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.