Many firms are developing in-car computing, or telematics, solutions.
At the moment, the main examples of telematics in use are in-car navigation systems, vehicle tracking and identification and stolen vehicle tracking systems. However, in the future, telematics will be used for significantly more sophisticated systems, especially as wireless technology advances. The main thrust behind the use of telematics is increased communication between the car and the driver, which should mean greater efficiency all round. The key will be to use the Internet to communicate as well as providing a number of services.
The greatest interest in the telematics market has emerged from the fleet industry, which should drive the market in the near future. This is because players in the highly competitive fleet industry see a potential for drastically cutting their costs. Fleet providers may also be able to develop customer relationship management solutions from the information sourced from their drivers. The information could be used to develop driver profiles, leading to differential pricing for drivers in the future.
The major opportunity to make money from telematics systems will be from the revenue they will provide in the future, rather than from selling the hardware. Indeed, as with mobile phones, whichever company sources the revenue from the services will likely subsidize the hardware. Currently, auto manufacturers have taken the lead through partnerships with technology companies to devise services for drivers, but as the market grows, an increasing number of independent service providers will take a share of the services revenue. These companies, with greater experience and aptitude in providing services, are likely to edge out the manufacturers to the extent that profitability will be too low for manufacturers to continue subsidizing the hardware units.
So whilst auto manufacturers are reaping the rewards of telematics now, the real winners in future will be the content providers such as ATX, TrafficMaster and SmartMove, all of which are developing their content quickly for the market.
