The hi-tech super-connected car

By: Dan Keegan

Date: Wednesday, 19. December 2007

The next time you buy a car you may be selecting from an array of options very different from your last purchase. The automobile, it seems, is on the cusp of a revolution--and it's a revolution based on electronic technologies rather than power, acceleration, and agility in handling.

"Electronic innovation will dominate the next decade to meet demands of both consumers and regulators," Philip Radtke, of McKinsey and Company Electronic Initiatives told a recent conference on automotive telematics in Detroit.

Radtke anticipates that in the near future, electronics will be as much as 40% of the cost of a car. A significant amount of this cost will be telematics--a marriage of computing and wireless communication capabilities that will allow motorists to be just as connected in their cars as in their homes.

In other words, future buyers of cars are likely to be as much focused on mobile internet connectivity, traffic info on demand, navigation assistance, and even local point of interest information (restaurants, accommodations, shopping, fuel prices) as they are on power, agility, and comfort.

However, there are some problems with this future of automobility and superconnectedness. For a start, the technologies are complex, and they require complex partnerships and collaborations to put them in place. And then there's the customers--the end users. What combinations of telematics features will they want? How much will they pay?

There was much talk at the Detroit conference of "value propositions" and "bundling." One statistic offered up during the sessions was that car owners are willing to pay up to US$395 for telematics equipment in a new car but only $165 in a pre-owned vehicle. Vehicle manufacturers, it seems, need to be pretty canny about offering packages that people want.

The telematics vision quest

This was the fifth annual automotive telematics conference in Detroit and the event typically brings together a high-powered and enthusiastic collection of executives, technical specialists, and marketers.

The last one attended by this writer was in May 2002. On that occasion, telematics appeared to have recently descended from what GartnerG2 automotive analyst Thilo Koslowski referred to as a "hype cycle peak."

As a measure of the descent from that peak, not long after the conference one of the principal participants, Wingcast, a joint venture of Ford Motor Company and QUALCOMM put together to develop and deliver wireless mobility services, was dismantled. The two companies wrote off some $125 million in investment in the interests of "restructuring" their approach to telematics.

The telematics conferences, which are organized by a British-based group called Telematics Update, have something of a vision quest atmosphere about them.

They are described as "providing a rich environment for establishing strategic relationships and networking." Underlying the presentations, workshops and panel discussions on everything from hardware to marketing is a strong sense of a dream vision that may not be possible now but will be if the dream is pursued.

The telematics reality

Today, telematics interest and the telematics dream is, as Koslowski put it, on "the slope of enlightenment." In other words, the graph of optimism, having descended from the peak of hype to the trough of gloom, is showing a steadily rising slope now, but this time the dream and the reality are more in synch. The problems, challenges, and issues are being tackled on a broad front and progress is tangible, not merely hype.

The issues are not insignificant. Some of the key ones mentioned in the 2005 Detroit conference:

What do end users really want and how much will they pay?
Should technologies be embedded or carried in?
What kind of user interface will fill the requirements of user friendliness and safety?
How will engineers, marketers and designers deal with a world in which the automobile has a slow development cycle while consumer electronics cycles about every three years?
Where will profits come from and how will they be allocated?
In a wireless automotive world how will security and privacy be maintained?
What packages of options should be offered?
What kind of partnerships and collaborations need to be developed to provide reliable telematics services?
What kind of training efforts will be required to supply personnel for the telematics world of the future?

There weren't any resolutions to any of these questions at the conference but there was a sense that, despite a lack of clear direction on where the profits will be, the pieces of the automotive telematics puzzle are falling into place. Slowly but surely the dream is coming alive.

Some are even looking beyond this dream to the new realities it will bring about. "There's something going on besides telematics itself," Vijay Sankaran, Manager of Ford's Strategic Infrastructure Engineering Group, told the Detroit assembly. "We need to ask, where we're headed as a society."

Sankaran sees "no reason why TCP/IP based services over internet cannot be extended to vehicles. However, as the airwaves around cars fill with information from phones, computers, internet exchanges, diagnostic information and more, the gremlins are gathering--cars are likely to become prone to the same problems we have with our home computers: hackers, viruses, spyware.

Our shrinking privacy due to communications technology is one of the major issues of the day. But nevertheless, as Koslowski points out, people are likely to yield up their privacy if there's a benefit in it for them. For example, we now accept cookies in our computers, even though we know they collect information about us. We may resist black boxes in our cars now, but the carrot of insurance discounts if we allow our driving habits to be tracked will likely convince some drivers to accept them.

For us consumers, what will most likely lure us into the world of the super-connected car are Automatic Collision Notification, detailed traffic information, navigation assistance, and hands-free phone facilities.

Auto manufacturers dream of the day when automatic wireless transmission of diagnostic information about the vehicle alerts them to problems sooner. Imagine the savings if a manufacturer only had to recall 10,000 cars instead of a million!

Up to now, Telematics Update has contented itself with hosting high-powered conferences for those concerned with putting together the automotive telematics world of the future. Perhaps soon they will set one up one for the little people--the end users--and let them have their say.

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