LONDON, DEC 25: Over the next couple of years, cab drivers in London and elsewhere will find themselves competing with the latest in automotive technology - and they are unlikely to shine in comparison. Within a few years motorists in cities across Europe could have access to navigation systems able to direct them turn by turn through the most difficult maze of city streets, tell them where the traffic is built up and plot the quickest route from A to B, avoiding all road construction. Eventually most of these services will be Internet-based.Telematics is the term used to describe this convergence of communications and computing in the automotive industry.
Basic services have been available for several years, but in Europe, current users total no more than 80,000, according to Europe's largest telematics-service provider, Tegaron Telematics GmbH, which is jointly owned by DaimlerChrysler and Deutsche Telekom. Tegaron supplies systems to Volkswagen and Renault as well as to DaimlerChrysler.
But as the Internet's impact reaches the car, with an increase in wireless bandwidth and wireless information devices becoming more popular, the sector's growth is set to surge. There will be more than 12 million European drivers subscribed to Telematics services by 2004, forecasts UBS Warburg's European Telematics analyst, Richard Hickinbotham.
Integrated traffic information and navigation systems look set to be one of the first features to become widespread in Europe, although sophisticated safety features, on-board entertainment and information, e-commerce and remote diagnosis of mechanical problems also will be part of the car of the future. Imagine a car that could tell you the history of the landmarks you are passing in a strange city, while the kids download a game to play during the journey, a car that would diagnose and inform you of any engine complaint, while warning your local garage to stock the right spare part.
"The services that will be developed in the future will be constrained only by people's imagination. A lot of them will become visible over the next year or two," said Bill McIntosh, chief financial officer of Trafficmaster PLC. His firm, based in the United Kingdom, serves real-time traffic information to telematics-service providers and automotive-industry concerns like Britain's Automobile Association, and to its own subscribers through dashboard-top devices.
Top-end cars like some Mercedes and BMW models already combine technologies such as GPS, or global positioning system, in-car computers and GSM, or global system for mobile communications, to provide a raft of features. Some cars already incorporate an automatic-call feature informing emergency dispatchers of your location if the air bags are deployed, remote unlocking if you lose your keys and stolen-vehicle tracking and navigation systems. Simple `concierge' services also are available, where operators at a call center provide local information and assistance.
The cost of current services has limited their proliferation. A subscription to an on-board system from Tegaron costs around 600 German marks ($276 or 303 Euros) a year, and Onstar in the US charges from $199 to $399 a year for its service packages.
The relatively small number of users at present has kept the industry off the front page, but it won't stay that way for long. A recent report from Strategis Group on the Telematics market estimates that there will be 17.2 million subscribers in the U.S. in 2005. Forrester Research Inc. is even more bullish on prospects for the market, predicting 30 million vehicles in the US will be online by 2005.
Over the next few years the same technologies that are revolutionizing the link between mobile phones and the Internet will open the floodgates for new Telematics services, as well as cutting the price of existing ones. The increase in bandwidth provided by improvements to wireless networks will help propel Telematics into the mass market by allowing the use of "thin client" technology, which removes the need for expensive in-car computers because most of the computing is done on a server somewhere else.
Open computing platforms will provide the basis for third-party provision of Telematics services, though analysts think it is unlikely there will be totally common architecture across the whole car industry anytime within the next 10 years.
Current world-wide Telematics revenue from both hardware and services is about $4 billion, according to estimates by UBS Warburg, which predicts it will rise to $24 billion by 2005 and $47 billion by 2010. In Europe, Telematics revenue this year is expected to total around $230 million, and is projected to climb to $13.5 billion by 2010, according to UBS.
As in the wider wireless world, both Europe and Asia have an edge on the U.S. going forward because they have single standards for wireless technology. Each market is headed in a distinct direction in other ways, too. Emergency and breakdown assistance is big in the U.S., where traditional Internet applications like Web access and e-mail are well down the list of consumer preferences. Forrester quizzed 8,200 online consumers on the technologies they would want in their next car and just 9% expressed strong interest in having Web access and e-mail.
Meanwhile, independent studies show Europeans prioritize dynamic-navigation systems, which link live traffic information to maps to provide real-time re-routing, said Hinkinbotham. "The roads are increasingly blocked and if you want to have a decent experience you'll need this," he said. "You are seeing it in all the top-end vehicles and that will permeate down."
But potentially big revenues aren't the only factor driving this market. Car companies see this as an opportunity to cement relationships with customers it has been a step removed from in the past.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
