By Forrester Research
Special to CNET News.com
November 26, 2003, 9:30AM PT
By Mark Dixon Bunger
To date, automakers have failed to make telematics work--as a technology and as a business. The combination of auto experience, technology and collaboration in Sweden's Telematics Valley offers a feasible alternative to proprietary, profitless programs.
Telematics Valley is an umbrella organization with 54 member companies involved in automotive and information and communications technology (ICT), all located in one small region. Forrester traveled to western Sweden to meet Telematics Valley's experts in manufacturing, supplies and ICT, who are working together to make telematics take off. They're succeeding where other telematics initiatives have failed, for several reasons:
Decades in the automotive industry. Equipment makers Saab and Volvo, truck maker Scania, and supplier Autoliv, among others, have headquarters and factories nearby--one reason Ford Motor's Premier Auto Group established its Telematics Center of Excellence here.
World-leading information and telecommunications technology. In Telematics Valley's collaborative culture, local member companies such as Ericsson and TeliaSonera work with erstwhile rivals like IBM, Flextronics International, Accenture and Vodafone.
A local population rife with engineers and early adopters. Identified by the Organization for Economic Cooperation and Development and the Economist Intelligence Unit as the world's best-educated and most IT-friendly nation, Sweden is culturally ideal for developing and piloting new technology.
Open up for business
Give consumers interoperability and upgradability. Saab is relying on other open technologies like Bluetooth for wireless connectivity and a dual-SIM mobile-phone subscriber module that lets a customer use the same phone subscription for the car and for the handheld phone. Saab's 9-3 telematics device runs on QNX Software Systems' upgradable operating system, meaning that today's vehicles can be compatible with tomorrow's devices.
Stave off obsolescence. By ceding complete control over content and functionality, Saab's telematics device won't be hopelessly out-of-date by the time the vehicles are sold to their second owners. On the other hand, OnStar will face coverage problems, as the United States dismantles its analog network. One of the few potential payoffs from telematics is its ability to help automakers gather usage data and prompt service loyalty. But if the devices are obsolete and ignored after a few years of service, they will be useless at precisely the time they're needed most--as the car ages and enters a more maintenance-intensive phase of life.
Slash development and unit costs. When Saab needed a wireless interface, it turned to Bluetooth--it didn't spend millions to invent a new, proprietary wireless standard. Equipment makers simply can't afford to design proprietary technology fundamentally based in telecom and consumer electronics, not automotive. Even if the biggest manufacturers could get telematics into 20 percent of their vehicles, they'd sell just a few hundred thousand telematics units every year in each region, compared with the millions PalmOne, Sony Ericsson and Nokia produce--for a fraction of the cost.
Getting out of the ditch
Simplify--because telematics isn't a luxury differentiator. Automakers hoped but failed to "brand" their drivers' in-car experience with unique telematics--witness BMW's usability and technical gaffes with the first-generation iDrive. Equipment manufacturers should avoid this mistake in the future, because even entry-level carmakers like Kia will surpass "luxury" telematics features only a year or two after they hit the market--similar to how device makers like Ericsson and Flextronics are able to throw on dummy-proof gizmos like digital cameras and Global Positioning System receivers at ever-lower costs. Rather than trying to develop and then defend a proprietary technology stack, manufacturers should add a simple Bluetooth interface and a layer of abstracted commands, as BMW is doing with its next generation of telematics.
Collaborate--because customers refuse to be "owned." In the early days, telematics was a battleground between telecommunications providers and automakers, each fully expecting to profit from "their" mobile customer. By now, customers have voted, and they chose mobile phones and connected PDAs (personal digital assistants), which are far more prevalent in both Europe and North America than telematics devices. Telecom operators in turn have embraced new devices like Handspring's Treo, Microsoft Smartphone systems and GSM cards in PCs and PDAs, by selling them on their sites and bundling them with service. Carmakers should also embrace branded devices as options in vehicles: "Would you like the Sony entertainment pack or the NavMan traveling salesperson's kit?"
Open up data access--because telematics can't drive the car. Another reason automakers try to keep telematics standards closed and proprietary is to avoid perceived safety risks--an errant PDA disabling the antilock braking system, for example. But features like in-car entertainment, safety and security get data from the vehicle--they can't possibly send data to the vehicle and make it careen off the road at a high speed. Equipment makers should embrace an open standard interface that transmits vehicle data to personal handheld devices and receives commands from these devices, only for noncritical systems like stereo and climate control. Groups like Telematics Valley and the OSGi Alliance are cooperating to develop these "vehicle middleware" standards--and manufacturers would be wise to join both.
© 2003, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.