"Connected Car" Applications on the Rise: ABI Research

Taipei, Aug. 8, 2011 (CENS)--The "connected-car" application market has been expanding. Despite smartphone challenge, embedded OEM and aftermarket connected car systems is forecast to reach 189 million by 2016, according to ABI Research.

ABI Research telematics and navigation group director Dominique Bonte comments: “Despite all the hype about hybrid and smartphone-based telematics solutions, embedded connected car systems still have a bright future. On the OEM side, solutions such as GM's OnStar and Hyundai's Blue Link offer more reliable safety and security functionality such as emergency calling. Similarly, embedded aftermarket systems for insurance telematics, road user charging, or stolen vehicle tracking offer the best performance. Finally, electric vehicles simply require embedded connectivity in order to remotely check battery charging status, which has even prompted Ford to abandon its hybrid approach in the Ford Focus Electric.”

However, car OEMs and Tier One suppliers are still facing multiple challenges in designing cost-effective, upgradeable, and easy-to-use embedded solutions and bringing them to the market rapidly, the major research firm said. While vendors such as Continental, Saab, and Shanghai Automotive Industry Corp. (SAIC) Roewe and the GENIVI consortium are pinning their hopes on open source operating systems such as Android and Linux, others such as Toyota are looking to adopt cloud-based systems to achieve cost and scalability advantages.

As the “connected lifestyle” era continues to gain momentum – especially with younger users – automotive OEMs need to develop a solid connected car strategy as an absolute priority in order to retain control over the user experience, safety, and monetization opportunities of next generation vehicles, ABI Research said.

Meanwhile, the fleet management and trailer tracking system shipments is projected to reach 6.4 million by 2016, ABI Research said, but consolidation is urgently needed.

At a compound annual growth rate (CAGR) of 27%, commercial telematics systems shipments are set for solid growth. However, the fleet management industry continues to be haunted by structural problems: extreme levels of fragmentation with too many “me too” and “dots-on-a-map” providers and proprietary solutions littering the landscape.

Bonte said: “The commercial telematics industry faces aggressive consolidation which should ultimately result in the reduction of the hundreds of vendors into at most ten major global players. This process is already well underway with recent mergers and acquisitions including Masternaut and Cybit, Trimble and Punch Telematics, and – most recently - Trimble and PeopleNet.”

However, consolidation is only effective when tight technical and commercial integration is achieved, a process which can take years. Also required are the adoption of open software approaches, scalable Software as a Service (SaaS)-based platforms, telematics standards, and new business models, as well as the embrace of convergence and a far-reaching willingness to cooperate across the whole value chain in the form of partnerships.