Subject: [NEXTEL-1] Driving Telematics beyond safety, security

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Date: Thu, 02 Jan 2003 12:16:10 -0500

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Driving Telematics beyond safety, security

So far, success in telematics has been elusive, but analysts still predict a load of opportunities in areas such as trucking and remote diagnostics.

By Brad Smith
January 1, 2003

Wireless Week
© 2002, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Making money in the automotive telematics industry has been like one of those mirages you see in the desert. It always seems to be out there, but you can never quite reach it.

The earliest consumer telematics systems from General Motors OnStar and Mercedes TeleAid haven't been wildly successful–about half of OnStar's users drop it after the first year–and Ford Motors decided in 2002 to bail out of its Wingcast joint venture with Qualcomm, writing off its $100 million investment.

Still, analysts continue to offer enticing forecasts for telematics revenue. The Telematics Research Group said in November there were 214 vehicle models worldwide that were telematics-enabled. A recent study by Frost & Sullivan predicts the commercial telematics market will grow from $771.3 million in 2001 to $4.75 billion in 2009. The analyst firm also says there will be 5.4 million vehicles fitted with telematics gear in 2009, up from 75,500 eight years earlier.

Even more optimistic is a forecast by the Adventis strategy company that there will be a $4.2 billion telematics market by 2005, reaching $21.8 billion in 2010.

In an encouraging note last fall, a Driscoll-Wolfe report says a survey of people who owned cars with telematics services from General Motors OnStar or Mercedes TeleAid showed that 45 percent had used the service and 51 percent would continue to pay for it.

The biggest selling points for OnStar and TeleAid are safety–automatic crash notification–and security–tracking stolen vehicles. In addition, both offer location services.

But telematics itself is very broad and shouldn't be confused with just safety and security, although there are some side applications as well. Telematics is tied, especially with Bluetooth, to hands-free calling. Other uses include remote diagnostics, wireless Internet services such as e-mail and content and voice-activated services.

The Frost & Sullivan report predicts telematics companies will need to match new services with commercial niches. "The available technology offers a wide spectrum of product possibilities, but getting to the core needs of customers will be crucial to boosting uptake," says analyst Alfonso Corredo. He cites especially the use of automatic services capable of using multiple open communications technologies.

"The popularity of telematics in the trucking industry is brimming with opportunity for new participants," says Corredo. "Greater reliability and accuracy, streamlined operational efficiencies, higher safety levels and real-time information on the status of shipments are just some of the latest reasons."

Any of the automotive telematics systems have three things in common, according to the Telematics Research Group: two-way wireless communications, a location-sensing device and an interface to the vehicle's electronics system. Services are layered on top of those three capabilities, with the most important trend in telematics safety and security the addition of intelligence and adaptability, TRG says.

As an example, an automatic crash notification system will be able to add severity information to reports to help rescuers determine the seriousness of an accident. The systems also may be able to adjust airbag settings to fit passenger physical characteristics and may filter incoming information when a driver needs to have full attention on driving.

Speech input and output will be the preferred choice for telematics systems, TRG says, with head-up displays part of future interfaces. Some services will require vehicles to be parked before they can be used.

The research group says cell phone integration is a leading consumer demand, with Bluetooth and an interface with the vehicle radio system likely to be the common platform. Future vehicle systems will have crash event data recorders, much like the "black boxes" on airplanes.

Most enticing from an auto manufacturer's point of view, TRG says, is remote diagnostics. This capability, which will be possible when telematics is integrated with a vehicle's operational system, can cut manufacturer costs for warranty, recall and design improvements while also increasing customer loyalty.

Remote diagnostics probably won't start appearing until at least the 2005 model year because of the lead times auto manufacturers maintain on new products. Diagnostics will be done by embedding modules in the vehicles and linking them to the vehicle's own computerized system.

These modules are being made by a number of companies, among them the cell phone manufacturer Sony Ericsson. The company recently came out with a GSM/GPRS module similar to CDMA and TDMA versions it already has on the market. All are built to withstand extreme operating temperatures, as well as being vibration and shock resistant.

The GSM modules, which have two SIM cards and support remote SIM card mounting, will be available in the first quarter of 2003, according to Joe Braga, Americas marketing director of Sony Ericsson Machine to Machine Communications. The module will be demonstrated at the 2003 International Consumer Electronics Show in Las Vegas, used in a Saab car. The demonstration is in partnership with Delphi Automotive Systems.

Auto makers, as well as dealers, are very interested in being able to use telematics in diagnostics in a couple of areas, Braga says. One is simply the ability to locate vehicles in case of a recall issue. Another is to provide remote diagnostics, in some cases remotely reconfiguring in-vehicle software or alerting car owners to bring their vehicles in to the nearest dealer.

Sony Ericsson has had a partnership with Delphi since 2000 to work on plug-and-play communications systems for vehicles. One of the aims of the partnership is multimedia capability, including Internet services sold under Delphi's Communiport brand.

Delphi launched its Communiport system at the 2002 Paris auto show. The system provides audio, navigation, personal productivity and Web browsing functions over a GSM/GPRS network. The system also has Bluetooth so that drivers can use their personal cell phones for connectivity.

Delphi said the system allows drivers to download turn-by-turn navigation information, as well as the most current news on road and traffic conditions. Users can store personal diaries, to-do lists and send and receive e-mail.

Sony Ericsson also has created an initiative through its Ericsson Mobility World outreach program to support tens of thousands of application developers and systems integrators working in the machine-to-machine communications field, Braga says. This will help developers and integrators alike to keep in touch with the latest industry products and design products and services around them, he says.

Regional Telematics Differences

USA

Western Europe

Japan

Market Dynamics

• Homogeneous market

• Multiple languages

• Homogeneous market

• Large land mass

• Multiple cultures

• Difficult navigation

• Spotty wireless coverage

• Inter-country travel

• Long-term ITS* vision

• 4 cell phone systems

• Cell phone & SMS use

• Packet-based cell phone

• 58 autos/square mile

• 92 autos/square mile

• 493 autos/square mile

Telematics Focus

• Safety & security

• Mobile phone integration

• Navigation & routing

• Cell phone integration

• Travel information

• Real-time traffic info

• Content & LBS info

• Real-time traffic info

• Cell phone integration

• Navigation & routing

• Safety & security

• Travel information

• Navigation & routing

• Safety & security

Driving Forces

• Keeping up with OnStar

• Mobility info Web sites

• Government ITS*

• Collision EDR

• Cell phone usage

• Web cell phone usage

• Active safety systems

• Active safety systems

• Active safety systems

Leading Auto Companies with Telematics

• GM

• BMW

• Toyota

• Mercedes-Benz

• Mercedes-Benz

• Nissan

• BMW

• Audi

• Honda

• Lincoln

• Fiat

• Mazda

Issues

• Driver distraction

• Fragmented markets

• What follows navigation?

• Privacy protection

• Language barriers

Telematics (TM) Strategy

• Add content to S&S

• Leverage cell phones

• Leverage navigation

• Cell phone integration

• Leverage SMS network

• Leverage Web cell phones

Current Status

• 1M navigation systems

• 2M+ navigation systems

• 9M+ navigation systems

• 3.0M TM-enabled autos

• 100K+ TM-enabled autos

•5M+ traffic information distribution receivers

•2.5M telematics service provider subscribers

• 50K TSP subscribers

• 60K TM-enabled autos

*ITS—intelligent transportation system Source: Telematics Research Group, November 2002

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