Telematics services are becoming increasingly popular in the United States, with at least five
automotive original equipment manufacturers and several after-market vendors offering telematics hardware and
services to customers.
The telematics market supports just more than 60,000 customers today, but it is expected to
grow to nearly 1.3 million customers by 2003, according to research conducted by Driscoll/Wolfe Marketing &
Research Consulting, Palos Verdes Estates, Calif. A similar study by The Strategis Group predicts telematics customers
will grow to about 1.23 million by 2003.
“As service and equipment prices fall, telematics will evolve from a
gee-whiz accessory for a handful of luxury car owners into a standard option chosen by hundreds of thousands of new
car buyers,” said Stephan Beckert, a consultant at Strategis. “Telematics will be offered on a dozen new car
models in 1999.”
The trend toward telematics being offered as a standard feature on new vehicles is growing.
Mercedes-Benz, for example, will offer telematics as a standard feature on its S-Class models this spring. Protection
One Mobile is providing the response center services.
Customers are drawn to the safety features of telematics,
particularly emergency notification and stolen vehicle recovery, said Clem Driscoll of Driscoll/Wolfe. Information
services such as traffic information and navigation assistance also generated interest, although at lower levels than
safety-related services.
However, while people express an interest in those services, there is a limit to what they are
willing to spend, he said. Many people surveyed by Driscoll said they believed their portable phone already can provide
many of the same services offered by telematics.
“They realize telematics services may be more convenient,
but there is a question as to how much they are willing to pay,” said Driscoll.
Before telematics services truly
take off and begin to reach the mass market, prices for both the hardware and monthly service must come down.
Driscoll said most telematics units are selling for about $1,000 with monthly service charges of about $20 per month.
Wireless access services often are charged as an additional monthly fee.
In order to be successful, hardware prices
will have to fall to the $200 – $300 level for the aftermarket and about $500 when financed into the cost of a new
vehicle, said Driscoll. Monthly charges need to come down to about $10 a month, including wireless access fees, he
said.
Telematics growth to date also has been slowed by a lack of customer awareness and demand.
“The
aftermarket for telematics has been very small, and some suppliers are getting discouraged,” said Driscoll.
“Consumers aren’t aware enough of the benefits of telematics to rush out and buy it.”
The market for
telematics is being driven by new car manufacturers. However, Driscoll predicts consumer awareness will increase as
more and more new cars are equipped with telematics systems, which in turn will drive the aftermarket for
telematics.
Wireless carriers play a role in telematics as well by providing the link between customers and response
centers. Some wireless carriers have been proactive in taking steps to make sure their networks are accessible
nationwide. Many carriers, however, are taking a wait-and-see stance, said Driscoll.
“In general, wireless
carriers have looked at location-based services, including telematics, and have asked how big the market will be,”
said Driscoll. “There is a general belief that it is going to take some time for the market to
develop.
“Virtually all of the major automobile manufacturers plan to introduce telematics, so (wireless
carriers) can’t ignore it,” continued Driscoll. “Wireless carriers see it coming and they realize it will be a
pretty significant application.”
Driscoll said carriers are beginning to view telematics as a data service that
doesn’t threaten their voice business.
Telematics could hit a speed bump in 2001 when wireless carriers are required
to be able to locate wireless 911 callers. Many carriers are expected to use the technology they deploy for E911 to offer
commercial information services as well, which could pose a competitive threat to telematics services.
Telematics
stands a good chance of surviving, said Driscoll, because it has a head start and many of its services are tied to the
automobile, such as automatic crash notification.
Many in the telematics industry believe the service’s safety
benefits will cause it to be extremely successful.
“This is going to be like a seat belt or an air bag,” said
Gary Wallace, director of marketing at Protection One Mobile. “It’s going to be a standard safety feature on all
automobiles.”
