Automotive Telematics - What Lies Ahead
Telematics typically refers to the integrated use of Telecommunications and Informatics, also known as ICT (Information and Communication Technology). Though Telematics has found applications in a number of domains, automotive telematics still remains one of the most prominent and promising areasof its application. As per Machina Research, 'From less than 90 million connections globally in 2010 the automotive M2M market will grow to almost 1.4 billion connections by the end of 2020'.
Automotive telematics consists of various technologies working together in a typical M2M scenario. The technological advances over the past decade related to communication (3G/4G), GPS, Cloud, Mobility, Big data, Social networks etc have really opened the doors for innovation in this area. The kind of applications and products which are possible using the abundance of information which can be tapped from vehicles is only limited by our imagination. A vehicle typically generates diagnostic data related to the engine, fuel, brakes, gears, location etc. This data is relayed to the backend server which processes it and mines the relevant data which can be used in various applications.
Some of the most typical applications of Automotive telematics consist of vehicle tracking, geo-fencing, fleet management, route management, cargo management, vehicle diagnostics etc. These applications are available in the market since a long time and are provided by multiple vendors, OEMs or third party application providers. While such applications will continue to drive the automotive telematics market, the road ahead clearly shows the move towards data analytics. This is accelerated by the parallel emergence and adoption of big data technologies and predictive analysis techniques.
The vehicle insurance sector is taking a keen interest in the information that can be tapped from vehicles and the people driving them. There are companies which process the huge amount of data coming in from vehicles and do predictive analysis regarding the vehicles and the driving habits of the person driving the vehicle. This in turn helps the insurance companies to price their insurance products accordingly or even offer usage based insurance options like Pay as you drive (PAYD) and Pay how you drive (PHYD) etc. Insurance premium can be based on the driving habits, route taken, weather conditions, traffic situation, speed of the vehicle etc.
Another growth area is seen in the social marketing area. The data coming from the vehicle can be mined to understand the characterestics of the driver, his likes, dislikes etc and based on the location of the vehicle and other parameters, targetted advertisements can be sent to the drivers. This has huge potential in the advertising and marketing business. Imagine that you are driving towards the city and the vehicle reminds you that it is your sons birthday next week and you should buy a particular toy from a particular store since they are running a clearance sale, or if you are driving through the city and you get a message saying that your favourite movie is playing nearby and you can book the tickets by just responding to the message. We will get more used to machines giving us suggestions based on our profile and behavior.
Apart from these analytics based use cases, there are other areas in which telematics will bring in innovations. One of the key areas which is being targetted by multiple OEMs is security. There is a lot of research going on to create an emergency assistance network on the back of regulatory mandates like the eCall in Europe. Vehicle Infotainment is another promising area which will allow content providers to stream the content to vehicles over high speed communication networks.
Machina Research expects the automotive M2M sector to generate EUR157 billion revenue in 2020, up from EUR10 billion in 2010. The biggest revenue generating segments will be security and tracking, emergency assistance, navigation and insurance. Automotive telematics offers great opportunities for vehicle OEMs, service providers, vendors and third party integrators. There is potential for growth in the B2B, B2C areas based on the onboard telematics or backend vehicle platforms. We are at just at the tip of the ice berg right now, the possibilities are infinite.