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Feature Article
November 2001

Telematics -- Is It The Eye Or The Pie In The Sky?


Some of today's luxury car owners may seem to possess an uncanny sense of direction behind the wheel. But more likely than not, their navigational prowess is traceable to a small box hidden within the dashboards of their cars. Inside, it contains a global positioning unit, a cellular chipset, and a signal amplifier -- the guts behind the next revolution of communications technology called "telematics."

The promise of telematics could usher in a future reality that has been longingly anticipated in one form or another since the dawn of AM radio. Today, the Internet makes data time-sensitive in an unparalleled way by offering infinite updatability. But very soon, telematics -- which in the simplest sense is a marriage of computing and mobile telecommunications -- will make data location-sensitive.

How? New technologies enabling automatic and precise positioning of mobile phones, coupled with high bandwidth networks and wireless device innovation, promise to bring advanced, real-time navigation to end users. All this will occur relative to the location of a wireless user -- an unprecedented feat. Rather than merely supplying the address and perhaps a general map of one's desired address, for example, the technology behind telematics will guide the user along the "best" path to that address from their current location. The implications of such technology on business, society, and general culture are colossal.

Will it happen? To a large extent, it already has. Consider the numbers corresponding to the expected boom in the global wireless market segment alone -- from an estimated $5.42 billion in 2002 to $40 billion in 2006. Of this, the North American automotive telematics market could rack up nearly a quarter of that $40 billion, given double-digit growth.

All this is not lost on automotive OEMs, which are embracing telematics in ways that far exceed their incorporation of its technologies into luxury cars. Indeed, telematics promises to change the fundamental relationship between car companies and their customers by offering greater levels of safety, security, and remote interaction than ever before. That, they hope, will build brand loyalty in equal degrees as drivers gradually learn of, then utilize, then accept, and ultimately demand this newfound technology. Not surprisingly, more than 30 percent of all new vehicles manufactured in 2005 -- not just luxury cars -- are expected to have on-board navigation systems. And location-based services will account for one-half of the world's wireless subscribers and more than 70 percent of global Internet users.

No one can argue that wireless navigation is not an essential component to the telematics value proposition. Eyeing this fact as the tip of an iceberg, businesses have sprung up in abundance during the past several years to service the many facets of a market poised to explode.

Comparisons between the wireless communication/information technology paradigm and the Internet are no mistake. In historic terms, today's enormous investment in infrastructure for wireless technology is roughly comparable to that which occurred during the Internet's formative stages in 1993 and 1994. Back then, no one could have reasonably predicted the overwhelming degree of interest in the Internet or the corresponding investments that were necessary to drive further innovation in the medium. Today, experts see this cycle repeating to a large degree as new technologies are introduced weekly and venture capital that currently sits on the sidelines increasingly flows into the development of start-ups.

The current state of telematics sets up an interesting paradox: In order for this revolutionary communications technology to flourish as expected, companies must take a down-to-earth approach in articulating the vast range of its current and future possibilities to the average consumer.

Thus far, the buying public's familiarity with telematics remains mostly limited to current onboard navigation and remote vehicle diagnostic systems. From mobile telephony and Internet access to a range of location-based services, they yearn to know how telematics will change the their everyday lives. For them, technology exists that allows service providers to offer optimized dynamic navigation on car equipment and other supported devices. Specifically designed for the automotive industry, this technology can act as a virtual co-pilot to drivers by offering services such as adjustable maps, choice of route, ranking of routes by the quickest or least-expensive means, journey time estimations, real-time traffic conditions, recalling of previously saved directions and driver-controlled customization of services.

The battle over standards is ongoing and presents no clear frontrunner. Current versions of HTML, entitled cHTML, or compact HyperText Markup Language, and the Wireless Application Protocol (WAP), an open standard platform that is endorsed by more than 500 wireless industry players, each possess some advantages. But many insiders predict that, in its present state, WAP must evolve to overcome substantial drawbacks.

Developing wireless applications usually necessitates the development of one application per supported device, since significant variations exist in constructors' implementation of the WAP standard.

To combat this, some companies are developing technology that acts as a layer between applications and clients. This technology essentially identifies the terminal and gateway configuration launching requests to a navigational platform and then dynamically generates code on a request-per-request basis that is tailored to the device and gateway.

Overall, telematics advocates are pushing hard for standardization of systems. They point to projects such as the collaborative Automotive Multimedia Interface Collaboration (AMI-C), which could one day lead to the design and implementation of open specifications for systems that handle everything from wireless communications to interactive games.

So how does all this play out? Companies -- especially automotive OEMs -- in the telematics arena might find great comfort in current research that validates keen consumer interest in telematics, despite its relative infancy. According to a 2000 survey conducted by The Strategis Group, 28 percent of respondents were "extremely" or "very" interested in location-based services. Among those same respondents, safety services aroused the highest interest levels. More than 33 percent of respondents were "extremely" or "very" interested in each of the following services: "Panic Button -- Emergency Response Center," "Phone Finder," and "Emergency Roadside Assistance."

In terms of information-based services, at least 18 percent of respondents were either "extremely" or "very" interested in each of the following services: Location-enhanced 411, "411 Plus" directions, and customized traffic information.

Among total respondents, only 22 percent were not interested at all in location-based services. The overwhelming reason: Perceived lack of need.

Consumers aside, it has yet to be determined who will come away the big winner. On one hand, automotive OEMs will continue their strong push for telematics technology that is embedded in the very fabric of their products. But the telecom giants of today and tomorrow won't sit idly by as that occurs. Rather, they are
positioning themselves as worldwide providers of telematics in portable devices such as cellular phones and PDAs. How this ultimately shakes out is anyone's guess, although many predict an eventual collaboration of some sort between the two sides.

Still, telematics is reality. Seldom, if ever, in modern history has emerging technology been stymied for long by the status quo. That's not likely to occur within the realm of computing and wireless communication, either. Like life itself, technology seems to blossom once its roots take hold. Barring catastrophe, exponential growth and innovation in telematics will continue unabated. Companies that will flourish in this new world, therefore, are those that can meet several challenges.

First, they must thoroughly understand consumer preferences to determine how best to respond to real market needs. Sound decision making based on well-researched data could lead to telematics being a "must have" feature for the average vehicle owner.

Second, companies need to somehow stay ahead of the research curve by evaluating and then quickly integrating emerging technologies into new offerings. Those that loiter risk losing out to more aggressive competition, shifting consumer preferences, or even nascent telematics technologies.

Third, corporate leaders must take the initiative to implement sound, proactive changes to their companies' business models to keep pace with macro shifts. They must then clearly articulate their products, services and vision to public and institutional audiences that remain receptive to big ideas.

Perhaps most importantly, telematics technology must be reliable, user friendly, and offer fundamental value to consumers. If products work properly, if accessing and retrieving data can occur painlessly, and services prove useful to large segments of society, then the telematics revolution will truly be realized.

Charles Nahas is general manager, North America at Webraska. Webraska is a worldwide provider of Internet-based wireless navigation technology and services. The company offers a full range of products designed to develop and launch Internet-based wireless navigation and location-based services and applications.

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