Mobile resource management market contracts

Frontline Solutions, May, 2005

The once rapidly expanding mobile resource management (MRM) market shrank by about 1% last year, according to new research from ARC Advisory Group. In 2003, the industry had revenues of $1.16 billion in hosting, software, and services, but those numbers dropped to $1.159 billion last year.

MRM solutions provide near-real-time location status of vehicle fleets and field technicians.

"This market's contraction has been driven by dramatically falling prices," said Steve Banker, service director for supply chain management at ARC. "MRM suppliers with solutions that require expensive in-cab equipment and provide high-end functionality [such as vehicle diagnostics] at a high price have seen their revenues fall, and many have been operating in the red. The result has been widespread consolidation in the industry."

In the past two years more than 20 mergers, bankruptcies, and other consolidation events have taken place, most notably the break-up of Aether Systems.

According to Banker, many companies in this space are struggling to make money.

One segment of the MRM space is growing quickly, however--low-priced, on-demand services with inexpensive hardware. Under this model, users pay a monthly service charge for a hosted solution. Systems based on the Nextel network in North America are doing particularly well, Banker said, in part because inexpensive GPS-enabled phones can be used as the hardware platform.

Price per vehicle for these solutions has fallen from around $50 per month to as low as $20 per month for simpler solutions.

This has opened the door for smaller companies to take advantage of the technology. Traditionally, large truckload and less-than-truckload carriers were the primary market for these systems. Now, smaller service firms (such as HVAC and plumbing companies) are rapidly becoming part of the customer base.

For more information on the report, "Mobile Resource Management Worldwide Outlook Through 2009," visit ARC's Web site.

www.arcweb.com