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Automotive Industry

Mobile Electronics compete with OEMs - Opinion & Analysis: Electronics - Mobile communications industry, auto industry face off - International Pages - Brief Article - Statistical Data Included

Automotive Industries, Feb, 2002 by Paul Hansen

As the telematics market emerges, the auto industry needs to be wary of intense competition from the mobile communications industry, which could win a significant share of future telematics revenues. Such could be the case in Japan where NTT DoCoMo's i-mode, the largest mobile Internet service provider in the world, is already up and running with more than 1,900 compatible Internet sites and 30 million or so subscribers. NTT DoCoMo is already working with Honda in Japan to develop Honda's next generation telematics systems.

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Another huge mobile communication carrier active in telematics is the British company Vodafone. Vodafone owns 46 percent of J-Phone, the No. 3 competitor to i-mode for mobile Internet services in Japan. Making a direct link to telematics in Europe, Vodafone purchased Mannesmann Autocom, including Passo, which provides telematics services -- emergency and breakdown assistance, as well as a portal to the Internet -- to BMW customers in Germany. Now known as Vodafone Passo, the company purchased approximately 20 percent of ATX, the U.S. telematics service provider serving Lincoin, Jaguar Infiniti, Mercedes-Benz USA and, starting with the 2003 model year, BMW.

Given i-mode and J-Phone's popularity in Japan, such mobile Internet phones are surely being used in vehicles as stand-alone Internet mobiles. That puts mobile network operators in direct competition with telematics operators.

Those likely to profit most from telematics will be the companies that effectively control the product chain, from the information and content suppliers to the end users. The supply chain would include the content and service providers, the content aggregators, the Internet portals and the communications carriers who will speed data and voice to and from moving vehicles. Also likely to profit will be the companies that have the best connections to customers, through good marketing programs.

One determining factor in the fight for telematics dominance is the degree to which mobile Internet phones will be used versus equipment embedded in the vehicle. Here, the auto industry should have an edge. As mobile phones have gotten lighter and smaller, they have become even less appropriate for telematics. And because mobiles are battery powered, their computing power and memory are limited.

Telematics users would benefit from special equipment embedded in the vehicle, with user interfaces designed specifically for safety and comfort. Passengers who want to connect to the Internet would favor large displays and keyboards. A driver who connects to service providers for navigation, traffic, concierge information, or weather would be much safer using an easy-to-read display mounted permanently to the instrument panel. Instead of a keyboard, speech recognition is a safer way to enter information and make menu choices while driving. Speech recognition and synthesis require a large computer and a lot of memory -- too much for mobile devices. Furthermore, in order to send data so that vehicle problems can be remotely diagnosed, the telematics platform would need to be connected through a gateway into the vehicle's communications network. Automakers need to control that gateway, not only for safety, but also to maintain control of such information.

Automakers, especially U.S. automakers, know by now that safety sells. J.D. Power and Associates' Emerging Technologies studies have shown that consumers want safety features more than sophisticated entertainment features -- and that two-thirds of consumers think dialing a cell phone is the leading cause of driver distraction. Because all of this specialized telematics equipment must be embedded in the vehicle by the automakers themselves, it represents a good opportunity for the auto industry to carve for itself a protected niche within the telematics value chain, based on legitimate concerns about safety.

PAUL HANSEN is a strategy and market research consultant. He publishes The Hansen Report on Automotive Electronics in Rye, N.H., a business and technology newsletter. [www.hansenreport.com]

Automotive Industry

Mobile Electronics compete with OEMs - Opinion & Analysis: Electronics - Mobile communications industry, auto industry face off - International Pages - Brief Article - Statistical Data Included

Automotive Industries, Feb, 2002 by Paul Hansen

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