Issue: Jul 2006


Telematics - The Future



Why are Telematics not more prevalent in the automotive industry? Why have they not become widely available – or even standard equipment on many vehicles? Perhaps it is because the world’s automakers have not yet recognized the benefits they can provide to their customers and, ultimately, to their own bottom lines.

Why are Telematics not more prevalent in the automotive industry? Why have they not become widely available – or even standard equipment on many vehicles? Perhaps it is because the world’s automakers have not yet recognized the benefits they can provide to their customers and, ultimately, to their own bottom lines. So speculates Anders Franzén, corporate vice president, M2M Communications, Sony Ericsson Mobile Communications. In an interview with Automotive Industries, Franzén discusses the future of Telematics in the automotive world.
Automotive Industries (AI): How prevalent is the use of Telematics systems in today’s vehicles, especially when compared to other automotive safety, security and convenience systems?
Franzén: Many systems and features that were once unavailable or optional to automotive consumers are now available across a wide array of cars, from the most basic to the most luxurious. Among them are ABS brakes, multiple air bags, and automatic / manual transmission combinations and electronic skid control. In the case of many cars, about the only options a consumer has these days are a choice of color, and upgrades to wheels, interiors and audio systems. But Telematics have not yet achieved that “standard equipment” status. Some, such as GM’s OnStar are in limited use in some vehicles, but most automakers including Ford and DaimlerChrysler and others have not yet picked up the challenge.
AI: Why do you believe this to be the case?
Franzén: There are a number of different reasons. Firstly, you must understand that some of the systems that have become standard or widely available (like ABS brakes) are not offered to improve profit margins. They are offered to meet competitive forces – often driven by new entrants into the auto market. It appears that even though GM has made OnStar widely available, no one else has yet to consider Telematics to provide a competitive advantage, or the lack thereof to be a competitive disadvantage. So they are not pursuing it.
Another reason why Telematics are not more prevalent is that the automakers have a lot of other things to worry about these days – especially the U.S. automakers. A lot of their focus is on retaining or regaining market share and profitability. So even if they see the benefits of Telematics, it is hard to get them to move it up on their priority list.
It is also possible that GM has inadvertently reduced the growth potential of Telematics by retaining ownership of OnStar, and thereby making it unavailable to all but GM buyers, and some models of Audi, VW, Accura and Isuzu. I believe that if GM were to sell OnStar, thereby making it available to many other automakers, Telematics could become more widely used; their advantages would become clearer, and they would become an important feature to consumers.
AI: What are the principal benefits and advantages of Telematics to which you refer?
Franzén: Well, there are advantages to both the customer and to the automakers. Those auto owners who have Telematics systems like OnStar already know that they can be used as telephones, as tracking devices in the event of theft; for emergency services notification in case of illness or accident, and even for concierge services.
Well beyond these services, however, is a whole array of benefits to both the automaker and the consumer. Telematics can be used to keep both manufacturers and owners apprised of vehicle quality, performance and maintenance issues. On-board software could be updated via Telematics systems.
For fleet owners and operators, Telematics could again be used to monitor vehicle performance and maintenance needs; to transmit data between vehicles and a home base; and to monitor vehicle location. Telematics can also be a valuable tool in the Homeland Security arena.
What I am saying is that there is a lot of untapped potential for Telematics in the automotive industry, but it is slow to develop because this potential is not fully recognized, is not legally mandated or the automakers have other issues with which to deal.
AI: Does this mean that Sony Ericsson is pessimistic about the future of Telematics in the auto industry – or Telematics in general?
Franzén: Not at all. There is plenty of demand for Telematics outside of the auto industry. In fact, it is in these areas where the bulk of our Telematics and M2M (machine to machine) technology is applied. For example, our M2M applications include monitoring and control of electronically controlled systems, industrial processes, electronic payment terminals and gas, water, electricity and power networks meter readings. They also extend into service and maintenance of elevators, escalators, vending machines and point-of-sale equipment.
There is also plenty of value and potential in the automotive market. At Sony Ericsson, we provide Telematics for such fleet capabilities and applications as cargo tracking, route planning, order management and logistics for road, rail, air and sea, along with driver navigation, safety, remote vehicle diagnostics, car security, mobility services and infotainment. But I must stress again that until the automakers recognize and take advantage of the competitive benefits of Telematics, they will not pursue it. I see it as opportunities lost.
AI: Are there any special needs or issues relative to auto industry Telematics that Sony Ericsson is addressing?
Franzén: There are several. One of them is that technology in the M2M world moves a lot faster than in the automotive world, and M2M product life spans are much shorter. Many of today’s automobiles last 10 years or more, but the Telematics in them becomes obsolete much more quickly. So how do you keep Telematics technology current in older cars?
A second issue is that automotive Telematics need to be rugged. Control units in such systems as airbag deployment and engine controls require toughness and reliability far greater than those used simply for telephone and entertainment systems.
We also have to deal with the reality that automotive M2M market is much smaller than the market for handsets. We have had discussions with some of the key telecom technology companies to help them understand what our piece of the industry is all about and what our core technology needs are. But the market is driven by the 600 or 700 million handsets out there – not by the 15 or 20 million M2M data communications devices.
AI: So what is the bottom line for Sony Ericsson and M2M at this time?
Franzén: The bottom line is that there are a lot of issues, but we intend to continue to pursue automotive Telematics. We believe in it and we believe in its potential. We now need to further convince the automakers that Telematics can add to their competitiveness and to their bottom lines.

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