Frances Perraudin assesses the staying power of current telematics trends.
Even if the connected car hasn’t quite come to dominate our roads yet, the concept has hit the mainstream.
Almost every major media outlet has covered the topic of automobile telematics in some form – whether it’s usage-based insurance, cars with inbuilt Twitter or snazzy safety devices.
But many new telematics services and applications have been met with skepticism by industry experts.
And with car manufacturers and technology companies putting more and more money into telematics, distinguishing fads from core offerings is more important than ever.
The major trends
Closest to the core are those applications that enhance safety and security, experts say.
Even though voluntary eCall has had low adoption rates across Europe – due to consumers’ reluctance to pay for additional services – the fact that it is now due to be mandated by the E.U. is a sign that the relevant authorities are very serious about technologies that reduce or ameliorate traffic accidents.
“Things like vehicle tracking and diagnostics, and roadside assistance aren’t widely known about at the moment, but once they are, people will come to expect them in their cars,” says Dominique Bonte, vice president and practice director at ABI Research.
Jack Bergquist, a senior analyst in automotive infotainment at IHS, adds that services like real-time traffic information, fuel pricing, weather updates, live POI (point of interest) searches and more accurate navigation are also “pretty central to the offering.”
Another area that OEMs are smart to embrace is connected customer relationship services, as these help build a direct relationship with the customer – something OEMs have left to dealerships until now.
An example of this is an instant message appearing on the dashboard monitor as soon as there is a problem with the car, telling you where your nearest dealership is and the time of the next available appointment.
The niche players
Just because something has limited appeal doesn’t mean it’s a fad either, according to Bergquist.
“Things like usage-based insurance are a great service for certain high-risk categories, but not everybody,” he says. “If you’re an average driver, you won’t see much of a saving because prices need to be maintained in order to maintain profit margins.”
Indeed, one of the main benefits of the connected car is that you can create a vehicle that caters to the individual, according to Bergquist. There are services, even in the safety and security category, which will only appeal to some.
His example is Volvo’s remote heating control, which has proved very popular in Nordic countries. If you live in Southern France, however, the ability to pre-heat your car isn’t going to be something you’re particularly interested in, whereas being able to pre-air-condition your car would be a dream. “Telematics isn’t a one-size-fits-all thing,” Bergquist says.
(For more on what's next, see Telematics: What's next for apps and services, part I and Telematics, What's next for apps and services, part II.)
The likely fads
The problem with identifying fads is that they often become apparent only in hindsight. The category of safety and security has had its fair share of these, also because it has been around the logist.
For example, Dominique Bonte points to OnStar’s remote immobilization, designed to trigger the horn and disable the ignition system if a car is stolen, or an owner is behind on payments. The obvious safety issues involved in cutting out an engine mid-drive and the service’s vulnerability to hacking mean that it is barely used.
Bergquist also argues that, had eCall not been mandated, it might well have been thrown on the scrap heap. He describes it as “one of the biggest U-turns we’ve had in telematics over the years.”
Kevin Link, a senior VP at Verizon Telematics, has the infotainment area pegged as the sector undergoing the greatest transformation and, therefore, at biggest risk for fads. “Logically, this is the area that is most likely to have the greatest risk of fad,” he says.
It's also an area where OEMs need to be most careful. Hardwiring a social media application or a music streaming service into the vehicle is dangerous, as there’s no telling what will happen in five years’ time. “If the company fails, you’re left with a button in the head unit that doesn’t do anything,” Link says.
Exit strategy is a must
Link’s message to manufacturers is that they need the flexibility to adopt every new fad quickly and to get rid of it just as swiftly. “I know what the killer app is, and it’s the app that can replace the killer application,” he says. “Today, in the U.S., people are crazy about things like Twitter and Facebook, but these can come and go in a time frame of two years.”
To be sure, social media are here to stay in some shape or form, but the business is changing so rapidly that OEMs shouldn’t commit to just one platform without having the ability to remotely refresh the customers experience.
And this is also where the controversial area of smartphones comes in. The use of smartphone apps with the connected car has been a matter of some debate, with the issue of safety a main concern.
But smartphone integration can be invaluable to an OEM when it comes to managing in-car apps. “Connecting a smartphone to the car is a smarter way to avoid the fads because, if an app is removed from the smartphone, it is also removed from the head unit,” Link says.
“All of the latest technology is being brought into your vehicle by the driver who has the latest smartphone,” Bergquist says. “Provided the connectivity stays the same, OEMs open themselves up to the possibility of having a continuous upgrade without ever having to change the hardware in the vehicle.”
However, In the end, it seems that everything has an expiry date in the tech world. These days, technology is advancing so quickly that even the smartphone has an uncertain future, according to Bergquist. “The big question is the pace of change in consumer devices," he says. "We really don’t know what a smartphone is going to look like in seven years.”
Frances Perraudin is a regular contributor to TU.
For all the latest telematics trends, check out Telematics Japan/China 2013 on Oct. 8-10 in Tokyo, Telematics Munich 2013 on Nov. 11-12 in Munich, Germany, Telematics for Fleet Management USA 2013 on Nov. 20-21 in Atlanta, Georgia, Content and Apps for Automotive USA 2013 on Dec. 11-12 in San Francisco, Consumer Telematics Show 2014 on Jan. 6, 2014, in Las Vegas.
For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.