Last year, about 15,000 German drivers used real-time traffic data delivered to the car via mobile phone. These motorists also had instant access to emergency call services and could arrange for theater tickets or a table at a restaurant.
But the moment any of these motorists crossed the German border into a neighboring country, they entered an informational black hole. They instantly lost their telematics services, and their onboard navigators often did not recognize the roads on which they were driving. As telematics grow more popular, European providers are trying to expand their information networks across borders.
In the last three years, automakers and telecommunications companies have engaged in frenzied negotiations to form joint ventures. Each player is trying to position itself for the coming in-vehicle Internet boom.
One of the first joint ventures was Germany's Tegaron, a partnership between DaimlerChrysler and telecommunications giant Deutsche Telekom. Next, BMW formed a partnership with Mannesman PASSO. In Italy, Fiat subsidiary Magneti Marelli S.p.A. joined forces with Telecom Italia to form Viasat. Volvo, Ericsson and Telia formed a Scandinavian consortium called Wireless Car. And in France, PSA Peugeot-Citroen formed a venture with Vivendi called egery.
Each rival is maneuvering for market share, but each is beginning to realize it must cooperate, too. Each national market has its own telecommunications standards, and some also have separate infrastructures for the collection of traffic data. Any company wishing to offer international telematics service has two choices: Build its own information network, or work with a local service provider.
Tegaron already provides information services to Audi and Renault in Germany and hopes to expand. Others are adopting the same strategy. At a recent conference in Turin, Italy, Jan Hellaker, chief executive of Wireless Car, said the company wants to attract manufacturers other than Volvo to its services.
And egery recently announced an agreement with Ford of Europe. 'I see the future of the telematics sector in Europe made up of a network of local service providers,' said company chief technical officer Laurent Artaud. Each company will specialize in its own national markets, then provide 'roaming' services to competitors.
Several rivals already are negotiating to share services across borders. But to do so, the telematics companies will have to agree on common standards. Basic services such as emergency assistance may be possible within the next year or two. More complex services such as real-time traffic data is about four years away.
Egery and its competitors say they want to expand beyond their national boundaries, selling original equipment and aftermarket products throughout Europe. So what does this mean for the competitive relationships within this network?
'I don't know,' comes the simple answer from Artaud. 'We are all too young at the moment.'
Competition will increase as the market develops. Typical battlegrounds are likely to involve up-to-date traffic information, related Web services and ease of use. It is not clear how this will affect vehicle brands. Could we see, for example, a Ford Mondeo equipped with Peugeot telematics hardware using data provided by a Mercedes affiliate?
If so, competitors will have to work together to set standards for new services. For example, rival mobile phone makers Nokia and Motorola are working together on standards.
'At Nokia, we call it co-opetition,' says Johannes Dunnwald, head of strategy at Nokia's Smart Traffic Business Unit in Dusseldorf, Germany. 'The true market potential cannot be realized through traditional business relationships alone.'
Only a few telematics providers operate profitably. One is Trafficmaster, a company based in the United Kingdom that specializes in traffic information. It is not affiliated with any vehicle maker and provides data to a number of brands. Unlike many of the new start-ups, it is a mature business, having been in the business for 11 years.
The most important element in achieving profits is mass-market acceptance. Most telematics services are restricted to expensive car models. But egery appears determined to move into the mass market. Its service already is accessible in France on the Auto Channel sponsored by the Vizzavi portal. Starting this year, it will be a factory-fitted option on Peugeot and Citroen cars, beginning with the range-topping Peugeot 607. By the end of 2002, about 80 percent of Peugeot and Citroen cars will come equipped with telematics hardware.
Will customers share the industry's enthusiasm for telematics? Egery's Artaud says it is too early to tell. 'We have done a lot of customer research, but the proof will not come until the services are in the market.'
E-mail writer Elaine Catton at [email protected]