP) integrate content from content aggregators, hardware and software, and the existing mobile wireless infrastructure to provide mobile services to automobile drivers. The first wave of telematic products has been focused on automobiles, and the supply chain model shows that the vehicle is the final delivery system for telematics. In the future, the auto will be only one of the vehicles for telematics. TSP's will expand their services to cellular phones as well. Eventually the personal cellular phone will be the focal point for telematics. An individual telematics subscriber will be able to use telematic services in their car, at the mall, waiting for a bus, or at a sporting event. An example of this is a recent announcement from DaimlerChrysler AG[6]. On 10/26/01 Chrysler Group announced a new vehicle communication strategy utilizing Bluetooth technology and personal mobile phones. Chrysler's new system is driven through the user's cellular phone and works inside and outside the vehicle. The Bluetooth technology will allow a customer’s cellular phone to be integrated with their vehicle’s telematic device so that only one device is in use at a time.

Future Trends

Currently the focus of most telematic services is on safety. As consumers become more comfortable with the technology and voice recognition software improves, applications and services of convenience will start to become integrated components of our lives.

Motorola, one of several original equipment manufacturers involved in telematics, sees a future that will combine the convenience and safety features of current telematics systems with comprehensive on-the-road communication capabilities. The result, Motorola says, could be this scenario of driving home from the office[7]:

• A driver gets in the car, quickly checks the best route home, checks out the weather en route and turns on the cruise control system.

• The driver is able to check recent e-mails, which are read out by the Internet-compatible car radio, and answers some of them straightaway, in fluent, non-computerized language.

• The vehicle monitoring software notices a minor problem with the vehicle emissions sensor and asks if you’d like it automatically reconfigured the next time the vehicle is not in use (remotely by a technician).

• The driver then books a hotel room for tomorrow's conference via the in-car Internet that also updates the driver's diary at the same time.

• The driver now can enjoy the journey home and is able to listen to their favorite music, by selecting an MP3 file, downloaded directly from the Internet.

ATX Technologies projects an even more elaborate driving experience in their video showing the typical telematics driving experience by 2004[8].

Ultimately, telematics will be a highly valued service that will enhance motorists' daily life. This technology will enable mobile society to download information to their car, such as maps, directions, a directory of restaurants in the vicinity of the moving vehicle and so forth. It will also provide communicate between a vehicle, office PC, home PC, a family member's cellular phone or a business colleague's personal digital assistant device.

Risks

Will the telematics market grow at the rate predicted and can telematic service providers (TSP) be profitable? The telematics market faces a number of obstacles to the projected growth. A survey of telematic users conducted by Ducker Worldwide showed that a TSP could expect approximately 50% of current users to re-subscribe[9]. OnStar acknowledges that an 80% re-subscription rate is required to be profitable. A second risk to market growth is consumer acceptance of telematics. The Ducker survey also found 60% of the people with telematics installed in their car had not used the system. The telematic market is in its infancy, and consumer acceptance is still low. A third issue is that of driver distraction. Governments around the world are passing legislation to limit the use of handheld devices in cars. While 2nd and 3rd generation telematics will have improved voice recognition systems, drivers may still be distracted and accidents may result in a push for legislative action. Given these risks, some researchers predict the consumer demand will remain low, and the market will grow at a much slower rate.

The path to safe, hands-free cellular phone usage in vehicles is strewn with stumbling blocks. Automakers and software vendors know they must first create voice-recognition systems capable of operating reliably in the face of wind and road noise, blaring radios and little voices in the back seat. They must also figure out ways to tie cellular phones to radios and navigation systems, and then give software the ability to understand voice commands.

The dilemmas facing designers are substantial, says Marc Serughetti, director of marketing for Wind River's automotive and industrial business unit (Wind River is a producer of embedded software and services for telematic devices). "Creating such devices can present tremendous challenges for developers," he writes. "Developers must ensure that devices can be connected through multiple networks, they must cope with software complexity and they must design systems that can be upgraded."

And there's also potential for abuse. For some, the fact that a person's location can be tracked is in itself a breach of privacy. More worrisome is that someone with malicious intent could follow a person's every move. "When you start talking about having location-based services on every device, it's scary; it's Big Brother technology," says Amir Haramaty, chief operating officer of Nexus Telocation Systems Ltd., which plans to provide a service in Florida this year that will let people track vehicles, valuables, and even individuals. "This technology can help in emergency situations and improve efficiency, but we have to be careful."

Yet another area of risk for telematic product providers is focusing product efforts too much on "automotive telematics" and not on telematics in general. While the use of telematics in a car is the first application of this technology, the mass market for telematics may be both inside and outside the vehicle since many telematic applications are useful outside the car. While today, telematics is driven through the automobile; in the future telematics will be a personal productivity and convenience product driven through personal cellular phones. Thanks in large part to a Federal Communications Commission mandate for Enhanced-911 that took effect Oct. 1[10]; the next generation of cellular phones, due next year, is expected to include GPS chips to support location-based services. Wireless carriers are installing E-911 systems that, together with GPS, can identify within 50 meters the location of a cellular phone when it's turned on. The mass market for telematic products may not be tied to the automobile. Instead, telematic services may be more tied to a consumer’s cellular phone.

conclusion

There is no doubt that the telematics industry will experience significant growth in the next five years. As figure 3 shows, as the industry matures, the focus will move away from the vehicle integrator and towards wireless service providers. Wireless service providers are already beginning to offer voice-activated dialing and services such as “Tell Me”[11]. As consumers become accustomed to telematic applications in their vehicles they will soon begin to expect them via their other mobile devices such as cellular phones and PDAs. Users will want to access their email via a voice-activated system – and they won’t want to pay two separate bills, one for the “auto” email service and one for their “mobile” email service. This will require integration between auto manufactures and wireless service providers similar to the alliance between Chrysler and AT&T Wireless utilizing Bluetooth technology[12]. Automobiles will move away from providing a full “telematic” system but rather a system that allows a cellular phone to be plugged into the vehicle and utilize the cellular phone’s wireless connection.

In the short-term, the most popular telematic services will remain to be those centered on safety and navigation. Telematic services that are quick and require minimal interaction between the system and the driver, such as making dinner reservations or checking move times, will also become popular. Services that require a lot of interaction between the driver and the telematic device, such as receiving and responding to email, will probably not be in high demand. These sorts of tasks require a high degree of multi-tasking and can distract drivers for extended periods of time. Although the use of telematic devices is on the rise, it will likely take several more years before a significant number of drivers are comfortable interacting with telematic devices to the extent that will be required to make the industry profitable.

-----------------------

[1]

[2]

[3]

[4] Anderson, Jamie; Telematics: Why CRM strategy will be crucial for auto makers; http:/autoforum..

[5]

[6] Chrysler Group Unveils Vehicle Communications System;

[7] Walley, Wayne; Drive to Communicate; 5/2001.

[8]

[9] Ulnick, M. Scott and Haupricth, William; The Current Market for Telematics: Great Products Searching for Demand; Ducker Worldwide; 10/8/01.

[10]

[11]

[12]

-----------------------

[pic]

Figure 2: Telematics Value Chain (Future)

Figure 2: Telematics Value Chain (Current)

-----------------------

.

.

.

.

.

.

.

.

.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download