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Motorola takes the driver's seat

The electronics maker announces deals with BMW and Audi to equip cars with telecommunications and computing capabilities.

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  First spin in voice-activated car
Michael Orr, CEO, MobileAria
July 11, 2001
Motorola announced on Tuesday deals with BMW and Audi to equip their cars with telecommunications and computing capabilities.

Known as telematics, such capabilities include wireless communications and global positioning system (GPS) satellite tracking. General Motors has popularized telematics through its OnStar system, which is found in more than 1 million cars.

The deals that Motorola struck with BMW and Audi are multiyear, global agreements. The deal with Audi is for six years. Motorola would not provide further details of either agreement.

Motorola's announcement came on the same day that the beleaguered electronics manufacturer apologized at the company's annual analyst meeting for its lack of equity growth.

Motorola said it expects the new deals to bring hundreds of millions of dollars.

But Gartner analyst Thilo Koslowski said the challenge for companies involved in telematics is to manage their expectations for revenue potential.

The auto supplies market brought in $400 billion last year, which has companies daydreaming about the potential for recurring revenue from subscriptions to telematics services.

However, Koslowski said carmakers should not expect to see much revenue generated from telematics and instead view it as a feature allowing them to improve customer relations and build loyalty, at least early on.

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Daniel Garretson, senior analyst, Forrester
July 6, 2001
"Telematics is too young to be thought of as a revenue generator. Customers don't really know why they need to pay for services that aren't well defined," Koslowski said. "Automakers shouldn't look at it as being about revenue, but rather improving the customer's experience and maintaining--if not growing--market share."

Telematics is also controversial. On one hand, it can offer improved safety because of features such as navigation, traffic-information and collision-avoidance systems. On the other hand, telematics can create increased distractions and thus risks to safety.

One service that could help carmakers attract customers would be remote vehicle diagnostics, which would alert a driver when the car needs servicing and help the driver schedule an appointment with the dealer, Koslowski said. Vehicle diagnostics is one of the features that Motorola plans to add to its telematics services in BMW cars.

Motorola's telematics unit includes a wireless transceiver for Internet access, a GPS receiver and a computing system. Other features that Motorola is planning for the future include real-time traffic information and multimedia entertainment capabilities. Bluetooth wireless networking is also expected to be added to the unit for synchronizing data with handhelds and notebook PCs.