OEMS will Need to Vie with Telecoms and Content Providers for Telematics Revenue

By Tracey E. Schelmetic December 05, 2012

If you read any of the year end technology wrap-ups that are no doubt forthcoming as December continues on, one technology you’ll likely find at the top of nearly ever list of technologies to watch will be telematics.

Telematics, of course, is the blend of technologies that helps turn your car into a hotspot of communication, entertainment and navigation. Services such as OnStar and others help drivers find businesses and addresses, help them in times of emergency, get them back into the car when they are locked out and even help them browse the Internet or send and receive messages. Speech technology, blended with GPS, entertainment content and advanced mobile device technologies are helping turn our cars into moving homes or offices.

Telematics are becoming big business: not just the hardware itself, but the service revenue that occurs when we purchase something from the car. Right now, there is a bit of a war going on among the various stakeholders with their fingers in the pie of telematics. The original equipment manufacturers (OEMs), which put the hardware in the car, wireless carriers and content providers are all beginning to vie for what has been estimated to be $4 billion in telematics revenue over the next two years.

A new report has focused on how OEMs can be sure to reap a significant share of telematics revenue. Strategy Analytics Automotive Multimedia and Communications’ (AMCS) report, “Monetizing Telematics Service Revenues,” has found that revenue from services is just one benefit OEMs can achieve with telematics.

“OEMs can not only create recurring revenues, but also reduce costs, and increase consumer satisfaction. Revenues from services are important but just one of many drivers behind the growing number of OEMs launching telematics solutions,” said John Canali, senior analyst with Strategy Analytics, in a statement announcing the report.

It will be a matter of competing against some very big players.

“As more OEMs come to market with solutions, we expect a number of different business models to emerge,” said Richard Robinson, director of Strategy Analytics Automotive Multimedia and Communications. “Verizon’s acquisition of Hughes Telematics may prove highly disruptive as the role of the carrier may change. While charging an annual service fee is currently the most popular business model, OEMs, carriers, and content providers should explore how to maximize the benefit of a connected car,” he added.

Find the full report summary here.

Edited by Brooke Neuman

IoTevolutionworld Contributor

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