ANALYST REPORT
CONNECTED CARS, FLEET MANAGEMENT AND TELEMATICS Keeping drivers informed and entertained - and vehicles running smoothly and safely
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ANALYST REPORT
The author is Jeremy Green, principal analyst at Machina Research
The Connected Car, Fleet Management and Telematics Until teleportation finally arrives – or fleets of delivery drones – M2M has a critical role to play in keeping our roads and vehicles running smoothly and safely. In a report specially commissioned by M2M Now, Jeremy Green of Machina Research examines this multi-faceted market
The Transport and Telematics sector is the largest and in some ways most exciting segment within the overall M2M market. Machina Research treats the sector as made up of two main components: • Connected Car – mainly focusing on privately owned motor vehicles, but also including those owned by a third party such as a rental company, leasing agency or car club • Fleet Management – mainly focusing on specific application/s related to managing groups of vehicles that are owned by organisations, driven by employees and managed as fleets. This includes trucking and logistics companies, service organisations, and taxi companies. It doesn’t include public transport operators, which we deal with elsewhere.
with a CAGR of 25%, compared to 23% for the market as a whole. This is shown on Figure 1 below. Figure 1 1,400,000 M2M Connections (000s)
Introduction
1,200,000 1,000,000 800,000 600,000 400,000 200,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
This report is split into two sections. The first looks at connected car opportunities and the second concentrates on fleet management applications.
The connected car opportunity Machina Research estimates that, at the end of 2014, there were approximately 125 million M2M connections in the automotive sector globally. By 2024 this will have grown to 1.2 billion, representing a CAGR of 23%. Europe, followed by North America, remain the largest market in terms of connections throughout our forecast period. However, the fastest growing region is Emerging Asia-Pacific,
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Developed A-P
Emerging A-P
Europe
Latin America
MEA
North America
Figure 1. M2M connections in vehicle telematics by region 2014-2024 [Source: Machina Research, 2015] This market represents the intersection of a mature, wellestablished vehicle telematics industry – perhaps the oldest and most mature part of the overall M2M market – with a much broader and more dynamic connected car market, with a wider range of services aimed at fulfilling the needs of the driver, the passengers, and the automotive industry itself. To date the automotive market has been dominated by aftermarket devices – typically ‘black boxes’ fitted by an expert
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ANALYST REPORT
installer, integrated with the vehicle’s electronics via the CAN bus, and dedicated to a single application such as usagebased insurance or stolen vehicle recovery. But the market is in transition, with factory-fitted embedded connections playing an increasing important role. By 2024 there will be some 624 million such connections, and they will be built in to the majority of new vehicles. The embedded category will be growing much faster, from about one third of connections in 2014 to more than half in 2024. This is illustrated in Figure 2 below.
M2M Connections (000s)
700,000 600,000 500,000
• In-car entertainment & internet access – the provision of video, audio and gaming content as well as simple raw bandwidth for, for example, internet access. • Vehicle navigation – connected turn-by-turn navigation. • In-car voice – Voice as part of a vehicle platform concierge service such as GM’s OnStar. • Usage-based insurance – Pay-as-you-drive insurance. This can take several different forms, such as recording more or less granular details of vehicle usage (e.g. time of day, distance driven, acceleration, harsh breaking) and providing feedback to the insurance company and/or the driver. This is sometimes provided in real-time to indicate the impact of driving behavior on insurance premiums. • Lease, rental, HP and share car management - The monitoring and tracking of vehicles that are used by private individuals or commercial organisations - but owned by third parties such as rental agencies or car clubs.
400,000 300,000
• Vehicle diagnostics – data used by the automotive OEM themselves for vehicle diagnostics, maintenance scheduling and monitoring user experience.
400,000 100,000 -
Factory Fit
After Market
Figure 2. Factory fit vs. after market devices 2014-2024 [Source: Machina Research, 2015]
The shape of the M2M opportunity in Automotive We characterise M2M in the automotive sector as dominated by ten main application areas. These are as follows: • Vehicle platform – the central vehicle computer which supports multiple applications as well as features not separately chargeable, like ‘find my car’, remote heating activation and remote door lock/open. • Stolen vehicle recovery – vehicle tracker predominantly for the purpose of stolen vehicle recovery.
By the end of our forecast period the vehicle platform itself accounts for the greatest number of connections, with Usage-based Insurance the second largest category. Note that In-car voice, as a service provided on the vehicle platform, does not itself account for any connections. This is shown in Figure 3 below. 1,500,000 M2M Connections (000s)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
1,000,000
500,000
-
• Emergency call – automatic or manual alerts to emergency services that an accident has occurred. • Roadside assistance – applications that users can use to contact their provider of roadside assistance and help with vehicle location.
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
In-Vehicle Emergency Call System Usage-Based Insurance Vehicle Diagnostics Stolen Vehicle Recovery Roadside Assistance
In-Vehicle Entertainment & Internet Access Lease, Rental, HP & Share Car Management Vehicle Navigation Vehicle Platform Fleet Management
Figure 3. Connections by application 2014-2024 [Source: Machina Research, 2015]
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ANALYST REPORT
What’s driving the advent of the connected car? A wide range of trends are behind the drive to connect the world’s vehicles. The automotive industry has its own reasons for wanting to put connectivity into its products. In developed markets growth is slowing or has stalled altogether. As with other consumer markets the mid-market is shrinking, with customers moving to either luxury or value brands. There is increased competition from new entrants, and margins are under pressure. The industry is aware that it has only a tenuous relationship with the final customer. Even though after sales service accounts for perhaps as much as half of the revenue that cars create, many car buyers go elsewhere for service once their warranty has expired. From this perspective the ability to add connected services gives the automotive OEMs hope that they can create innovative driver-oriented services that will bring in new revenue streams, reach out directly to the end customer so as to deepen the relationship, win valuable after-sales service business, and differentiate their cars from those of their competitors. In one sense, they are pushing at an already open door. The ICT industries also see automotive as a major opportunity for growth. For mobile network operators facing saturation in the personal mobility domain, M2M is a new and largely untapped market, and the automotive industry is conveniently structured as a B2B opportunity with a small number of very large customers. The arrival of Big Data, the Cloud, 4G and dedicated M2M provisioning platforms means that the telecoms industry has some new tools to offer to the automotive sector. Moreover, the major mobile OS players – Apple, Google, Microsoft and Blackberry - are all looking to the automotive head unit as the next screen to colonise, and each is bringing their own particular perspective on business models, user interface, and content and applications distribution and discovery, to the in-car experience. There are external drivers too. There is automotive-specific regulation, like the EU’s eCall mandate, which requires that car manufacturers ensure that new vehicle models can initiate an
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automatically generated emergency call which includes data about the car’s position in the event of a crash. After years of delay the legislation has now been ratified by the Council of Ministers and the European Parliament, and the requirement comes into force from March 2018. A similar requirement now exists in Russia, where the ERA-GLONASS system is already operational. Regulations to require new vehicles to be tracked in the event of theft have also been mooted in Brazil, though here too there have been prolonged delays, and the eventual adoption and implementation of this seems increasingly distant. Other regulation, including more stringent pollution rules and CO2 emission constraints, also push car makers towards connectivity, not least because they make electric vehicles more attractive, and these can benefit from connectivity even more than conventional cars. Increasingly, would-be car users will simply expect cars – like most other things that they own or use – to be connected to the internet. The next generation of car purchasers simply won’t accept un-connected cars. It will seem natural to be able to access web applications and content from the driver’s seat, albeit in ways that are appropriate to an in-car context. This will include both car-specific applications like parkingspace finders, and more access to the same services that are available in other contexts, like social networks and streaming media. The idea that in-car users should only have access to media content that they physical brought with them into the vehicle, or broadcast media not targeted to their specific preferences, will seem quaint.
Changing demographics – don’t buy, rent In fact, car users may not be car buyers, or car owners, at all. In Europe and North America fewer young people are buying cars. In major cities across the developed world the proportion of households that don’t own a car is growing. The average age of first car purchase has got progressively older over the last 25 years. In keeping with the general trend towards preferring access to ownership, the sharing economy model is on the rise in the automotive domain. Car clubs like ZipCar and Mobility are increasingly popular, and there are
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ANALYST REPORT
also even more disruptive P2P car-sharing players like the US RelayRides and BuzzCar in France. Even the major car makers are now getting in on the act. BMW already provides DriveNow in partnership with German rental company Sixt, Ford operates Ford2Go, Daimler has both Car2Go and the broader-concept Moovel, and VW has Quicar. Peugeot has the Mu rental service, while GM has partnered with RelayRides, and uses its OnStar platform and embedded technology for connectivity. All of these need for cars to be connected, to protect against theft and abuse, to monitor and bill for usage, and to make cars easily available to users via smartphone apps and digital keys. And, looming like a spectre over all of these is the admittedly still-distant prospect of Google’s self-driving car. This is not only a tremendous feat of IT and artificial intelligence which will need high-bandwidth connectivity, but also follows a ‘cars-as-a-service’ model. Google doesn’t expect that customers will own self-driving cars. Instead they’ll summon them when they are needed, use them for a journey and then send them off to wait or be used by someone else. We have illustrated these dynamics in Figure 4 below.
User/buyer behaviour • Sharing economy • Digital native expectations • Car as a service
Auto Industry Dynamics • Competition and new entrants • Slowing growth • Demand for new revenue opportunities
External environment • Demographics • Regulation • Urbanisation/ traffic congestion • CO2 constraints
Connected Cars
ICT Industry Dynamics • Telecom market saturation and declining ARPU • M2M connectivity • Big Data • OS player strategies
Figure 4. Factors driving the advent of the connected car [Source: Machina Research, 2015]
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Market barriers That’s not to say that the road to the connected car is going to be all plain sailing, to mix a metaphor or two. There are a number of potential obstacles – some technical, some commercial and some even regulatory – that will tend to slow the deployment of in-car connectivity. First among these are the unresolved tensions between different models of connectivity. Automotive OEMs have taken different approaches to in-vehicle connectivity. One major difference is whether the OEM adopts a ‘built-in’ or a ‘brought-in’ approach. The former uses embedded connectivity, while the latter is typically handled via smartphone tethering. Using a handset removes the requirement for additional dedicated connections. This effectively reduces the scale of the connected car market in terms of numbers of connections, although not the impact. It also changes the commercial dynamics of the solutions. While it is hard to generalise, mass market OEMs such as Ford or Kia tend to favour a brought-in approach, whereas more luxury marques tend to opt for a built-in approach, or a combination of the two. Advocates of brought-in connectivity point to the ease of upgrade, transferability of content and lower cost. Advocates of built-in options highlight ease of use, the need for ‘automotive-grade’ user interfaces for use while driving, and the need to use some services while the driver is not in the vehicle, for instance remote activation of air conditioning. At the very least there is likely to be continued pressure from smartphones and their application environment on the potential market for embedded connectivity.
Where’s the intelligence – and the spectrum? Another factor that will have implications for the amount of traffic generated by M2M connections is whether the intelligence resides on the network or in the devices. The last few years have marked a sea-change here and much of this is due to one key factor: the advent of increasingly ubiquitous access to broadband networks. This allows the intelligence to reside on the network rather than on the device itself. The
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ANALYST REPORT
next five years may herald the shift from offline to online intelligence. The availability and accessibility of networks is not quite at a sufficient level today to allow on-device intelligence to be fully abandoned. Machina Research will be watching this dynamic with some interest over the next few years. If, as expected, the shift takes the form of less intelligence on the device and greater connectivity, it will be manifested in M2M as much as in any other connected devices and the implications of the advent and timing of this shift for M2M traffic and revenue is quite substantial. A further issue relates to the uncertainty over future network standards. The most prominent challenge is that MNOs will elect to switch off 2G (or even 3G) networks and refarm the spectrum for use with LTE. In the US AT&T has already declared that it will switch off its GSM/GPRS/EDGE network in the US by the 1st January 2017, and Verizon Wireless has indicated that its CDMA network would likely be switched off from 2022). In Australia Telstra has declared its intention to switch off GPRS at the end of 2016; 2G is already gone from Japan and Korea. We expect that M2M connections in this area will be increasingly dominated by 4G as factory fitted connections grow in importance, because automotive OEMs will seek to make their platforms as future proof as possible, both in terms of network technology evolution and application requirements. However, there will remain significant niche opportunities in some applications for satellite connectivity and, more importantly, for Low Power Wide Area networks. Figure 5 below shows the breakdown of M2M connections by technology.
As a result, automotive manufacturers should be wary of allowing the installation of modems in vehicles if there is a risk that the networks upon which they depend, be they 2G or 3G, will be switched off during the anticipated lifetime of the vehicle. We expect that most OEMs will opt for multi-mode devices including 2G, 3G and LTE, with increasing amounts of LTE between 2015 and 2020. But other solutions are also under consideration, including the possibility of modular incar units and also the option for over the air (OTA) reprovisioning of the device and SIM from one network to another. Of course, none of these challenges really apply where connectivity is provided via smartphone tethering, as is the case with Ford. Here technology upgrades, or network switching, is effectively handled by the user.
Whose platform – and who pays? This points to another related issue – the automotive unit’s operating system (OS) and the ecosystem that goes with it. One aspect of this is the relative openness of the platform: whether it’s a proprietary walled garden where the manufacturer alone will develop applications, or an open platform such as Android with a large third-party application development community - or maybe some ‘half-way house’ with a closed platform supporting some open elements? The answer to that question will determine factors such as how secure the platform is, what functionality is available and, consequently, which applications can/should run over it. Some application developers are likely to be eager to access the vehicle platform whereas others will be happier with their own stand-alone black box. The nature of the vehicle platform, and particularly foot-dragging in opening up the platform, could result in slower development of applications.
M2M Connections (000s)
1,000,000
Evidence from the handset space suggests that OEMs are not the best placed to decide the OS. A more open application development environment would pay dividends in terms of superior applications, but manufacturers remain cautious towards this.
900,000 800,000 700,000 600,000 500,000 400,000 300,000 400,000 100,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2G
3G
4G
Low power wide area
MAN
Satelite
Figure 5. Global M2M connections by technology 2014-2024 [Source: Machina Research, 2015]
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The OEMs want to stay in control of the look and feel of their products, and they fear being disintermediated by the big OS players like Apple and Google. They also believe issues of security and reliability mean that they need to maintain a high degree of control over the system. Combine this with a highly fragmented application development environment, with different OSs for different OEMs, and this makes a less-thanappealing target for application developers. Many application developers protest that automotive OEMs do not provide enough support or revenue share for the applications, or enough help on content discovery. However, there are reasons
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ANALYST REPORT
to be positive about the future. There is increasing use of standardised application development environments including traditional mobile OSs, and an open standard for vehiclebased initiatives in the form of GENIVI. It is moving slowly, but the application environment is gradually opening up. Other possible road-blocks include regulatory uncertainty, as with the shifting deadlines for both the EU’s eCall initiative and the Brazilian government’s SIMRAV mandatory requirement for stolen vehicle tracking capability. Still with regulation, there are concerns about data privacy, about the users’ freedom to choose their own roadside assistance and insurance provider independently of the choices that the OEM may make, and about the security risk from cyber-attacks. Unsurprisingly, there is a cost associated with embedding almost any of these capabilities into a vehicle. In many cases this cost will be assumed by a third party as part of a wider service subscription, e.g. insurance telematics or a stolen vehicle tracker. In other instances the automotive OEM may assume the cost in order to provide access to further revenue streams, e.g. car servicing linked to vehicle diagnostics, or vehicle platform services such as voice or satnav that the end user pays for on a monthly basis. The third scenario is where the enduser pays directly for the additional device, such as a satnav. Similarly, the model for who pays for which services and how is far from resolved yet. For aftermarket devices such as connected navigation devices there are a simple set of models for payment. However, for applications that reside on the built-in vehicle platform, the dynamics are not so clear. The tried-and-tested model for payment for cars is as a one-off payment. However, this will not really work for ongoing connectivity.
as fleets. These include vehicles in transport and distribution, but also field service vehicles and taxi fleets where a dedicated device is used for a data-oriented dispatch system Across each of these types, the applications can be thought of in three main ways: • Vehicle-related – Fleet management is the most mature and typically comprises vehicle tracking as part of supply chain management. Vehicle tracking is the main application focus for the forecasts included in this report but we would also include specific applications related to supply chain management such as scheduling and job allocation in this category. Scheduling applications would apply not just to the driver of the vehicle but also to other support workers such as repair teams. • Cargo-related - Supply chain management such as consignment tracking, job allocation, routing and freight monitoring. (For the record, we count the tracking of containers and trailers elsewhere). • Driver-related – These are typically driven by cost savings and meeting regulatory requirements. Driving style analysis allows the company to reduce fuel consumption, reduce CO2 emissions (eco-driving), and potentially reduce insurance premiums. Regulatory requirements include monitoring that drivers are taking the appropriate breaks and, in some countries, meeting duty of care requirements for lone workers. Measures to monitor and control personal use of company vehicles are also included. At the end of 2013 there were approximately 11 million Fleet Management connected devices worldwide, as shown in Figure 6 below. By 2023 we expect that to grow to 60 million, plus another 10 million vehicles connected via a factory-fit connection.
M2M Connections (000s)
70
With regard to high bandwidth services requiring a separate subscription, there are really three options. The connectivity could be handled through smartphone tethering and go on the driver’s bill. Alternatively it could be carried via the dedicated car connection, but with data usage billed to the user’s phone bill. GM has set out its plans to allow users more flexibility to do just this. A third option is to let users bring in their own SIM card for the car connectivity, which might be billed separately, or again to a phone bill. Audi in Europe and Volvo both permit the user to bring in their own SIM.
60 50 40 30 20 10 0 2013 2014
The long rise of fleet management Fleet management is often considered as one of the more mature M2M sectors, but it is still growing rapidly and evolving in many different ways. As defined by Machina Research, it covers the tracking and monitoring of road vehicles managed
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2015
2016
Developed A-P Emerging A-P
2017
2018
2019
Europe Latin America
2020
2021
2022
2023
MEA North America
Figure 6. Global M2M connections in the Fleet Management application 2013-2023 [Source: Machina Research, 2014]
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ANALYST REPORT
Total M2M revenue (US$ million, real)
M2M device revenue (US$ million, real)
M2M service revenue (US$ million real)
Developed A-P
599
1617
10%
148
189
2%
452
1428
12%
Emerging A-P
200
1306
21%
44
165
14%
156
1141
22%
Europe
637
2322
14%
164
305
6%
473
2017
16%
Latin America
129
853
21%
31
122
15%
99
731
22% 24%
MEA North America Total
67
506
22%
16
73
16%
51
433
1291
6688
18%
325
1003
12%
966
5685
19%
2924
13292
16%
728
1857
10%
2196
11435
18%
Figure 8. M2M revenue for the Fleet Management Application Group 2013 and 2023 [Source: Machina Research, 2014]
Today Fleet Management is mainly about narrowband data. There has been some talk about adding real-time video to applications for security, safety, and even for monitoring driver behaviour where privacy regulations permit, but for the most part it is just that – talk. There have been some interesting deployments of video cameras in telematics, but these almost all use locally stored footage, recorded over when storage is full and only retrieved if required to support or defend a claim. Where devices and connectivity are being upgraded to support 3G and 4G, the main driver has been maintaining compatibility with future network plans rather than the requirements of the application. This means that 2G and 3G will hang on rather longer in this application than in others, as Figure 7 below illustrates.
M2M Connections (000s)
30 25 20 15 10 5 0 2013
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2G
3G
4G
Satellite
Figure 7. Global M2M connections for the Fleet Management Application by technology 2013-2023 [Source: Machina Research, 2014]
Fleet Management applications will generate substantial revenue, growing from US$2.9 billion to almost US$13.3 billion in 2023. This represents a CAGR of 16%. As shown in Figure 8 at the top of the page, the largest opportunity is to be found in the North American market which is not only the biggest global market but continues to experience significant growth (CAGR 18%). The use cases for fleet management are well established and mature – job management and scheduling, vehicle tracking and route optimisation, vehicle monitoring and preventative maintenance, driver hours tracking, and driving behaviour monitoring, which often includes fuel consumption reduction and accident reduction. The business cases for these use cases also seem to be well established. Suppliers and, to a slightly lesser extent, adopters of telematics technology point to savings in fuel consumption ranging from 10% to 25%, and
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reductions in insurance claims costs as high as 70%. There are similar claims about increases in labour productivity, ranging from a 10% improvement up to 50%, and savings on maintenance costs too. Driver-related applications in particular are often about meeting regulatory requirements linked to safety considerations. Although the details of the specific regulations, which are usually country-specific, are in the process of changing, the basic requirement to track the time individual drivers spend at the wheel and the length of their rest breaks stays the same. Despite the maturity of the technology and the use cases, the fleet management sector is in something of a ferment at the moment. Among the traditional specialists there has been a flurry of mergers and acquisitions. Since 2011 Trimble has acquired PeopleNet, Punch Telematix and Tata’s telematics Indian division, GEOTrac in Canada, TMW, and ALK. Masternaut merged with Cybit in 2011, one of its key competitors in the UK market, and was itself acquired by FleetCor, a fleet payments provider, in June 2014. Telogis acquired Navtrak in July 2012 to increase its presence in the small to medium business market. In February 2014, Lysanda bought stolen vehicle recovery specialist TRACKER to create a new Tantalum Corporation including both B2B and B2C products. TomTom bought the telematics operations DAMS Tracking from parent company Diffusion Artistique et Musicale SAS (DAMS) in April 2014, and Fleetmatics bought the Italian company KKT which owns the routing optimisation and scheduling software Routist in June 2014. Everywhere one looks in Fleet Management the sector is in flux. Growth is still rapid, M&A is rampant, regulation is introducing new dynamics and service propositions are evolving rapidly. While it may be one of the longest established M2M sectors, it is hard to describe it as ‘mature’.
New routes to market But the turbulence in this market is not simply a game of musical chairs among the traditional specialists: outsiders have also been buying into telematics. Mobile network operator Verizon bought Hughes Telematics (HTI) in July 2012, which included fleet management assets as well some other verticals. In 2014 Vodafone bought Cobra Technologies, which in complement with its Zelitron asset offers a strong opportunity to pursue the fleet market. Beyond telecoms operators, the diversified company Danaher, from outside the telematics sector, bought Navman Wireless
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ANALYST REPORT
in January 2013. Oskando (owned by Ambient Sound Investments, an investment company created by the engineers who founded Skype) merged with Danish telematics vendor Autolog to create EcoFleet in September 2013. Omnitracs, originally a subsidiary of Qualcomm, was acquired by private equity company Vista Equity in November 2013 and subsequently acquired Roadnet Technologies and XRS. French tyre company Michelin bought Sascar, Brazil’s largest fleet management and telematics company, in June 2014. Most recently WABCO, a manufacturer of vehicle safety systems bought Belgium-based Transics in February 2014. Moreover, the vehicle manufacturers themselves, arguably the sleeping tiger of the telematics industry, have begun to take an interest, albeit often in partnership with the aftermarket specialist companies. Within the last year Telogis has announced arrangements with Volvo for Volvo Link, Ford for Ford Crew Chief, GM for OnStar for Fleets, Hino Trucks for Hino INSIGHT, and Mack for Mack Fleet Management Services. Daimler Virtual Technician, a remote diagnostics solution offered in North America, is provided by Zonar Systems. The relationship with an aftermarket supplier goes some way towards negating the major disadvantage of manufacturersupplied fleet management solutions, i.e. the presence within operators’ fleets of trucks from different OEMs. The possibility of pairing built-in connectivity and sensors with brought-in devices for the user interface and application framework may also shift the balance somewhat; Volvo’s Dynafleet and Daimler Fleetboard both offer a smartphone app dashboard as part of the overall solution. And this last development points to another potential disruptor: the future role of the major mobile OSs – Google, Apple and perhaps Microsoft. The Google Play Store and the Apple App Store both offer many low-cost applications which can be used by individual truckers and the managers of smallto-medium fleets. Examples include MyCarTracks, Fleet
Manager, Fleet 101 K2 Transportation Management System, Spedion, and Big Road. Microsoft has fewer apps in its portfolio, but the HERE mapping and navigation platform which it licenses from Nokia has real potential. There can be few truckers who don’t own a smartphone these days, even in emerging markets. A lightweight fleet management application, downloaded to a smartphone, updated automatically and provisioned with information from the increasingly sophisticated sensors within the device, interfaced with a web portal for the fleet manager, could prove an attractive alternative, especially for small companies without any sort of legacy IT estate. These small companies are in a way the most interesting segment of the fleet management market. While big in-house fleets and logistics companies have long appreciated the benefits of using telematics solutions, penetration at the smaller end of the market remains very low. Small companies, and independent truckers, who make up the bulk of the logistics industry in most emerging markets and not a few developed ones, remain unconvinced about the business case. Perhaps those apparently un-arguable demonstrations about cost savings contain some glaring flaw visible to small business owners but not to suppliers. Alternately, perhaps there is something wrong with the commercial aspects of the fleet management products and services that make them unsuitable for small and cash-strapped businesses. The entry of new kinds of player, with new sorts of proposition, into the fleet management market may turn out to be exactly what’s needed to bring the benefits of the technology to the smaller end of the market. The current round of turbulence may be an early sign of something better to come. For more information on Machina Research’s research and forecasts on the Fleet Management sector, you can contact us on enquiries@machinaresearch.com.
Principal analyst Jeremy Green joined Machina Research in September 2014. He has worked in the telecommunications industry in the UK, Australia and Hong Kong for over 30 years, most recently at the analyst company Ovum from 1999-2014. Prior to this he worked as Head of Market Planning at the mobile satellite services company ICO, and before that at KPMG and BIS. At Machina Research Jeremy focuses on the automotive sector as well as new and emerging companies and business models in the Internet of Things. Jeremy has a PhD in Science and Technology Policy from the University of Manchester.
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COMPANY PROFILE
Company Summary Founded in 1992, Numerex is a public-traded company on the NASDAQ Stock Exchange (NASDAQ: NMRX), headquartered in Atlanta, Ga. The company specialises in business services, technology and products used in the development and support of machine-tomachine (M2M) solutions for enterprise and government markets worldwide.
Company credentials
Key differentiators
As a truly single-source M2M service provider, Numerex has evolved from primarily a proprietary network services company into a comprehensive M2M solutions provider for the Internet of Things, serving a wide range of markets including enterprise and personal security, government, healthcare, energy and utilities, financial services and transportation. Numerex’s portfolio encompasses products and solutions across four key vertical markets – safety and security solutions, asset ID and tracking, asset logistics and remote monitoring and control.
Numerex emphasises providing secure, real-time device management, network and application solutions through two unique differentiators: Numerex DNA and a proprietary Numerex platform. Its ISO-certified global network offers cellular and satellite connections to handle all aspects of connectivity – including international regulations, processes and data requirements. Numerex DNA integrates all the necessary foundational components that enable an M2M solution through a single source, rather than requiring customers to utilise multiple vendors and partners. Numerex platform services enable multiple devices to be connected to multiple wireless networks through a single application.
The company’s M2M expertise enables its customers to efficiently, reliably, and securely monitor and manage assets remotely whenever and wherever needed. Numerex DNA® features hardware Devices, Network services and software Applications that are the foundational components of Numerex customers’ M2M solutions. Numerex has a long history in enhanced telematics systems that help fleet management companies create good driver incentive programs. Numerex packaged solutions in this area include FASTrack PrePaid which provides turnkey asset and theft recovery options with a low cost of ownership; FASTrack Fleet for full-featured, flexible asset tracking and telematics; and SmartGuide™ which offers a turnkey solution for fleet management, driver behaviour and monitoring of tracked drivers and vehicles.
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Competitive pressures The M2M adoption rate among enterprises will rise rapidly this year in several vertical markets as organisations seek to fully realise the efficiencies and ROI that technology can enable. For Numerex, these markets include asset ID and tracking for emergency response; asset logistics solutions for both manufacturing and distribution; remote monitoring control applications for oil, gas and water; tank monitoring for the bulk liquid markets; monitoring for solid waste management, and remote healthcare monitoring, among others. Regarding competitive pressures, the M2M value chain is comprised of multiple vendors each specialising in different solutions, devices, platforms, middleware and vertical specific applications. Numerex’s ability to shift from vertically oriented systems, towards a horizontal systems approach, allows its proprietary technology to work across a variety of M2M industries.
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COMPANY PROFILE
Company Summary AT&T provides advanced mobile services, next-generation TV and high-speed internet services, and smart solutions for businesses. The company claims the best worldwide coverage of any U.S. carrier, with data roaming in more than 210 countries and territories, and 3G in more than 170 countries and territories. AT&T serves nearly all of the Fortune 1000, as well as neighbourhood businesses all around the US. It also offers solutions like highly secure mobile cloud and corporate network management.
Company credentials AT&T connects cars, machines, wearable devices and more. It is working with top automakers and technology companies to make customers' lives easier - so they can use their car to order a pizza on the way home, and then use a connected watch later that night to track how many extra steps they'll need to take at the gym the next day. AT&T is constantly innovating to find new connections in the Internet of Things. In 2014, it was issued an average of more than one patent per day. Additionally, AT&T provides carrier-grade IoT Managed Services for storage and next generation Rapid Application Development for new IoT Solutions. AT&T has spent the past several years pushing into the connected car market, with deals with General Motors, Nissan, Audi, Tesla, BMW, Subaru, Ford Motor Co. and Volvo. Elsewhere in the transport and telematics space, AT&T has connected over 1.8 million commercial vehicles, 900,000 usage-based insurance users, and 243,000 refrigerated containers. It is in the process of re-launching a unique global AirCargo Tracking solution.
Key differentiators AT&T monitors virtually everything, everywhere. It enables asset monitoring solutions across all major verticals including Energy, Transportation and Logistics, Healthcare, Aviation, Automotive, Construction, and Retail. It has more than 20 million devices deployed across the key M2M markets, including meter reading, fleet, transportation, air cargo, healthcare, automotive, construction, digital signage and retail. Its Global SIM enables connectivity in 200+ countries. AT&T’s customisable and scalable solution stack is designed to
M2M Now - April / May 2015
meet the unique needs of an enterprise, so customers can quickly implement IoT solutions and get to the bottom line faster, with increased efficiency, productivity, and visibility. Capabilities include pre-certified devices, global connectivity with a single SIM, a single online management platform, application development tools, pre-packaged vertical solutions, and a professional services team to help every step of the way. Also, their M2M Foundry supports IoT rapid prototyping and innovation. To make sure AT&T’s customer’s needs are met, it has developed strong partnerships across industrial companies, technology enablers, and IoT service providers. AT&T is a founding member of the Industrial Internet Consortium and has partnered with top industrial manufacturers, service providers, and technology enablers to accelerate IoT development, including GE, IBM and Rockwell Automation.
Competitive pressures In addition to its success in telematics, transport and automotive, AT&T’s Digital Life home automation and security business, which is only two years old, was the number one security company in terms of net subscriber additions in the US last year. Its emphasis and differentiation is completely different from other carriers who have stayed more in the traditional sense of focusing on adding smartphones instead of venturing into what is the next era. Specific to the transportation space, AT&T tries to differentiate itself by making it easier for transportation companies to create their own solutions. It works together with customers on new IoT Managed Services, making it easier for customers to develop solutions on their own via the AT&T Flow Designer and then store and access the data using the M2X Data Service.
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COMPANY PROFILE
Company Summary ORBCOMM, one of the largest space-based global M2M companies, provides a comprehensive portfolio of M2M solutions and connectivity options to customers in the transportation and logistics, heavy equipment, energy, maritime and government sectors. The combination of global multi-network services (satellite and cellular), state-of-the-art devices and robust web-based applications allows customers to match unique business needs with M2M communications solutions for mobile and fixed remote industrial tracking, monitoring, control, and management. The publicly traded company is headquartered in Rochelle Park, New Jersey, USA.
Company credentials
Key differentiators
ORBCOMM solves customers’ operational, logistics and security needs through a suite of industry-specific M2M solutions, including a broad offering of global satellite and cellular networks, hardware, and software applications. By means of a global network of low-earth orbit (LEO) and geostationary orbit (GEO) satellites and accompanying ground infrastructure, as well as Tier One cellular partners, ORBCOMM’s low-cost and reliable two-way data communication services track, monitor and control mobile and fixed assets in specific core markets.
ORBCOMM has one of the widest single source selections of capabilities, from connectivity, to hardware, to software, supported by one of the largest engineering teams in the commercial M2M industry. The company’s networks and suite of integrated products and services enable the delivery of business critical information to and from virtually any place in the world - simply and affordably. Whether the assets are global cargo containers, trucking fleets, fishing vessels or military assets, ORBCOMM delivers data that provides context and meaning for critical decision making in the areas of process and product.
Through the recent strategic acquisitions of SkyWave Mobile Communications, InSync and Euroscan, ORBCOMM has become one of the biggest global commercial providers of two-way data satellite services exclusively designed for M2M applications with a complete portfolio of M2M devices, satellite and cellular airtime and applications. ORBCOMM is able to offer its portfolio in a reliable and cost-effective way. Its latest and most diverse selection of products comes with an extremely low cost structure. This framework enables ORBCOMM to engage with customers of all sizes without compromising customisation and customer support.
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Competitive pressures ORBCOMM has the technology to bring all the necessary components together in flexible and economical ways. For instance, working with ORBCOMM, an enterprise is able to track and manage cargo with a variety of fleet management applications, including dispatch, electronic forms/signatures, location-based services, in-cab messaging and equipment data monitoring. The security and productivity of mobile workers and vehicles anywhere, even beyond the reach of cellular networks, is possible as well as compliance with insurance and government regulatory requirements with the availability of vehicle maintenance data.
M2M Now - April / May 2015