In a review of the current telematics landscape for Telematics Update, Andrew Tolve asks how telematics firms compete with the likes of Apple and Google - when the telematics business is fragmented, unlike for the mobile device market the two tech giants dominate.
According Tolve, the telematics business is fragmented among content and app providers, data aggregators, infotainment system manufacturers, safety and roadside assistance specialists, personal navigation device suppliers, real-time map and traffic-update purveyors, fleet management providers, insurance telematics device manufacturers … etc. etc, which leads to a prevailing assumption of likely consolidation as these technologies becomes more mainstream.
Rendering the past 15 years of telematics investment obsolete
He suggests another possibility: "that individual telematics companies and the telematics industry as a whole could be outflanked by an entirely different set of players that swoop in and render the past 15 years of telematics investment obsolete."
Quoting Jim Nardulli, senior vice president of navigation company NNG, in his keynote address at this year’s Telematics Update Detroit conference “This could be a $0 billion-dollar business for a lot of us. If you’re trying to compete with someone not in your business but offering the same services you have, you have a massive disadvantage.”
By “someone not in your business” Nardulli refers to the arrival of big companies like Google, Nokia, and Apple in the automotive space, along with the major network providers.
The chief prize, according to Tove, of all of these companies is captive audience time. "Americans alone drive 1.5 trillion miles per year, which breaks down to 50 billion hours at 30 miles per hour, or about 250 hours per vehicle per year."
“If you need consumer attention, that’s a hell of a lot of captive audience time,” said Nardulli. “That’s what’s driving this war.”
Baby steps from touch to speech
Both Apple and Google are developing speech as the successor - or complementary - user interface to touch, but it's early days, and they are progressing cautiously due to limitations of the technology as develped so far.
Apple has released its own mobile mapping service, plus an agreement with eight auto OEMs to integrate Siri, Apple’s automated personal assistant, into vehicles starting in 2013. According Tove "The list of OEMs included many of the heavyweights, from BMW to GM to Toyota, Honda, and Audi. Additionally, Apple has said that a spoken mapping function will be integrated into the next generation of its iOS platform, suggesting that anyone with a mobile Apple product may have a free Siri turn-by-turn navigation specialist (plus POI provider) guiding them down the road in the near future. That, of course, means that Apple will be vying for ownership of the in-car experience in a way previously reserved for OEM platforms like Ford SYNC, Audi Connect, Mercedes mBrace, and Chrysler Uconnect."
It should be pointed out, howver, that Apple's efforts in the advertising broker space have not been a success.
Google has also has said that it sees its future as being in 'spoken search', as described today by Ben Gomes, Google's vice president in charge of search, at the LeWeb conference in Paris.
According to Tove, "Google has been testing an autonomous car; while Nokia has partnered with Ford to advance smart and connected cars; Verizon made the $612-billion acquisition of Hughes Telematics; and Sprint partnered with Chrysler for Uconnect and unveiled integrated, end-to-end UBI services, a first for a wireless provider."
Why they might want your lunch
Rivals in other industries have been outflanked - such as in music devices, computing and mobile devices - in part because incumbents have misunderstood what both Google and Apple are about.
They each have completely different business offerings, but focus on differently compelling propositions; for Google it's attention, while for Apple, it's experience.
Google is in essence the world's most successful advertising agency. What is sells is attention of users of its products to advertisers. Therefore it is happy to give away its products if it pays for itself in advertising revenue, be it Search, Google Glasses or whatever - although that has yet to be proven for Android devices. It's mainly just Samsung who are driving sales of andriod mobile handsets.
Google products are marketed as providing useful tools for mankind, cynically or altruisticly as you will. But its all about users' attention
Meanwhile Apple is in the business of providing experience. With the promise of excellent experience. This will be more familiar marketing fuel car makers, especially for brands such as BMW or Mercedes, but more on the model of Coca-Cola; in the sense there's only one type of Cola-Cola, but it's the same Coca Cola that Elizabeth Taylor would drink; expensive for what it is but an achievable, as well desirable, experience.
The way to counter both threats would be to provide compelling products but it's hard not to envision more money to be made not in sales but in being swallowed up should new entrants wants to accelerate their involvement in telematics.