OE Telematics and Infotainment Systems Still to Achieve Mass-Market Penetration
“Frost & Sullivan believes that while most vehicle manufacturers have a wide variety of products under the telematics and infotainment umbrella, they do not have a strong focus on the design according to consumer and vehicle segment needs,” says Frost & Sullivan (http://transportation.frost.com) Research Analyst Praveen Chandrasekar. “Vehicle manufacturers also need to consider reworking the pricing of the systems taking into account the consumer acceptability factor.”
The price comparison analysis provided in this study for around nine premium and mass-market vehicle manufacturers in Europe according to their different vehicle models clearly brings out this need. The analysis highlights the key differences between the retail price at which vehicle manufacturers sell their systems, the average OE market retail price, and the price that consumers are willing to pay for these systems
The issue of product design mainly revolves around the question of integration. Although consumer demand is increasingly leaning towards fully integrated systems, OE suppliers continue to focus primarily on complex and sophisticated stand-alone systems for specific applications such as navigation or rear seat entertainment (RSE).
This gap between consumer expectations and OE supplier focus is proving to be a major stumbling block to market penetration. Consumers are unconvinced about the value proposition of stand-alone telematics and infotainment systems in view of their high prices. This is a particularly strong challenge in the cost-conscious mass-market vehicle segments that paradoxically hold the maximum potential for revenue growth.
“Integration and price reduction hold the key to increasing the uptake of telematics and infotainment systems in the OE market,” says Mr. Chandrasekar. “Suppliers need to focus on integrating different applications such as navigation and audio/video (A/V) entertainment into one system as well as reducing the retail price at which the various systems are offered to the end consumer.”
Current market trends reveal that vehicle manufacturers and their associated suppliers have started moving towards developing standardised platforms as well as integrated solutions for telematics and infotainment systems. Standard platforms across different vehicle brands and models could well bring down the cost of telematics to a consumer acceptable level while opening up new opportunities for integration.
Efforts are now underway to develop a common standard software platform, which can be utilised on multiple hardware platforms. If this were to materialise, the costs associated with developing multiple proprietary hardware platforms for different software architectures could be eliminated. Some organisations are now forming partnerships with each other in the endeavour to create a universal architecture and an industry-wide standard.
Another positive sign for the OE telematics and infotainment market is the increasing participation of some major consumer electronics firms. Since most telematics and infotainment systems belong to the consumer electronics category, these companies will be able to leverage their expertise in enable the traditional automotive industry to design systems in line with consumer demand. Apart from being technologically superior, such systems could also help reduce costs by optimising hardware and software usage.
Integration efforts are also underway as vehicle manufacturer demand gradually shifts towards comprehensive systems incorporating a perfect mix of telematics and infotainment applications combined with vehicle features such as park aid and climate control in a single package. However, the potential for such systems to be developed depends on the collaboration between various participants in the value chain.
“All these developments are expected to deliver much-needed cost effective solutions that meet consumer expectations,” says Mr. Chandrasekar. “The key to unlocking the huge revenue potential of these systems is to prioritise the umbrella of telematics and infotainment applications across the different vehicle segments in line with the needs of the consumers in those vehicle segments.”
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of the European OE Market for Telematics and Infotainment – Competitive Analysis, then send an e-mail to Magdalena Oberland - Corporate Communications at magdalena.oberland@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, country and source of information. We will send you the information via email upon receipt of the above information.
European OE Market for Telematics and Infotainment – Competitive Analysis (B587-18)
Background
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.
List of Keywords: European, OE, telematics and infotainment systems, original equipment, vehicle manufacturers, pricing, system design, integration, integrated systems, stand-alone systems, navigation, rear seat entertainment, RSE, audio/video entertainment, A/V, standardised platforms, park aid, climate control, value chain.
