7/1/2003 | 4 MINUTE READ

Telematics' Unanswered Questions

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While there are plenty of definitions of “telematics,” consider it to be a collection of computer functions based in the vehicle.


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“It’s been a tough year for telematics,” conceded David B. Wohleen, president, Electrical, Electronics, Safety & Interior, Delphi Corp. Multiple issues still stand in the way for this sector to become profitable. While there are plenty of definitions of “telematics,” consider it to be a collection of computer functions based in the vehicle, including:

  • Safety and security
  • Information services
  • Entertainment
  • Communications
  • Diagnostic services.

Every original equipment manufacturer (OEM) and big auto supplier is in the telematics game, as are large telecommunications, computer and media companies. For the sector to become truly viable it needs to answer several still-open questions.

What are the sustainable business models?
“Last year, several telematics companies apparently didn’t have the right business model because they are no longer with us,” noted Wohleen at a recent Telematics Update conference. Casualties such as Wingcast highlight the industry’s struggle in finding viable, business models. The dot-com era popularized the notion of substituting measures such as market penetration over good old-fashioned positive cash flow. With the bust of dot-com companies, funding sources—whether internal budgeting committees or venture capitalists—are simply unwilling to operate on faith that profitability is in the wings.

Among the most prominent business models are subscription-based. Unfortunately, renewal rates have not been high, for instance, for GMs’ OnStar service, despite the two-million North American vehicles that are telematics-enabled. The services model has also not really taken hold overseas. Another subscription model, satellite radio, is saddled with huge debt incurred to build out its land and spaced-based infrastructure. Millions of new customers must soon buy the services of Sirius and XM Radio to keep these firms afloat.

Where’s the killer app?
The specific killer application still hasn’t popped out. The killer category, however, appears to be entertainment. The reason is that consumers are willing to pay substantial dollars for goods and services they use often. The typical American home spends hundreds of dollars a year on entertainment services, including cable TV, movie rentals, and pay-per-view movies. Telematics executives are hungry for such revenue streams to flow to new vehicle-based entertainment services as well.

What’s the driver/telematics interface?
Telematics is forcing product engineers to totally rethink how people interact with electronic devices. Particularly challenging is designing interfaces that do not involve the driver’s eyeballs at all. This is far more difficult than one may think. Almost all automotive electronic gadgets require at least occasional glances, such as to see what’s the right button to push. Such actions contribute to driver distraction. If too extreme, they set the manufacturer up for massive lawsuits should accidents result. To avoid requiring the driver’s eyeballs, manufacturers are exploring two alternatives: voice- and touch-based interface devices. For instance, the driver could use voice commands to control email and voice mail. Both the input and output are purely sounds. Manufacturers are also experimenting with novel touch-based input devices. They contrast with the familiar keyboard or mouse by not requiring any visual feedback, such as following the mouse cursor on a screen. Despite a plethora of offerings, no input/output device today thoroughly satisfies the high usability and no driver-distraction requirements.

How to get broadband to the vehicle?
Bandwidth does matter. Broadband rates are mandatory for transferring video or audio to the vehicle. There is a historical precedent for far greater capacity busting open a whole new industry. Cable TV is the most prominent example. Many in the telematics industry believe that once broadband data exchanges are possible with the vehicle, the telematics market will take off. No single way of doing such high-speed transfers dominates today, however.

All the contenders have limitations and low market penetration. Wireless Wi-Fi technology is wildly popular. Because of its short transmission range, however, it is not a “what you want, where you want it” technology, at least not yet. Certainly 802.11 technologies can zip large files very quickly from a home personal computer to a vehicle in a driveway. Impeding a faster 802.11 rollout are the competing 802.11 standards. Another option is to do the data transfers while stopped at a gas station.

This can be either wireless or over a physical connection between the pump and the vehicle. Delphi’s Wohleen referred to this as “filling up the bit tank while filling up the gas tank.” Satellite radio also offers high bandwidth. It is closer to a “what you want, where you want it” technology in that it blankets huge, geographical regions. Unfortunately it lacks two-way interactivity.

What’s portable, what’s part of the vehicle?
Hand-held devices such as cell phone and personal digital assistants (PDAs) continue to become more powerful and multi-functional. They could eliminate the need for building many of those same functions into the vehicle. Integrating electronics is generally a costly proposition. Furthermore, people would rather have the functionality on their person rather than only in the vehicle, if possible.

Halfway between complete portability and built into the vehicle are docking stations for hand-held devices. Complementary speakers, power supply, antenna, and interface are permanently part of the vehicle. The cell phone or iPod can be installed or removed when desired. Complexities abound here, however. Any of dozens of models of cell phones could go into any of dozens of brands of vehicles. The cell phones and on-board systems can also vary widely in what kinds of functions they offer. Marrying any mobile device with any vehicle generates a mind-boggling array of combinations. This complexity is effectively precluding docking stations from being more widely available. In the absence of standards the promise of wonderful electronic mobility and compatibility will remain just that—promises. Certainly, occupants in the future will enjoy vastly more services in their vehicles. Finding the right mix of business models and technology, however, will not happen overnight. Much invention and market testing still needs to be done.


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