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Finding the telematics business case

John Day

John Day

Posted Feb 22, 2010

I’ve seen a lot of really cool automotive electrical and electronics technology that hasn’t yet reached the market, not because the technology won’t work but because automakers have not yet articulated a sufficient business case.

What’s the problem? I asked Ralf Hug specifically about the business case for telematics, where he has a lot of experience on both the OEM and supplier side. He asks himself the same question and then suggests one possible answer.

“OEMs can sell a telematics control unit, either as a standard feature or an option, and top of that is the revenue from selling content and services,” Hug says. “The ultimate objective, of course, is to use telematics as a unique selling proposition and achieve more vehicle sales – or halt declining sales.” He cites Ford as a good example of that, since Ford claims increased sales due to SYNC.

Then there is the ability to retrieve diagnostics data, which should interest managers responsible for warranty repairs and overall vehicle quality and production. And consider the potential for updating electronic control units remotely in much the same way the Microsoft updates Windows.

Building better relationships

“Building better relationships with car owners through vehicle health reports and dealer integration not only increases the likelihood of maintaining customer loyalty but also improves parts and service revenues and profitability of the OEM and dealership and keeps customers loyal within the OEM dealer network,” says Hug.

The problem, as he sees it, is that there are many “businesses” within a car company, each with its own priorities if not its own P&L. “Sometimes all of the internal businesses’ objectives come into alignment, but more often there are conflicts among them,” he says. “When I worked for a luxury car maker I had to re-open the business case for telematics about every three months because someone thought the ‘telematics’ line item could be deleted to lower the cost of the vehicle. My team and I had to deal with each objection by explaining the value that telematics creates despite having a program in place for many years.”

What’s needed, Hug suggests, is someone high enough up in the organization to be able to sort through conflicting priorities. “Someone has to have the vision and the clout to negotiate the rather complex ecosystem and make something happen at a senior management level and be able to work across various functions within a car company.” But telematics has not gained sufficient mindshare at a high enough level because the people running car companies today are, for the most part, car people who think a lot more about mechanics than they do about electronics.

“A change in organizational structure is needed to overcome these barriers for a holistic business case,” Hug says. And electrical/electronics engineering is likely to become a more viable career path.

Microsoft Windows, Ralf Hug, Ford Sync, Telematics

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John DayJohn Day recently launched John Day’s Automotive Electronics News ( to provide news and feature coverage of the automotive electronics industry. Earlier he wrote for Auto Electronics magazine, Auto E-lectronics, EE Times, and other business and engineering publications. Visit John Day

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Comments 2

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There is a natural progression of technology and user needs which needs to be better addressed in Telematics that it is today. Fortunately, there is already a model to follow. Facebook started on the PC because of the user interface and a large enough data pipe. It eventually moved to mobile devices through wisely using the pipe they had as well as bigger pipes. The User Interface was a challenge, but Facebook figured that out. Once they met the challenges of getting on a mobile device, they then started leveraging the fact that it was mobile and add value that you don't get on the PC version. This is a lead up to Telematics. The hugely successful technology products that are used by a large portion of the market will come to Telematics. There are challenges, such as a requiring a user interface that for the most part you can't look at. The data pipe needs to be sufficient as well. When the UI and pipe issues are addressed, the popular products will migrate to Telematics. And the companies that can become instrumental in making that happen should capture a first mover's advantage. Trust me. If Chevy offered all that Sync does, as well as a popular product like Facebook, it will influence car sales. You have to remember, a great deal of these users are rabid in their usage. Interacting with Facebook 30 times a day is not uncommon. They will want to be connected while driving in a safer way than looking at their phone while they drive.

Dave Wright
10:39 PM Mar 3, 2010

i need mobile diagram. please you help my ? i live myanmar country.

9:06 AM May 19, 2010

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