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GPG Electronic toll collection Car navigation Traffic management and route-guidance On-board internet and Internet and e-mail access “Mobile office” Theft- tracking Emergency call On- board collision-warning Interactive vehicle diagnostics Value-added content services Nav Systems Reservations Entertainment Bundled systems Communications Video games DVDs Integrated systems Electronic toll collection Car navigation Traffic management Automotive Telematics and Multimedia in the United States GLOBAL POLICY GROUP

Automotive Telematics and Multimedia in the United States

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Page 1: Automotive Telematics and Multimedia in the United States

GPG

Electronic toll collection Car navigation Traffic management and route-guidance On-board

internet and Internet and e-mail access “Mobile office” Theft-tracking Emergency call On-

board collision-warning Interactive vehicle diagnostics Value-added content services Nav Systems

Reservations Entertainment Bundled systems Communications

Video games DVDs Integrated systems Electronic toll collection

Car navigation Traffic management

Automotive Telematics and Multimedia in the United States

GLOBAL POLICY GROUP

Page 2: Automotive Telematics and Multimedia in the United States

GPGAutomotive Telematics and

Multimedia in the United States

Outline of Presentation•Defining Telematics•Passenger Car Telematics Market Overview•Commercial Vehicle Telematics Market

Overview•Recent Developments: Emerging Drivers of

Growth in the Passenger Market•Future Trends in Passenger Car Telematics•Future Trends in Commercial Vehicle

Telematics

Page 3: Automotive Telematics and Multimedia in the United States

GPG

Defining Telematics

Automotive Telematics and Multimedia in the United States

Page 4: Automotive Telematics and Multimedia in the United States

GPG Defining Telematics

the convergence of wireless communications, location technology, and in-vehicle

electronics which is being used to integrate the automobile

into the information age

telematics

Page 5: Automotive Telematics and Multimedia in the United States

GPGTelematics Building Blocks:

Technologies

Networking and Vehicle

Interface Technology

Location Technology

Voice-recognition Technology

Communications Technology

Navigation Systems

Mayday Systems

CarPCs

Audio/Video

Systems

Wireless Phones

Integrated Telematics Systems

Interior Systems

Map Databases

Page 6: Automotive Telematics and Multimedia in the United States

GPGTelematics Building Blocks:Applications and Services

Emergency call or mayday services

Device-to-device communications

Interactiveon-board

entertainment

Navigation and route guidance

services

Remote vehicle access and diagnostics

Person-to-person

communications

E-commerce applications

Interactive value-added services

Commercial fleet management

Remote vehicle theft tracking

Services available using telematics devices:

Page 7: Automotive Telematics and Multimedia in the United States

GPG

Passenger Car Telematics Market Overview

Automotive Telematics and Multimedia in the United States

Page 8: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Passenger Car

Market:Current Device Options

• Autonomous navigation systems

• Integrated multimedia systems• On-board personal computers

• Rear-seat entertainment systems

• Installed wireless phones• Can be integrated with mayday service

Handheld wireless phones and PDAs• Not telematics devices

• Could affect telematics demand• Similar technologies/functions, but portable• Wireless integration soon possible

Page 9: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Passenger Car

Market:Current Service Options

•OEM mayday or emergency call services•GM/Saab OnStar, Ford/Lincoln RESCU,

Mercedes TeleAid, Jaguar Assist, etc.•Simple interface, connects to human voice•Fee- or subscription-based•Range of services (mayday, concierge, etc.)

• Independent information and emergency call services•ATX, Cross Country Group•Similar services, fees, etc., to OEM systems

•Often serve as call centers for OEM systems

Page 10: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Passenger Car Market:

Key Telematics Suppliers

Dot.coms Communications technology firms

Automotive networking and interface firms

Nav system producers

Satellite radio firms

Automotive audio firms

Locationtechnology

firms

Automotive interior firms

Call center firms

Voice recognition technology firms

Automotive electronics

firms

Mapping software firms

Automotive

Telematics

Page 11: Automotive Telematics and Multimedia in the United States

GPG

Commercial Vehicle Telematics Market

Overview

Automotive Telematics and Multimedia in the United States

Page 12: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Telematics Market:

Telematics Devices for Tractors

•On-board integrated telematics systems•On-board computer, GPS, wireless

communications, interface with tractor data bus

•Driver interface in cab for data and voice communications with dispatcher•Screen for incoming text messages with

keyboard or touchscreen for sending messages

Page 13: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Telematics Market:

Telematics Devices for Trailers

•On-board integrated tracking systems with GPS receiver/antenna, wireless communications, and battery/charger

•On-board sensor systems to allow monitoring of whether trailer is loaded, doors open, temperature, etc.• Sensor system often integrated with tracking

system to send real-time information to the fleet office

Page 14: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Telematics Market: Commercial Vehicle Services

• Communications• Tractor and trailer location• Routing/dispatch/ETA information• Electronic driver logs• Reporting• Billing/accounting• Electronic customer relations management• Remote tractor/trailer monitoring/diagnostics• Theft monitoring• Driver performance monitoring• Fleet management, cost, productivity

assessments

Page 15: Automotive Telematics and Multimedia in the United States

GPGThe U.S. Telematics Market:

Fleet Service/System Providers

• Communications/information service providers•American Mobile, Qualcomm/OmniTRACS,

ARINC/Dominium, HighwayMaster, Orbcomm

• Communications/information systems providers•Cadec, XATA, Eaton

• Internet-based communications/information services•@Road, Qwiktrack

• Truck-stop kiosk/hook-up internet-based communications/information services•DriverNet.com, PNV

Page 16: Automotive Telematics and Multimedia in the United States

GPG

Recent Developments:Emerging Drivers of

Growth in the Passenger Market

Automotive Telematics and Multimedia in the United States

Page 17: Automotive Telematics and Multimedia in the United States

GPGDriver #1:

Volume

•Primarily on luxury models and minivans

•Some telematics and multimedia devices are standard equipment in MY2000•Only on luxury models

•More telematics and multimedia devices as OE options on MY2000 cars and light trucks

Page 18: Automotive Telematics and Multimedia in the United States

GPGDriver #1:

Volume

•More OE telematics services in MY2000•Particularly emergency-response services

•Some (OnStar) expanding beyond luxury models•OnStar available on 29 MY2000 GM

models

•Rely on simple interface, human contact

•More OEMs providing telematics service interface as standard equipment•Revenues derived from service fees or

subscription

Page 19: Automotive Telematics and Multimedia in the United States

GPGDriver #1:

Volume

•Expanding range of products is essential to market’s growth• Increasing consumer awareness of telematics

• Availability in rental cars, increased advertising (especially OnStar and Mercedes)

• Telematics systems in hands of early acquirers and other trend-setters• High satisfaction and intention to make

second purchase among telematics users

•Higher volumes reduce prices, encourage innovation and integration

Page 20: Automotive Telematics and Multimedia in the United States

GPGDriver #2:

Proliferating Industry Alliances

Computer software

firmsAutomotive electronics

firms

Telematics

suppliers

Automotive interior

firms

Location technology

firms

Communications technology

firms

Voice technology

firms

Networking technology

firms

OEMs

Telecom equipment providers

Call center

providers

Telecom service

providers

“Content”

providers

Mapping software

firms

OEMs

Nav system producers

Page 21: Automotive Telematics and Multimedia in the United States

GPGDriver #2:

Proliferating Industry Alliances

•Telematics applications depend on diverse technologies•Beyond scope of one individual company•Beyond scope of automotive OEMs•Beyond scope of traditional automotive

suppliers•Beyond scope of telecom, consumer

electronics, IT suppliers

•Telematics services require diverse types of content, customer relations, etc.

•Alliances essential to meeting needs for diverse technologies and skills

Page 22: Automotive Telematics and Multimedia in the United States

GPG Driver #3:Movement on Standards

SAE

TSC AMI-C

IDB Forum

In-vehicle Telematics Standards

• Auto and electronics firms cooperate on standards

Standardizing interfaces to

promote “plug-and-play”

Standardizing open networks through

ITS Data Bus

Page 23: Automotive Telematics and Multimedia in the United States

GPGDriver #4:

Benign or Supportive Public Sector

•Regulations have helped create market•E-911 regulation provided invaluable boost to

GPS location technology•EPA and CARB regulations helped drive OBD-I

and OBD-II development

•Federal and state governments actively promoting ITS research and deployment

•Safety concerns on hold so far, but threaten• Industry adopting some self-regulation•NHTSA focus to date on cell phones

•States and localities also concerned

Page 24: Automotive Telematics and Multimedia in the United States

GPG•Many OEMs view telematics services as part

of web that extends customer relationship•Envision wide-ranging revenues from service

fees, vehicle maintenance, advertising, etc.•Simple interface as standard equipment•Contrast with device-led growth in Japan

Driver #5:Telematics and E-commerce

OEM Call center

Satellite Radio

Internet portal

Internet content

Service Provider

s

Page 25: Automotive Telematics and Multimedia in the United States

GPG

0.01 0.06 0.20.82

2.54

4.96

7.98

11.17

0

2

4

6

8

10

12

1997 1998 1999 2000 2001 2002 2003 2004

Mill

ions

of su

bscr

iber

s

Source: The Strategis Group

Recent Developments Drive Projections of Growth

Subscribers to Telematics Services

Page 26: Automotive Telematics and Multimedia in the United States

GPG

Future Trends in Passenger Car Telematics

Automotive Telematics and Multimedia in the United States

Page 27: Automotive Telematics and Multimedia in the United States

GPGKey Features of Next-Generation

Telematics Devices

•Simple interface•Technological capabilities must be balanced by

safety concerns and consumer interests

•Voice recognition and text-to-voice•May be key to safety while car is moving

•Systems may limit some functions to parked car

•“Plug and play”•Consumer will be able to install next-generation

telematics and multimedia systems

•Overcomes disparity in design and life cycles

Page 28: Automotive Telematics and Multimedia in the United States

GPGKey Features of Next-Generation

Telematics Devices

•“Node on the internet”•Connect vehicle to internet content•Safety concerns must be addressed

•Real-time features•Real-time traffic key to growth in nav systems•Move away from limited coverage of

autonomous CD- and DVD-based systems

• Integration of functions•Single interface for wide range of applications

•Communications (data and voice), navigation, audio, vehicle controls

Page 29: Automotive Telematics and Multimedia in the United States

GPGNext-Generation Telematics:

Is Integration the Killer Application?

•Everyone hopes for a single “killer app”•Navigation systems key in Japan

•Killer application in U.S. could be integration• Integration of interface for voice/data

communications, vehicle controls, vehicle diagnostics, location technology, etc.

• Integration can ease driver distraction• Integration driving cross-sectoral alliances

•Risk: Integrated devices can easily become outdated as technology rapidly changes•Does the answer lie in services, not devices?

Page 30: Automotive Telematics and Multimedia in the United States

GPGKey Features of Next-Generation

Telematics Services

•Voice/human contact essential•Call centers will not be replaced by internet

•Particularly essential to mayday services

•Most important to older buyers

•Location-based content to increase•Nationwide coverage essential

•Real-time traffic, weather, road status

•Location-based concierge services and POIs

•Location-specific targeted advertising

Page 31: Automotive Telematics and Multimedia in the United States

GPGLeading Areas of Consumer

Interest in Telematics Services

61%

61%

38%

56%

25%

41%

24%

31%

31%

28%

0% 10% 20% 30% 40% 50% 60% 70%

Emergency Response

Roadside Assistance

Airbag Notification

Severe Impact Notification

Vehicle Alarm Notification

Stolen Vehicle Tracking

Lost & Found

Remote Diagnostics

Routing Assistance

Remote Door Unlock

Source: ATX Technologies

Page 32: Automotive Telematics and Multimedia in the United States

GPGPotential Roadblock #1:

Price

•OE telematics devices still expensive• Installed nav systems cost $1800-$2000•Often bundled in luxury packages costing

anywhere from $2500 to $7000

•Aftermarket systems also expensiveDevice prices must come down

•Telematics services usually start at $200/year for basic package

Service prices less an issue – provided interface is standard equipment

Page 33: Automotive Telematics and Multimedia in the United States

GPGPotential Roadblock #2:

Competition from Portable Devices

Cell phonesSmart Phones

LaptopsPDAs

Nav Systems

Portable

Driving Technology

Portable

Dockable

Installed

Mayday Systems

Nav systemsAudio/Video

SystemsAutoPC

Cell phones

VehicleID

B B

us

Bluetooth

Page 34: Automotive Telematics and Multimedia in the United States

GPGPotential Roadblock #3:

Privacy

•Privacy issues long raised about Internet•Ability of Web sites to track individual

preferences without permission raises concerns

•Telematics compounds concerns through vehicle tracking, remote monitoring, etc. •Concerns already appear in trucking industry•Consumer concerns slow ITS deployment•Consumer concerns likely to grow

•Telematics service revenues depend on location-specific advertising, selling location and purchase information, etc.

Page 35: Automotive Telematics and Multimedia in the United States

GPGPotential Roadblock #4:

Infrastructure

•Telematics infrastructure poorly developed:•Multiple wireless communication standards

•3G may resolve some of this problem•What about 4G?

•Traffic information is inconsistent•Traffic Data Forum aims to address issue

•Poorly developed public ITS infrastructure•National ITS Architecture could address

interoperability issues•ITS Deployment funding increasing•Unclear support for IVI research

Page 36: Automotive Telematics and Multimedia in the United States

GPG Potential Roadblock #5:A Proliferation of Standards

TSC AMI-C

IDB Forum

In-vehicle Telematics Standards

Infrastructure Standards

Traffic Data

Forum

ITS Standards

SAE

Communication Standards

3GPP

WAP

Device-to-Device Connection Standards

IrDA

Bluetooth

Safety Standards

?

Page 37: Automotive Telematics and Multimedia in the United States

GPGPotential Roadblock #6:

Safety

•Regulators target cell-phone use in cars•NHTSA recently issued public warning•States and localities consider bans

•NHTSA now targeting in-vehicle telematics•NHTSA “forum” and public hearing assess

industry efforts, need for federal action•Ongoing driver-distraction studies seek data

• In-car internet and e-mail of particular concern

•Hands-free does not solve distraction problem

•NHTSA open to industry self-regulation•Emergence of groups modeled on MADD?

Page 38: Automotive Telematics and Multimedia in the United States

GPG

Future Trends in Commercial Vehicle

Telematics

Automotive Telematics and Multimedia in the United States

Page 39: Automotive Telematics and Multimedia in the United States

GPGLong-Haul Trucking to Remain

Key Telematics Market

•Key customers in long-haul trucking sector•Larger for-hire fleets have resources and needs•Evolving technology offers growth

opportunities

•Sector dominated by proprietary systems and well-entrenched national providers•Qualcomm, HighwayMaster, American Mobile•Developing new products and services to take

advantage of new technologies

•Trailer-tracking offers new growth area•Demand driven by concerns about theft, lost

trailers, efficient fleet-management, etc.

Page 40: Automotive Telematics and Multimedia in the United States

GPGCommercial Vehicle Telematics:

Future Trends

•Open data bus could offer new opportunities• IDB Forum has held discussions with heavy-

truck standards groups•Adoption of IDB architecture could open door

to new services and devices•Multimedia, in-cab computer, infotainment

•Truck makers could become more active

•Portable devices would appeal to fleets that rely on rental units

•“Turnkey” solutions would appeal to smaller LTL fleets and short-haul fleets

Page 41: Automotive Telematics and Multimedia in the United States

GPG•Growth in location-based wireless fleet-

management services•Communications, asset tracking, remote

diagnostics, theft monitoring, etc.

• Integrates electronic fleet-management and CRM functions with the Web• Integration with “virtual” marketplaces

•Existing suppliers, communications, and software firms developing new products•Smaller fleets prime market for new

internet-based technology and services

Commercial Vehicle Telematics:Future Trends

Page 42: Automotive Telematics and Multimedia in the United States

GPG•Privacy issue is a major potential

roadblock•Fleets use data for performance reviews,

incentive programs, etc.•Truckers angered by close monitoring of

performance, driving techniques, etc.•Drivers and unions oppose tracking of trucks

•Fears of “big brother”•DOT mandate of electronic recorders

sparks backlash

•NHTSA and FMCSA concerned about safety of trucking telematics systems

Commercial Vehicle Telematics:Privacy and Safety Pose Threats

Page 43: Automotive Telematics and Multimedia in the United States

GPG•Unlike passenger market, trucking sector

has existing telematics infrastructure •Long-haul market dominated by Qualcomm,

etc.•Heavy investment to date make it hard for

fleets to move to more open systemsTruck makers play little role to date

•Smaller fleets offer best target• Internet-based services appealing due to low

start-up costs•Truck-stop services target individual truckers

•Fast-growing short-haul sector also key

Commercial Vehicle Telematics:A More Mature Market

Page 44: Automotive Telematics and Multimedia in the United States

GPG

Summing Up

Automotive Telematics and Multimedia in the United States

Page 45: Automotive Telematics and Multimedia in the United States

GPGSumming Up:

Keys to the U.S. Telematics Market

•Development of integrated devices with simple interfaces that address safety concerns – at an affordable price•Need to provide more than portable devices

•Standardization is key to meeting goals and offering latest technology in the car

•Simplicity and safety essential in vehicles, even at expense of “gee-whiz” technology• Industry must impose limits – or regulators

will

•Risk of public backlash if safety not addressed

Page 46: Automotive Telematics and Multimedia in the United States

GPG•Development of targeted services

delivered safely with low-priced (or free) interface•Need to compete with other similar services

•Potential competition from telcos, etc.•Consumers do not want multiple internet

accounts, e-mail addresses, phone accounts/numbers

•OEM-Internet alliances may be answer•Privacy could become increasingly important

•Key question: Why should the consumer pay an automaker for these services?

Summing Up:Keys to the U.S. Telematics

Market

Page 47: Automotive Telematics and Multimedia in the United States

GPGAutomotive OEMs and

Telematics:Competing in an Open Market

•OEM service-focused strategy endangered by open access, portable devices•Europeans see handheld devices as key

•Safety/roadside aid services clearly appeal

•Voice contact essential in U.S. market•Key test: Renewal rate for OnStar

•Costs of delivering such services will escalate as subscriber base grows

•OEMs must get consumers to buy broader range of services from them