What makes this JV odder is that Qualcomm is generally considered to be the most polarizing figure in the history of the global telecommunications industry. With BMW and GM already working hand in hand with Motorola and Siemens, one would have expected Ford to downplay any Qualcomm connection and slipstream behind the BMW and GM initiative so as not to surrender the telematics opportunity to their technology suppliers.
Not surprisingly, Europe is expected to be the telematics hotbed of the world given its cohesive wireless technology platform.
Anyway, here's a 1999 article from Mckinsey & Company that examines the telematics opportunity in-depth.
THE NEXT WAVE: TELEMATICS
Microprocessors will also play a key role in the next wave, whose core triggering technology will be telematics: one— and two-way automotive communications technologies. Unlike the previous waves, this one promises to extend beyond automobiles and into the transportation and communications infrastructure.
Auto-related telematics is not a new phenomenon: AM, FM, and CB radios and cellular car phones have been with us for some time. Yet the revolutionary elements of current thinking in telematics suggest that in the future, automobiles will be vastly more integrated into the world surrounding them. For once they have been wired both to transmit and to receive a given radio signal, the possibilities for piggybacking new and valuable products and services on it explode.
Communications systems of this sort can take many forms, and no standard has yet been accepted. They can be active or passive (accessing specific sources of navigational information or listening to CDs, respectively, for example) and targeted or dispersed (such as a cellular phone call to a particular car or a traffic warning broadcast to all vehicles on a stretch of highway). The signals can come from roadside traffic information beacons or from Global Positioning System (GPS) satellites orbiting the Earth.
Ultimately, telematics will make “wired” cars a reality. To cite only a few applications, this technology will help drivers access local traffic and navigational information, find places to dine and shop, and tap into the Internet. Local repair shops will even be able to undertake real-time system diagnostics on cars or to upgrade their operating systems as their owners drive them to work.
Indeed, the range of technologies that could fall under the umbrella of telematics is quite large. Some of them (such as antitheft transponders) are already in use; some (automatic toll-collection devices, for example) are currently being introduced; and some (notably automatic driving and other advanced vehicle control systems) are now in the experimental stage. Other applications might include automatic annual vehicle registration, the automatic renewal of driver’s licenses, the tracking of stolen vehicles by police departments, automatic traffic control, and systems to verify the way drivers use their vehicles — an innovation that could let insurance, leasing, and rental companies give discounts to good drivers.
Between now and 2004, the in-vehicle computing systems market, including telematics equipment as a major component, is expected to grow at a compound annual rate of more than 16 percent (Exhibit 3). By the end of the first decade of the 21st century, the global telematics market alone may range into the billions of dollars. But though telematics will act as the trigger, it is far from clear which applications will be triggered.
Even more problematic for automakers than this kind of uncertainty is the absence of any guarantee that they will be able to profit from telematics applications by hard-wiring the components into automobiles. During the previous waves, it is true, novel technologies were part and parcel of the vehicles they adorned. But if recent experience holds, major elements of telematics could bypass cars entirely and migrate to products resembling personal digital assistants, hand-held navigation units, and other devices carried into cars by users and associated more with their phone systems than with their vehicles. The current dismal penetration rate for factory-installed cellular car phones serves as a warning: less than 2 percent of the phones installed in US cars each year are OEM products; aftermarket shops install the other 98 percent. Should the same fate befall all telematics applications, the auto industry will miss one of the best opportunities it has ever had to create new consumer value.
However, if telematics products and services are bundled into packages that create real synergy, it will make more sense to install them in vehicles at and by the factory. Bundling played a critical role in the rapid introduction of automotive semiconductors, and big suppliers like Motorola and Siemens, which now provide automakers with integrated multifunction electronics packages, have since consolidated the industry. Such factory-installed packages make it hard for aftermarket players to gain ground, since the electronics are just too closely integrated into the car. In automotive telematics applications, it might make sense, for example, to bundle together a single multiband antenna for AM and FM, a cellular phone, television reception, and the GPS rather than have separate masts for each...............
LESSONS FROM THE PAST
To some extent, the telematics wave differs from the two that preceded it. The most important distinction is the large number of ways of participating in telematics, with its “open” and beyond-the-vehicle characteristics. Companies can, for example, provide either on-board hardware or on- and off-board products and services, operate satellite networks, provide “content” (such as traffic reports), or combine some or all of these elements. Previous waves involved technologies that were relatively hard to disaggregate, so that companies had to make an all-or-nothing decision about whether to embrace them.
Another difference is the role of standards. During the multiprocessor wave, such companies as Robert Bosch GmbH cornered the European market for advanced engine management systems and effectively set the standards for the equipment that European OEMs installed. But evolving standards will play a far more critical role in the wave to come and may be less influenced by the actions of any one company. Thus, the specter of the struggle between Betamax and VHS hovers over the industry; telematics suppliers will have to weigh the benefits of committing themselves early to one of a number of would-be standards against the risk that their choice may not triumph in the end. Indeed, business coalitions are already doing battle over a variety of rival standards, especially in such key areas as a car’s basic operating system. Suppliers should consider the lessons of the PC industry’s “Wintel wars” before committing themselves irrevocably............
Telematics: Where the radio meets the road
mckinseyquarterly.com |
