Telematics Will Influence Most Automotive Electronics And Spawn 'e-Vehicle Wonderland,' Says Roland Berger Study
12 October 2000
Telematics Will Influence Most Automotive Electronics And Spawn 'e-Vehicle Wonderland,' Says Roland Berger Study
DETROIT, Oct. 12 Automotive telematics applications will
influence most auto electronics, spawning "an e-Vehicle wonderland" by 2004,
and a wide variety of powerful players will engage on the telematics
battlefield, according to a new global study by Roland Berger Strategy
Consultants, a leading strategy consulting firm in the industry.
The study predicted that automotive telematics subscribers in the United
States would grow from about 820,000 today to more than 11 million subscribers
by 2004, but noted that the perfection of the human/machine interface in
vehicles is crucial to that growth. It concluded that banking and shopping
from the car would account for the greatest share of applications, in addition
to the obvious voice communications use of mobile telephones.
The new report, available in November 2000 from Roland Berger, is an
outgrowth of a previous Roland Berger study of the overall automotive
electronics market worldwide, released last February. "Our earlier study
predicted that automotive electronics applications would grow much faster than
the automotive market generally. That dramatic growth was -- in effect -- the
first electronics revolution in autos, and the surge in telematics is the
second revolution," says Michael M. Heidingsfelder, partner and executive vice
president of Roland Berger of the company's Detroit office.
"Now it's becoming clear that telematics will lead the electronics systems
growth parade, and that consumer demand will drive the creation of an
incredible array of e-Vehicle features," Mr. Heidingsfelder says.
"Our study shows that telematics will influence powertrain, chassis,
safety, security, infotainment and interface display systems. About the only
systems not touched by telematics will be body electronics (such as window
lifters or seat memory), and it's not too great a leap to include many of
those eventually."
According to the global Roland Berger study, the e-Vehicle wonderland of
tomorrow will provide a broad range of services to the driver and passenger
such as:
-- mobile office features like e-mail, Internet access and telephone
-- mobile commerce features such as shopping and banking
-- traffic and navigation information including dynamic navigation
-- information services
-- emergency and safety features such as remote diagnostics.
Audio, TV/video and computer games, and -- down the road -- intelligent
driving features such as braking by GPS (global positioning system), are
candidate functions as well. Telematics is a relatively new term unheard of
until a year or so ago. According to Roland Berger, it is a blending of the
words telecommunications and informatics, referring to the science of
obtaining and transmitting information and deriving from "Informatik," the
German word for computer science.
Recent transportation studies have established that average time spent in
vehicles -- as both driver and passenger -- totals some 540 hours per year in
the United States and 270 hours per year in Europe, representing (in the U.S.)
some nine percent of day-time available (compared with 40 percent at the
workplace and 35 percent at home and 12 percent in shopping and recreation,
not including 6 hours of sleep per day).
"So the logical consequence of this extensive in-vehicle dwelling time is
a high interest in mobile services," says Mr. Heidingsfelder.
"That logic is strengthened by the trend toward the ubiquitous computer.
Clearly, many consumers want the same computing flexibility in their vehicles
that they already have in the office and at home, and this requires the
intelligent devices to be mobile. Shopping and working while driving saves
time, and the mobile office turns a journey into productive time,"
Mr. Heidingsfelder says.
"That's why the U.S. Big Three automakers as well as the European and
Japanese OEMs have made telematics development a major priority, with GM's
burgeoning OnStar system, Ford's RESCU and Wingcast and DaimlerChrysler's
Tele Aid. The GM and Daimler systems are fixed in-vehicle installations for
now, while the Ford system uses a portable wireless handset, so the battle is
on for the best configuration," he says.
All the systems feature navigation and emergency assistance, and promise
escalating levels of service and features in the years ahead. There are
partnering agreements with the likes of General Magic, AOL, Delphi, Motorola,
Ericsson, Qualcomm, Verizon, Sprint PCS, Yahoo and Sirius Satellite Radio.
"Each of the big auto companies is definitely focused on using telematics
applications for brand differentiation. GM already has attracted other users
to its OnStar system -- Honda and Toyota as well as affiliates Suzuki, Isuzu
and Fiat," says Heidingsfelder.
However, the size of the telematics market and its rate of growth will be
strongly affected by legislation and regulations affecting cell phone use in
moving vehicles, the study noted. By mid-2005, for example, estimates of the
size of the U.S. market range from about $3 billion up to $13.4 billion --
depending on the effects of legislative activity and industry self-regulation
to reduce accidents caused by distractions (today about 25 percent of
crashes).
For example, in the United States, Federal safety regulators have launched
a major investigation into cell phone usage while driving. In Europe,
95 percent of countries enforce hands-free use of cell phones, and in
Portugal, drivers are forbidden to use car phones at all while driving. In
early October, Suffolk County, N.Y., just minutes from New York City, banned
talking on cell phones in moving autos, with a fine of $150 for violators.
In order to protect the telematics market, the OEMs and suppliers must
work quickly to perfect the critical human-machine interface, according to
Mr. Heidingsfelder. That would include reducing the dwell time for use of
in-car telematics functions -- such as suggested by proposed SAE standard
J2364, under which completing tasks would require no more than 15 seconds.
The target of the interface must be "hands on the wheel and eyes on the
road," says Heidingsfelder. "Anything less will not be acceptable and will
not prevent the government from restricting the extensive usage of mobile
communication in vehicles."
To enable the e-Vehicle and a "car portal" through which myriad features
will be available, the study says, four technologies must converge:
1. A sharp increase in bandwidth for mobile data communication (surpassing
2,000 kilobits per second with the UMTS protocol by the middle of the decade)
2. Maturity of systems for voice recognition and text-voice conversion
3. Smart human-machine-interface-logic to guide the driver quickly and
efficiently through the different menus and features
4. Global positioning system (GPS).
Also according to the Roland Berger study:
* A central, integrated instrument panel will be developed that is
customizable like a computer screen and can display information according to
the needs and preferences of the driver.
* Human factors and ergonomic design must be addressed, recognizing human
physical characteristics, capabilities and limitations, and achieving ease of
use, comfort, convenience, health and safety.
* Artificial intelligence will come into play, moving the interface
beyond specific commands toward a more interactive relationship.
Key questions in the telematics arena -- and so not finally answered --
include which interface system or combination of systems will be employed --
such as fixed installations, personal digital assistants (PDAs), and/or
so-called mobile phone/smart phone systems.
Further questions include who will supply information to the vehicle, at
what level, and by what network, and once information is onboard the vehicle,
how it will be shared by various systems -- through multiplexing devices or
through wireless connectivity such as Bluetooth.
For automotive suppliers, the main competitors -- as well as partners --
are the OEMs and the telecommunications companies, not to mention the content
providers because OEMs often ask for fully integrated systems, the study says.
The right partnering strategy is the key in telematics to be flexible and fast
enough to meet the OEMs' and consumers' demands and to utilize the strength of
all involved partners.
The OEMs' objectives are to differentiate the brands, tap new sales
potential and safeguard and/or expand their customer base. OEMs, of course,
own the vehicle brand, have access to vehicle data, can integrate terminals in
the vehicle at the manufacturing plant, and have an existing sales and service
network and a large customer base already in place.
The telecommunications companies want to set up portals and set standards
for them, maximize new sales potential and penetrate target groups of new
vehicle buyers. They already have established portals and online customer
relationships, have a time and experience lead in portal concepts and likely
have greater competence in information technology and telecommunications.
But in addition to the OEMs, the Telcos, and traditional automotive
suppliers, a wide variety of other powerful players are in the fray, including
PC manufacturers, content and service providers, wireless equipment makers,
PDA manufacturers, entertainment systems producers, software providers and
even new car dealers, according to the study.
"The competition is moving ahead rapidly," says Mr. Heidingsfelder, "and
OEMs and suppliers have to position themselves to profitably participate in
the telematics business since telematics affect all players in the automotive
arena. "With 30 offices in 21 countries, Roland Berger is the world's leading
strategy consulting firm of European origin, providing strategy and
implementation support for clients in the automotive, aerospace, engineered
products, consumer goods, pharmaceutical, financial services, infocom and
other industries. A world leader in e-commerce consulting, Roland Berger
works with blue chips and start-ups to optimize their strategy, marketing,
technology, operations and management in the Internet economy.