Jupiter Media Metrix reports that U.S. consumers will pay for wireless services in their cars that enhance driving and vehicle ownership.
The February 2002 Jupiter Consumer Survey data reveals that despite a high $400 upfront cost for equipment and installation, 44 percent of consumers would pay for a basic telematics service focused on safety and security, and nearly 50 percent would be willing to purchase a premium service package that includes navigation assistance, automated business locators and office communications applications such as e-mail and voicemail.
"Telematics presents a new wireless value chain that combines content and services with a unique in-vehicle delivery infrastructure," said Jay Horwitz, Jupiter Research analyst. "With roughly 170,000 new subscribers each month and about 17 million new car sales annually, this represents a large future market. While telematics is an important sector for key stakeholders such as automotive and wireless operators, companies in industries such as travel, financial services, media and consumer packaged goods also stand to benefit. By reaching consumers in the vehicle, companies can present timely and relevant services that consider location, day-part and modality."
Vehicles Present Unique Context for Wireless Services
According to a new Jupiter Research Report, titled "In-Vehicle Applications: Telematics Enables Contextual Services & Operational Efficiencies," telematics services fit into three segments: personal services that address generic mobile needs including communications, information retrieval and entertainment (i.e. digital audio broadcast from Sirius Satellite Radio and Sprint PCS Single Voicemail); driving services that address safety and security needs that arise while driving (i.e. OnStar's automatic collision notification and Wingcast's proposed gas station locator); and, vehicle services that address vehicle ownership needs and take into account state and diagnostic variables (i.e. NetworkCar's OnBoard Technician).
Vehicle Services at Heart of Consumer Interest
According to the survey, the top five vehicle-based wireless services consumers would be interested in using include navigation services (45 percent), emergency services (44 percent), remote monitoring (36 percent), stolen vehicle tracking (33 percent) and personalized driving information (30 percent).
By incorporating contextual information - such as speed, location and mileage - these services address consumer demand for greater control and security, and improve car owners' ability to maintain their vehicle.
Consumers expressed significantly less interest in personal, or generic wireless services, such as automated business finder (18 percent); e-mail, calendar, voicemail (12 percent); personalized content (six percent) and live concierge (five percent).
High Upfront Costs will Pressure Rollout Strategies
According to Jupiter's telematics cost model, the upfront costs - including equipment and setup - account for between 85 and 90 percent of the total annualized cost. In turn, Jupiter analysts advise automotive original equipment manufacturers (OEMs) to define rollout strategies that encourage consumer investment.
"Telematics providers must automate services, relax subsidies, improve renewal rates and up-sell subscribers in order to break even. By keeping drivers connected, it represents an opportunity for automotive OEMs to squarely address the motivations guiding vehicle ownership and purchase decisions - mobility, convenience and comfort," Horwitz said.
Bigger Benefits From Vehicle Data, Not Consumer Services
Jupiter analysts have found that vehicle data collected through telematics services can be used to create operational efficiencies and improve design performance up and down the automotive value chain.
By consolidating and analyzing rich, real time driving and auto diagnostic data, OEMs will realize new operational efficiencies in streamlining transactions, directing service revenues to dealers and offsetting warranty costs. In the absence of subscriber revenues, this information will unlock new sources of revenue from automotive suppliers looking to benefit from information transparency and sharing.
Companies interested in purchasing the new Jupiter Research Report - "In-Vehicle Applications: Telematics Enables Contextual Services & Operational Efficiencies"- can call toll-free at (877) 464-6627 or visit www.jmm.com
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