Strategic Analysis of the Telematics and Location Based Applications and Services Market in North America

This Frost & Sullivan research service titled Strategic Analysis of the Telematics and Location-based Applications and Services Market in North America analyzes the dynamics and trends of the market and projects the future outlook for the market and the opportunities it offers to the different members of the value chain. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: embedded telematics, connected telematics, hybrid telematics, and phone-based mobile location-based service (LBS) application.

Market Overview

Advancement in Technologies Creates New Revenue Stream in Telematics Market

The telematics market is all set to expand as users begin to realize the convenience of being able to use everyday tools such as the Internet and electronic services on the move. This surge in interest has encouraged technological advances in telematics, and now, users can connect their LBS mobile phone to the vehicle and directly access services such as the Internet by streaming large amounts of data into the vehicle through 3G or 4G networks. With vehicle manufacturers introducing more applications requiring real-time data, telematics will assume greater importance in supporting the real-time wireless communication between the on-board device and the off-board server.

“Automakers should consider offering telematics as a standard feature in all its models, as it allows them to effectively utilize the real-time diagnostics information from vehicles and save millions of dollars in warranty and recall costs,” says the analyst of this research. “Automakers have to partner with wireless carriers and educate their global positioning system (GPS)-equipped phone subscribers to use their phones in cars (connected telematics).” However, automakers and system suppliers could face issues of obsolescence and mismatch between automobile and consumer electronics products. They could alleviate these problems to a large extent by developing a standards-based, flexible, and open architecture platform to keep the product relevant for a longer period.

Telematics service providers (TSPs) also need to expand their subscriber base to tide over the current lean phase. For instance, OnStar has rescinded its earlier decision to offer its services only to GM vehicles, despite GM’s recent announcement of offering telematics as standard in all its vehicles. It has decided to extend its telematics services to other automakers to enlarge its subscriber base and stay afloat in the market. A wider subscriber base is vital as most TSPs’ operating costs are fixed, which means their per-subscriber costs will increase if they lose subscribers. “Other TSPs may increase the renewal rates to offset free (new) subscriber losses by offering every-day use services such as turn-by-turn navigation, real-time traffic, as well as mobile and portable device integration,” notes the analyst. “They are also considering replacing certain operator-driven services by automated services.”