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Vehicle-enabled Information & Communication Services- Market Outlook and Real Business Opportunities - Michael Dornan, Gartner
- 1. © copyright 2004by OSGi Alliance All rights reserved. Vehicle-enabled Information & Communication Services: Market Outlook and Real Business Opportunities Thilo Koslowski - VP & Lead Analyst - GartnerG2 These materials can be reproduced only with Gartner’s written approval. Such approvals must be requested via e-mail—[email protected].
- 2. © copyright 2004by OSGi Alliance. All rights reserved. Who is Gartner? Gartner, Inc. is the leading provider of research and analysis on the global IT industry. Our goal is to support enterprises as they drive innovation and growth through the use of technology. We help clients make informed technology and business decisions by providing in-depth analysis and actionable advice on virtually all aspects of technology. This year marks the 25th anniversary of Gartner and the founding of our industry. We take pride in our pioneering work to assist our clients and our industry in benefiting from the use of technology. Gartner clients trust in our rigorous standards that safeguard the independence and objectivity of our research and advice. With $858 million in revenue in 2003, and more than 10,000 clients and 75 locations worldwide, we are the clear market leader.
- 3. © copyright 2004by OSGi Alliance. All rights reserved. • Telematics industry’s expectations become more realistic – dreamers are finally waking up. • Companies wanting to succeed current market consolidation must develop a bullet proof market strategy immediately. • Telematics vendors must understand the needs of the end customers to provide automakers with successful applications. • Industry must think “outside” the vehicle to put telematics into overdrive. Gartner’s Viewpoint on the Telematics Market
- 4. © copyright 2004by OSGi Alliance. All rights reserved. Advent of the Internet and mobile computing Reduced investment activity Wingcast dissolution Non-automotive content and app. providers see telematics as a new channel opportunity New telematics service providers enter the market OnStar launch Growing interest and investments from automakers, suppliers and technology providers Search for new “second-tier” telematics market opportunities/segments Growing market consolidation and company closures Realization of true potential of telematics Development of applications that meet consumers’ needs Integration of telematics services into broader mobile service offerings 1994-2000 2001 2002-2003 2004-2006 2007-2012 Actual Demand Telematics Hype Cycle - History Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Maturity Technology Trigger Peak of Inflated Expectations Visibility
- 5. © copyright 2004by OSGi Alliance. All rights reserved. Telematics Hype Cycle - Today’s Positions Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Maturity Technology Trigger Peak of Inflated Expectations Key: Time to “Plateau” 2–5 years 5–10 years Visibility Consumer Telematics Commercial Telematics Public Telematics In-Car Hands- Free Input Remote Diagnostics Advanced Collision Avoidance Systems Bluetooth in Automotive In-Car Digital/ Satellite Radio
- 6. © copyright 2004by OSGi Alliance. All rights reserved. Market size Commercial Challenge Competition Short- to mid-term Successful market penetration = Very significant = Less significant Consumer Long-term Public/Government Mid-term Our View on the Opportunity
- 7. © copyright 2004by OSGi Alliance. All rights reserved. Industry’s View of Telematics Opportunity Potential of Telematics on a scale from Low to High opportunity High Low Mid Consumer New Vehicle Market Consumer Aftermarket Commercial/Fleet New Vehicle Market Commercial/Fleet Aftermarket Public/ Goverment By 2006 During 2004 Worldwide United States Europe
- 8. © copyright 2004by OSGi Alliance. All rights reserved. What’s Holding Telematics Back? How important do you think the following factors are for accelerating market adoption for telematics solutions in all market segments in Europe? Cost reductions in technology hardware and software Flexible Pricing Options (e.g. choice pay-per-use or subscription) Better education on benefits for target customers Establishment of industry consortiums (e.g. create open platforms) Telematics embedded onto new models of vehicles Partnerships/JVs between vehicle makers and TSPs Government Regulations (e.g. restriction on in-car phone use) Market rollout of telematics solutions by Network Carriers Consumer focussed telematics promotions by Dealerships Telematics offerings accessible outside the vehicle (e.g home, office) Commitment to telematics by Software Companies Widespread adoption of Bluetooth Importance
- 9. © copyright 2004by OSGi Alliance. All rights reserved. Different Priorities Creating a DisconnectImportance • Catch 22 - Vehicle manufacturers and TSPs want lower cost hardware and software - suppliers want telematics embedded in new models. • Vehicle manufacturers realize the importance of joint ventures and partnerships, but are unwilling to release their control over projects. • Network carriers, fleet operators and suppliers understand the importance of educating the end customer - vehicle makers see this as less of an issue (sadly). • Telematics Industry is STILL not connected.
- 10. © copyright 2004by OSGi Alliance. All rights reserved. Three Year Business Outlook Automobile Manufacturers Automotive Suppliers Telematics Providers (TSP) Hardware Vendors Software Vendors Network Carriers Commercial/ Fleet Operators Consultancies and Research Create business with new customers Increase market awareness of offerings Create partner- ships Better understand needs of market Lower Costs 1 1 1 Grow business with existing customers 1 1 1 1 1 2 3 Improve offering or develop new one 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 32 4 2 5 4 3 5 5 5 5 5 5 5
- 11. © copyright 2004by OSGi Alliance. All rights reserved. Your Business Opportunities Compared to the telematics markets overall, how do you assess the prospects for your company in particular? 5.78 5.79 6.00 5.54 5.86 5.64 5.74 5.52 5.14 5.08 5.04 5.02 4.89 4.85 4.84 4.76 Software Vendor Hardware Vendor Commercial/Fleet Operator Consultants and Research Telematics-related Service Provider Automobile/Truck Manufacturer Automobile Supplier Network Carrier Average level of optimism on a scale of 1 to 7 Optimism rating for 2004 Optimism rating for 2005-6
- 12. © copyright 2004by OSGi Alliance. All rights reserved. Existing Telematics and Future Plans 65 48 39 23 19 16 16 13 13 20 23 16 29 16 10 6 Already Deployed Expected to be deployed in Existing Fleet 35 16 0 19 13 29 35 16 23 29 26 26 6 10 6 6 Satellite or cellular based terminal communication Real-time vehicle position tracking Stolen vehicle tracking Remote diagnostics Hands-free voice-activated cellphone connection In-vehicle Internet access Automated Sat-Nav GPS route guidance Electronic client/order information access Radar-based collision avoidance system Largest Fleets (100+) Smallest Fleets (<10) Source: GartnerG2 and American Transportation Research Institute % of fleets
- 13. © copyright 2004by OSGi Alliance. All rights reserved. Telematics Planned For New Vehicles 1. Remote diagnostic system 2. Automatic collision notification 3. Radar-based collision warning systems 4. Load stability sensors 5. Lane departure warning systems 6. Stolen vehicle tracking 7. In-vehicle Internet access 8. Electronic client/order info access In order of expectation Source: GartnerG2 and American Transportation Research Institute Safety Cost Business Needs
- 14. © copyright 2004by OSGi Alliance. All rights reserved. • Understand your target audience’s changing demand for commercial technologies and applications. – Fleet operators’ current interests lie in communication-centred tracking and routing applications. – In the future, fleet operators will expect basic communication technologies as standard features and look for advanced data transferability and safety features as optional technologies. • Develop universal solutions that provide data exchange between all parties associated with delivering goods. – Most technology providers will focus on delivering telematics solutions that are limited to the driver and fleet operator. The ultimate success from commercial telematics lies in sharing relevant information in real time with fleet dispatchers, customers, merchants, suppliers and formal transportation agencies. Recommendations - Commercial Sector
- 15. © copyright 2004by OSGi Alliance. All rights reserved. Europe: A Tale Of Two Targets Private New Car Buyers - Average Age: 39 42 45 45 47 48 49 “Selling technology to the over 40s?” Company Car Drivers and their employers 3.3 4.7 2.0 0.7 0.8 3.3 0.3 No. of company cars on the road (m) “But who is the customer?”
- 16. © copyright 2004by OSGi Alliance. All rights reserved. Overview of Consumer Survey • 3,000 adults (aged 16-70) were interviewed by panel survey across France, Germany and the United Kingdom. • Questions on a wide range of issues including… – Telematics - interest in services,willingness to pay, etc – Preferred interactions with dealers and manufacturers. • Due to poor customer awareness of Telematics, we did not use the word “telematics” in this survey, but talked about services available in the car.
- 17. © copyright 2004by OSGi Alliance. All rights reserved. Problems of Targeting - Example U.K. Interest in Telematics Young Age Old Willingness to Pay Young Age Old Ability to Pay Young Age Old Likely to Buy a NEW car Young Age Old Under-25s are most interested in all in-car services, except seat- back entertainment and remote immobilisation (35-44s), and automated toll-payment (45-54s). Under 35s say they would pay twice as much for a device as over 45s. MISMATCH
- 18. © copyright 2004by OSGi Alliance. All rights reserved. Learn from the Past - 3 Success Criteria Purchase Motivation Churn Reduction Additional Revenue Customer Targeting Customer Education Customer Segmentation Pricing Strategies Overcoming Technophobia Encouraging Usage CRM implication of Churn Supplementary Services Pricing Strategies Niche Services (Infotainment) Web-based Preferred Partners 1 2 3
- 19. © copyright 2004by OSGi Alliance. All rights reserved. Preferred Telematics Provider 75 45 55 37 63 37 15 22 31 18 16 13 13 3 9 3 11 9 18 10 23 17 2618 1 1 1 8 2 Device Itself Services + Billing Device Itself Services + Billing Device Itself Services + Billing Car Manufacturer Car Dealer Mobile Operator Motoring Club Other Base: All Car Drivers France Germany United Kingdom Other includes general retailers, petrol stations chains, insurance companies, and others
- 20. © copyright 2004by OSGi Alliance. All rights reserved. 51 48 29 22 32 26 21 23 21 4 9 33 33 35 41 31 33 38 33 32 29 20 19 5 6 9 2 1 Remote immobilisation, stolen car tracking Accident/breakdown emergency button Personalised car and radio settings Instant location-specific traffic news Drive thru-instant toll/parking payment Hands-free voice-activated mobile phone Navigation read-out service Pay-as-u-drive car insurance Automated car service booking Access to operator "find-me" services Voice activated Email/SMS readout Seat-back entertainment (games/video) Share price alerts Audible sports score alerts % of car drivers... Already Have Very Interested Quite Interested Base: All Car Drivers in France “Which of these services would you be interested in having available in your car?” Interest in Telematics - Example France
- 21. © copyright 2004by OSGi Alliance. All rights reserved. The Car Purchase and Ownership Cycle Get facts Get advice Compare models Compare prices Configure options Test drive Agree terms Arrange finance Delivery Trade-in Warranty Service Enhance Problem resolution Brand experience Happy motoring A. Browsing PURCHASE B. Negotiating INTEREST IN NEW CAR C. Ownership
- 22. © copyright 2004by OSGi Alliance. All rights reserved. Why Is CRM So Important? EU Block Exemption Oct 2003 Old Rules For Selling Cars • Single-brand dealerships • Exclusive sales territories • Sales channel is service channel • Dealer holds key to customer relationships Manufacturer’s priority:- Build good cars ules For Selling Cars • Multi-brand possible • Dealers compete for sales • Sales channel loses service obligation • Dealer NOT the key to customer relationships New R Manufacturer’s priority:- Customer Experience
- 23. © copyright 2004by OSGi Alliance. All rights reserved. Willingness to Pay For a Telematics Device 0 10 20 30 40 50 60 70 80 90 100 0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 Base: All Car Drivers % of car drivers that would pay at least... Cost of Device - Euros % would pay Mean France 70% €710 Germany 72% €1160 U.K. 66% €740 Device offers all the services they were interested, or very interested in
- 24. © copyright 2004by OSGi Alliance. All rights reserved. 0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 Peak= €1270 Base: All Car Drivers in GermanyCost of Device - Euros Measured as the product of the number of customers willing to pay at a particular price by the price point 80% potential €750-€1650 Device offers all the services they were interested, or very interested in Profit Volume CRM Revenue Potential Revenue - Example Germany
- 25. © copyright 2004by OSGi Alliance. All rights reserved. Preferred Telematics Billing Scheme Base: All Car Drivers 31 22 32 12 3 42 23 18 13 4 37 19 27 9 8 Not willing to pay Included in cost of device Pay-per-use Monthly subscription Undecided France Germany United Kingdom “How would you prefer to pay for the on-going use of these services in your car?”
- 26. © copyright 2004by OSGi Alliance. All rights reserved. Telematics as Part of a Broad Offering Content and service aggregator Office Vehicle/mobile Home
- 27. © copyright 2004by OSGi Alliance. All rights reserved. • Identify consumers’ telematics preferences first and leverage flexible technologies to satisfy their needs. Don’t do it the other way around. – In the short-term, develop flexible telematics solutions that require minimum resources but provide the ability to upgrade to more comprehensive services in the future. – Expand your target group by including the vehicle passengers, not just the driver. • Make telematics services available beyond the vehicle and integrate them into a broader mobile service offering. – Develop collaboration between companies from various industries, such as automotive, media and telecommunications. • Pure-breed telematics service and technology providers: Expand into new markets to ensure short-term survival and prosper from telematics offerings in the long-term. Recommendations - Consumer Sector
- 28. © copyright 2004by OSGi Alliance. All rights reserved. For More Information Thilo Koslowski VP and Lead Analyst Automotive Office: 408-468-8247 Mobile: 408-386-6043 [email protected]