Telematics utilizes location and communication technologies to provide a range of safety, security and convenience services to enhance the driving experience. Additionally, it promotes societal benefits such as reducing traffic congestion, exhaust emissions and other negative factors.
Telematics users access various value-added services through response centers—live operators or automated systems. Subscribers can take advantage of real-time, personalized help 24 hours a day, 365 days a year at the touch of a button in the vehicle, giving peace of mind on the road.
The North America telematics industry has had some ups and downs in the past few years and has slowly evolved to its growth stage with enormous potential. The service side of the telematics market is the prime revenue generator. Intelligent offerings with innovative services will directly drive demand for telematics-equipped vehicles.
They’ll all be there
In the past few years, the telematics market has been dominated by participants like OnStar (a division of General Motors), ATX Group Inc. and Cross Country Automotive Services (CCAS). After Volvo discontinued monitored telematics in its new models, CCAS was essentially eliminated from the race, but is expected to return in coming years. Today, OnStar has the lion’s share of the market, while ATX holds the rest of the pie. OnStar’s increased commitment to General Motors (GM) vehicles has created a lot of room for new participants to enter. New entrants might not be from a traditional automotive base; they might be from another industry, like wireless communications, home security or even web hosting. However, they must be aware that the automotive market is not easy to work in and that it will take a long time to establish a presence.
Telematics has not penetrated its market to the extent that was initially predicted. Today, more than 5.5 million drivers are estimated to be subscribers to telematics services in North America. OnStar alone services more than 5 million subscribers in the U.S. and Canada. This is largely due to the low presence of vehicle manufacturers (VMs) other than GM in this market. But the trend is likely to change as more VMs realize the revenue opportunities in telematics. Frost & Sullivan, a market consulting company, believes that all major VMs in North America will deploy some form of telematics in the next few years. Chrysler will be offering telematics through Hughes Telematics from 2009, followed by Toyota and others. GM’s strategy of offering telematics as standard equipment across all its models in North America will push other VMs to do the same.
Today’s services
Today, the services offered by telematics service providers (TSPs) are almost identical, but with different names denoting their brands. A few services advertised by one TSP are not advertised by the other, but nevertheless are offered. For example, OnStar advertises “Ride Assist” (if the subscriber is incapable of driving, OnStar arranges for a taxicab). ATX does not advertise this service, but provides it at a customer’s request. Similarly, ATX advertises “Critical Calling” (in case of an emergency or accident, the call center will inform the driver’s relatives). OnStar does not advertise such a service, but will still do the same.
The fundamental difference between OnStar and ATX is their business philosophies. OnStar, being a subsidiary of GM, offers certain features only for GM vehicles, whereas ATX, being a private-label company, customizes its services based on its customers’ requirements. The VMs pick certain services from the service provider, and offer them to their customers at a price. Thus, participants in the telematics market benchmark against each other to remain competitive.
Currently, the degree of competition is judged to be low, as telematics is still not a must-have feature. This is largely because VMs are not able to provide meaningful content at reasonable prices to consumers. But as Ford’s Sync system (developed with Microsoft Corp.) is expanding its offering to provide monitored telematics services, such as 9-1-1 assistance and remote diagnostics without any subscription fee, it is expected to give strong competition to traditional systems such as OnStar, ATX and Hughes Telematics. Microsoft also is planning to offer a system similar to Sync to other VMs like Hyundai, which can only increase competition. However, a service provider can offer more services through an embedded system than through a solution like Sync, which is restricted since it does not depend on a service provider. Today, telematics offers very few everyday-use applications, but tomorrow’s systems will expand such services. Some of tomorrow’s services are detailed below.
Chance to see the real side
Telematics services generally benefit a broad range of audiences, including vehicle makers, vehicle owners and new-vehicle dealers. TSPs are developing new solutions that allow every participant to benefit fully from their services. The real value of telematics is yet to be realized, but this is only a few years away. Telematics is expected to play a key role in the vehicles of tomorrow. Some of the emerging intelligent applications are as follows:
Predictive navigation
Future systems will look beyond occasional trips and provide intelligent solutions to improve everyday road trips. Based on real-time, historical and even predictive traffic, the system will automatically determine the fastest and least-congested route for the anticipated time of travel. This next-generation system will have the ability to anticipate traffic and road conditions along users’ routes and to guide them to their destinations based on their preferences and vehicle requirements. For example, a route with a nearby gas station may be selected if low fuel is detected. Predictive traffic information is based on historical traffic patterns, scheduled events such as school times and cultural events and weather forecasts. Inrix is expected to introduce the world’s first “third-generation” routing service, which supports this functionality. For vehicles without liquid-crystal display (LCD) screens, telematics displays might be projected onto vehicles’ windshields, like night vision systems do.
In-vehicle broadband connectivity
Future vehicles are expected to have broadband connectivity, providing unlimited in-vehicle Internet access. Service providers such as Hughes Telematics for Chrysler and Mercedes-Benz and ATX for BMW are adapting and developing web applications for the automotive environment. Hughes Telematics is expected to offer broadband connectivity around 2012 after switching to satellite communications. It will be interesting to see how the following questions are addressed:
- How is information entered when the user is driving? Will it be manual entry or voice recognition?;
- How is information displayed? Will it be on a navigation screen or on the windshield, or will it be read by a text-to-speech program?; and
- What will be the security protocol to prevent viruses from attacking the in-car system?
Some of the expected in-vehicle Internet applications are as follows:
- Initially, services might be limited to functions such as reading and replying to e-mails. However, as systems evolve, other services such as online interactive gaming, online shopping and watching streaming videos will become possible;
- Systems might be able to connect to external online portals like Facebook and Orkut and automatically display users’ current locations through a Global Positioning System to their friends online. If users are connected through this in-vehicle application, the system also might suggest a convenient location to meet, based on the distance between the users’ vehicles;
- Users also may be able to network their home and office PCs to their in-vehicle systems and transfer data between them; and
- Drivers may be able to download movies from the Internet for backseat passengers to watch.
Prognosis (Hughes Telematics)
Tomorrow’s remote vehicle diagnostics (RVD) will provide more value than today’s by adding prognostic functionality. Prognostic RVD systems will provide additional data, such as the amount of time the vehicle has spent idling, the fastest speed reached, average fuel economy, the need for an oil change and many others. If the system diagnoses a critical situation, the owner will be automatically alerted to the problem.
In some cases, the service dealers will be able to wirelessly send software updates based on the error codes and remotely rectify problems without the owner’s having to get the vehicle to the service shop. VMs could intelligently use this application for vehicle recalls and for research and development to design better vehicles.
In-vehicle voice and video applications (Hughes Telematics)
Future systems will be smart enough to understand that the user is asking certain questions without the need for any reference after the first time. For example, if a user asks for the weather in Chicago, the system will promptly reply with the appropriate information. Subsequent queries can then be made simply by naming the city, without referring to the context (weather). If the user just asks, “What is the weather condition like,” the system will be smart enough to understand that the user wants information for the current location and answers instantly.
The intelligent system also will be able to answer questions about sports scores, stock prices and other topics. On declaring the user’s point-of-interest (POI) information such as a museum, restaurant or fuel station, the system will automatically notify the driver by voice as the vehicle approaches the specified location.
Hughes Telematics is further developing the system to show various step-by-step procedures in the vehicle owner’s manual as a video on the LCD screen, based on the driver’s questions, such as how to change a tire.
Stolen vehicle slowdown (OnStar)
A stolen vehicle can not only cause damage to roadside property, but also can cause injury to the driver (suspect) and innocent citizens, either pedestrians or occupants of other vehicles. Once a stolen vehicle is in sight of a police officer, the service provider can cut off the accelerator while maintaining other power functions such as braking and steering. GM will make this feature available on nearly 1.7 million model-year 2009 vehicles.
Vehicle-to-vehicle (V2V) and vehicle-to-roadside infrastructure (V2I) communications
The telematics system will have the ability to transmit real-time road data between vehicles and between vehicles and roadside infrastructure. The simple addition of 802.11-type chipsets in telematics control units will enable dedicated short-range communications (DSRC) functionality.
- V2V—If a vehicle approaches a potential hazard, the driver will be automatically warned by an audio and visual display, and the unit then passes the information on to all vehicles within a certain distance (determined by the VM) through V2V communication. The system also can transmit the data to a traffic-control center, which in turn can display the message on roadside hazard warning signs to warn other drivers to avoid the route, thereby preventing traffic jams.
- V2I—If a hazard such as a traffic jam or speed zone is spotted, the service provider can send information by means of roadside infrastructure to alert drivers in the area of the situation by means of voice and visual prompts. This prevents drivers from jumping red lights and exceeding speed limits and helps them avoid traffic jams and other situations.
Today, most VMs are working toward this goal, but GM, with its incorporation of telematics into every vehicle, could be taking the first step. Consumers will be able to realize the actual benefits only when most vehicles have this location-based capability.
Vehicle tracking (Hughes Telematics)
Today, telematics offers only stolen vehicle recovery service. It does not offer tracking. Service providers are planning to offer this feature, for example, to allow parents to track teenage drivers. Using a web interface, parents can track information such as place of travel and speed driven.
The system also will provide an option to notify the driver if the vehicle is being monitored by an indicator in the vehicle. The system also will have the ability to alert (by text message or e-mail) owners of any violation of preset limits, like driving beyond a certain speed or moving out of a specified geographical area (“geofencing”).
Driverless cars to destination (GM)
Next-generation telematics systems, when linked with all on-board vision systems (such as for lane departure warning, blind-spot monitoring, night vision and adaptive cruise control) and the navigation system, might maneuver vehicles to their destinations without driver input. GM plans to begin testing driverless cars by 2015 and expects to have them on the road by 2018.
No stopping for directions
Although the services detailed above are in development and likely to become technologically feasible, it is not certain that they will actually be implemented fully. That will depend on what consumers want, what they are willing to pay for and what industry participants are willing to subsidize. However, to stay competitive, VMs are analyzing their options to get into this market. The trend could go in any direction—some VMs might offer broadband connectivity and real-time navigation and driver assistance services, which require a service provider, while others might offer safety services like airbag deployment notification and RVD, which do not need a service provider.
Frost & Sullivan believes that telematics will continue to develop. As telematics solutions such as GM’s OnStar, Ford’s Sync and Chrysler/Mercedes-Benz’s Hughes Telematics are expected to become standard in most passenger vehicles in the U.S. and Canada, consumers are likely to enjoy many value-added features. This is not far off.
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