Net-based products will soon hit the road as telematics technology delivers mobile wireless services to cars. By 2005, more than 30 million vehicles will have telematics, according to a new Report from Forrester Research, Inc. (Nasdaq: FORR). Forrester predicts that telematics will succeed, but not uniformly — safety and entertainment services will succeed quickly, but interactive navigation and information will struggle for three years due to ill-defined packages and benefits.
“Safety and entertainment are an easy value proposition, but navigation and information won’t take off until 2004,” said W. Daniel Garretson, senior analyst at Forrester.
Consumers will put a premium on car-based safety and security systems such as having automatic 911 calls placed when airbags deploy. Carmakers eager to differentiate themselves and create long-term customer relationships will partner with service providers like OnStar and Wingcast to put these systems into 10 million cars by 2003. These factory-installed telematics systems will first appear as $2,000 option packages in luxury cars and trickle down to economy cars within three years.
In addition, entertainment will be popular with consumer segments like families and commuters, who will relish commercial-free digital satellite radio and back seat DVD viewing. After-market consumer electronics retailers, as well as car dealers, will install 3 million car-DVD players and 9 million satellite radios by 2003.
“Unlike safety and entertainment — which have clear value propositions — navigation and information will struggle as a multitude of players battle to control the customer,” added Garretson. “This chaotic environment will initially result in sluggish market penetration.”
On the other hand, navigation and information — everything from turn-by-turn driving instructions to in-car Internet access — will be mired in a myriad of technology, business model, and image problems. Disorganized content companies and service providers will confuse consumers and inconsistent technology approaches will render systems unusable. But by 2005, navigation and information will take root, resolving technology and business problems and demonstrating real consumer value.
Forrester believes that strong consumer demand, standardized technology platforms, tiered service structures, and viable business models will improve the telematics climate and drive penetration to more than 30 million vehicles by 2005. But telematics services will not create a single dominant revenue stream. Instead, consumers will pay for some highly valued services and demand other services for free, much like the cable model with its tiered services and fees as well as its pay-per-use options.
For the Report “Cars Get Wired,” Forrester interviewed carmakers, service providers, mobile operators, and content companies. Additionally, Forrester surveyed 8,200 online consumers about which technologies and services they desired in their next vehicle.