{audio:0:00:01} Could you provide a short introduction to your background in telematics?

{audio:0:00:07} My history in telematics started in 2006, coming from the telco side and the cellular side into what was then called telemetry. It later became telematics and then you could say, it sliced into remaining in telematics and the automotive industry but for the generic markets, it became machine to machine or M2M and, today, that is known as the Internet of Things. It was really from the telco side that I started.

{audio:0:00:43} I then worked in all parts of the value chain, from the big data and SaaS-related companies, to targeting IoT solutions, to doing strategic consulting in a couple of different companies around the world. Obviously, all of this has been in a global play. I was also involved in the invention of the embedded SIM, that actually started out as an embedded SIM especially for vehicles, because of the vibration and heat. Today, you find it in your iPhone. That’s my quick background of who I am, in that space.

{audio:0:01:28} Can we take a step back and look at how the technological architecture of, specifically, in-vehicle telematics, has evolved over the last decade?

{audio:0:01:42} If you take a big leap back, I would say that it started to pick up pace in 2002, 2003, 2004 to 2006, where we started to get car manufacturers (OEMs) to embed telematics units into the vehicles. There were a couple of use cases linked to that. Obviously, the eCall, the emergency call, and stolen vehicle tracking. In the US, you also had GM providing the OnStar service. That’s really where it all started. Over time, it evolved to embedding more and more capabilities, so it became more and more vehicle-related telematics. It also became more and more consumer-related services. You started to see some OEMs starting to embed map downloads, even streaming radio and other services into it. The whole ecosystem around it started to model out. But I think this is also where it started to struggle. Technology wise, it’s there. The business ecosystem, for a global deployment, is not really there.

{audio:0:03:10} This could be linked to connectivity, as such. Once you start to do streaming audio and video, into vehicles, you start to consume a lot of bandwidth. From an OEM perspective, the way they manufacture a car is, basically, they put the telematics unit into the vehicle, they put the SIM card into the vehicle, just like the SIM card was nuts and bolts, and then they want to deploy the vehicle across the world and this is where they struggle. Consuming gigabytes of data and roaming in different countries just kills whatever business case they have. This still exists, to a certain degree, today.

{audio:0:03:50} We talked about private vehicles, but you also have commercial fleets, where you had the beginnings of fleet management embedded into the vehicles. Obviously, for a lot of fleet owners, some used it and some replaced it with aftermarket and put some third-party solution in there, for fleet management. We know how that has been developed from just being able to send pick-up and drop-off orders to the whole driver behavior, to economy and so on.

{audio:0:04:32} How could potential technology developments, in the next five to 10 years, help kick start the ecosystem?

{audio:0:04:47} I think there are a couple of things. Regardless as to whether it is embedded or OEM-related or centric solution, or if it is a third-party aftermarket, I think in the coming years, we are going to see some of the barriers being broken down. In five to 10 years, maximum, I think the roaming issue that I referred to before will be less of an issue. There will always be some countries that will be obscured from global cellular coverage, but I think it will be solved in a large portion of the world. That will help to fuel additional services in the vehicle. What are those? Those could be, basically, consumer-related services, in the private vehicle, that is linked to usage-based insurance, to being able to pick and book your time in a repair shop and so on, from that perspective.

{audio:0:05:59} On the other side, this then plugs into the whole data access. There is so much data in the vehicles and there are so many partners in the ecosystem that want access. I mentioned usage-based insurance, UBI, where the players in the insurance industry want to get access to the vehicle data if you are also a subscriber of the insurance. You pay, depending on how you drive and where you drive. There is this ecosystem around it that we are going to see evolve.

{audio:0:06:33} With 5G and that big technology step around the corner, that will help. The car started to become connected back in the 2G time and then there was a 3G and a 4G evolution and the speed racked up. But 5G is a big step because, for the IoT, 5G compressed the delays. Even if you have a good throughput on 4G, the delays are still fairly long. In 5G, we start to get very low latency and that will help autonomous driving enormously. When you do autonomous driving and you need to process data, the latency needs to be very, very short.

{audio:0:07:18} I think we are going to see a lot more, from a technology perspective, and also from an experience perspective. I think we are going to see a lot more companies replicating what Tesla is doing, where you actively start to push out software, over their updates, that really change the car. It’s a part of the car; it’s not something where you need a phone to update your solution in the vehicle; it’s something that just gets updated, overnight.

{audio:0:07:47} Going back to the roaming issue you mentioned, is that just because of the networks in each different local area that stops global OEMs having global coverage? Can you just elaborate on exactly what that barrier to globalization is?

{audio:0:08:04} If you are an OEM or an aftermarket player and you have one piece of hardware and one backend platform, you need to connect it over the cellular network. You go and buy a SIM, from a mobile operator, you put the SIM in the vehicle, as a subscription, and you need to integrate into the carrier network, from the backend, so you can get the data out, without passing internet. Think of it as a private network, within a mobile infrastructure.

{audio:0:08:54} That piece is fairly simple, but when you manufacture a car, where a car ends up in the US, another car ends up in Northern Europe and a third one ends up in Southern Europe and the fourth one ends up in Australia, you can understand the complexity. There is not a single carrier today that can provide a competitive price for high-volume data, in all these geographies. For example, if you take Telenor, where I live in the Nordics, in Sweden, and you put a Telenor SIM in the vehicle, that probably works very well for the Nordics, it works okay for Europe. I’m not so sure it scales for high-volume data in the US, because the roaming prices would be absurd and the same thing applies for Australia. On top of that, in some markets, like Australia, you actually have a permanent roaming ban. You cannot place a SIM in that country and have it constantly roaming, so you need to utilize a local SIM.

{audio:0:10:08} For global coverage, it is not a single provider covering the globe. It’s really a patchwork, with multiple carriers. For each one of these carriers, it has individual settings and it has individual backend integration. Then, when you manufacture the car, you need to understand where the car will end up, because I need to put the right SIM and the right configuration in it. The automotive industry is really struggling in that sense. They are not built for that. They really want this vision of, I can just put the SIM in there and I can go. The embedded SIM and the eUICC on top of that is one technology that will help the OEMs or the aftermarket players, over the air, to change the type of subscription that they care to use. This is still in the early days and there is still more work to be done there, before it’s really industrialized.

{audio:0:11:08} Can we just lay out the different parts of the auto telematics value chain? Between the OEMs, the TSPs, the aftermarket players, can you just lay out how you look at it?

{audio:0:11:20} I’ll start with the OEM side, which is what I refer to as the embedded type. Obviously, you have the OEM who is the manufacturer of the vehicle, the one that is selling it and also, at least in the future, the one that will provide the service to you, as a consumer or as a fleet owner. If I buy multiple Volvo trucks, I am the fleet owner and Volvo provide the fleet services for me. Typically, for a car OEM, they have their Tier 1 partnerships where, basically, they buy the different components. A car OEM can go to a Tier 1 and say, we want this telematics unit from you; it should include this, this and that. The Tier 1 goes to the Tier 2 and the Tier 3 and build it up and sell it. Then the OEM encapsulates it. It’s a fairly complex chain because there are so many dependencies in it in terms of how the product should go and stack. For example, say the Tier 3 sourced the SIM card, but it is the OEM that provides the services. It’s the OEM that buys the services of the SIM card from the carrier. It’s a bit of a complex ecosystem.

{audio:0:12:42} For the aftermarket, I would say that it’s similar but probably slightly more simplified. In the aftermarket, you have players that are trying to build a full-service proposition, where they build their own device. They probably also use subcontractors as well so, to a certain degree, they have their Tier 1s, 2s and 3s, but on a smaller scale. They contract for the carrier services and they sell this as a finished product to the fleet owner. Again, if I take myself as an example, I will buy the 20 Volvo trucks and I can decide to opt in for the Volve fleet-management services and then it goes into this complex value chain of the different tiers.

{audio:0:13:30} Or I can go to TomTom, as an example, and buy their fleet-management services and I put that in all my trucks. The benefit with this is that me, as a fleet owner, I have 20 Volvo trucks, but I also have 20 Daimler trucks. Having a third-party system enables me to have the same system, regardless of the vehicle that we are actually using.

{audio:0:13:56} What about if I have 20 Volvo trucks in the Nordics, 50 Ford trucks in the US, so different vehicle makes and different regions? There are global telematics players, but they do seem to be somewhat local leaders, in different markets?

{audio:0:14:17} You are correct in that. There are probably some that are more international and fit in multiple markets than others, but they are very regional today. Even if you are a big international fleet owner and you have fleets across multiple geographies, you will struggle. This is one of the reasons why you can see the big fleet owners, like UPS and DHL, very much manufacturing and building out their own fleet system. That is the only way for them to get into a coherent ecosystem.

{audio:0:14:58} Who do you think will be the ecosystem owner or leader?

{audio:0:15:07} On the in-vehicle side, I think there are two alternatives. One that I already mentioned is, obviously, the OEM. Today, the OEM sells a car to you, if we look at the private car as an example. Tomorrow, they will sell you a car as a service. Basically, you subscribe to a car or pay for it when you use it. To be able to enable that type of service, they need to have the connection to the vehicle and they need to be able to provide all the value-added services through that data pipeline. I truly believe that the OEMs are in a sweet spot to do that.

{audio:0:15:58} I often come back to Tesla as I really believe that they are thinking ahead here. Today, they sell a connected vehicle. When you buy the vehicle, you have all the services in it, you have all the data usage in it. But also, the way they enable the vehicle, in the future, potentially for autonomous driving and being an Uber alternative when you are not using the car, just shows that. I truly believe the OEM is in a sweet spot for that.

{audio:0:16:30} The alternative is that the OEM works with some kind of third-party player that provides some kind of marketplace, where I see this third-party player being plugged into the different types of ecosystem – it could be an insurance company; it could be a repair shop – and provide that intelligence into the vehicle and prime, you as a consumer, in it. But if I were to put a bet on it, I would say that the OEMs would take the central piece there.

{audio:0:17:09} If you look at the commercial side, I think it’s probably more unclear. In a way, the leasing model is already in place when it comes to the commercial vehicles. But from a service and fleet management perspective, it’s still fragmented. Who will succeed here? Will it be the aftermarket player that really covers the globe? Or will it be the OEM that expands? I will be honest and say that, today, it’s not clear to me. The OEM probably has some benefits because they are global but if they want to be truly enabling, then they have to open up their in-vehicle fleet management services for third parties, as well. It will be interesting to see.

{audio:0:18:02} Why, exactly, do you think the OEMs are best positioned for the consumer market?

{audio:0:18:09} Because they sit with the relationship from where you go and buy the car, lease the car or buy it as a service. They sit on the repair shops and the relationships with the repair shops. For them to pivot and start to provide a service, for me, is probably a lower step change than a new third-party actor coming in there and providing some kind of aggregated service, regardless of the vehicle. I think that is more far-fetched. I already believe that the car OEMs are, in a way, already transitioning. They started with us buying a car; today, we lease the car. Tomorrow, we will buy it as a service and only pay for it as we use it.

{audio:0:19:12} Then the OEMs will also provide the data integration for the insurance company or for whoever else. It’s really an integrated solution. But I am convinced that they will be the one priming us, as a consumer.

{audio:0:19:29} What is the history of the OEMs embedding devices in the vehicles? You mentioned GM and OnStar and it was 15 years ago that they actually started.

{audio:0:19:41} Like I said before, it started out with the basic on-call services and eCall stolen vehicle tracking. Then it evolved into more consumer-related services. In the early days, it was map downloads and, over time, it has become more and more related to consumer-related services and streaming audio and video.

{audio:0:20:12} But there is still a fork in the ecosystem. You have the OEMs that go all in, in providing full end-to-end services. For me, Tesla is in here. Then you have some vehicle manufacturers that only provide what is necessary. The embedded connectivity capabilities and telematics capabilities is only for the baseline. Basically, it’s eCall, because it’s regulated in certain markets. For everything else, you need to connect your phone to the vehicle and tether the phone. Basically, you use the phone subscription to access the internet and collect whatever you want or stream audio or video, even if it goes through the entertainment system in the vehicle. I think you still see those two, but once the connectivity issue that we talked about before, with the roaming, is solved, in the coming five or so years, I don’t see a reason to have a phone connected to the car, to get in-car enablement services. I really see that transitioning to the OEM track.

{audio:0:21:28} Also, in parallel, you have this mega-trend, as we talked about, where the car goes from buy, lease, to as a service. For me, that is the big next step in how I see telematics enabling the OEMs.

{audio:0:21:46} So the OEMs know this and are really laser focused on making sure they have some kind of control over the device and that data that is, potentially, going to be sold as a service?

{audio:0:21:57} Absolutely. You can already see some OEM brands starting to pivot into this as a service model where they, basically, take all the data and you capitalize it. There are a couple of Chinese brands soon going live in Europe, where you have a car as a service. I would not be surprised if we see the other guys follow. But at the same time, the car industry and the OEM industry is very, very slow in transformation. As we mitigate the connectivity issues, as they are able to, with transparency and in an unlimited way, capture whatever they want from the vehicle, they can truly start to transform their business model.

{audio:0:22:47} How does that leave independent players firstly, doing the consumer stolen vehicle recovery or the fleet management services, like mixed telematics, for example? Are they going to be completely disintermediated by the OEMs?

{audio:0:23:09} There are two elements to it. We have to remember that the lifetime of a vehicle is fairly long. Even if the OEMs decide that the Volvo xc60 2025 model is as a service, there is still everything before that, that is 20 or 25 years old. Usually, these are the cars that are easier to steal, as well. I think there is definitely a long, long, long tail of vehicles out there that still need standalone, third-party aftermarket types of solution, whether that be stolen vehicle tracking or something else. Even if you go and buy usage-based insurance and the insurance partner asks what vehicle you have. Well, I have this old car. They cannot capture the data from that old car, through the OEM, so you need to put this OBD dongle inside. I think there is a long tail there.

{audio:0:24:15} Obviously, if we look 20 years ahead then yes, they need to transform as well, in one direction or another. Especially if they are only working in the personal car arena. The companies that are working more in the fleet and the aftermarket of fleet and commercial, they can probably pivot more easily into other segments, which are also B2B related.

{audio:0:24:45} Let’s take it in a very simplified way. Today, you provide a third-party aftermarket fleet service to a fleet owner. They plug a device into the vehicle and the device sucks up the data and sends it to the platform. Once the data is in the platform, the telematics provider can now start to utilize it. He can plot it on a map, you can put geofencing on, you can provide routes for driving. You can track the vehicle and read out repair information and so on. Once you have that platform in place, the B2B telematics platform for fleet, it is not very hard to tweak the piece of hardware and you can put this into a tooling instead and start to attract heavy equipment or heavy tooling or whatever you want to do. The data gets into the platform and, basically, in the platform you build a layer that is now adopted for heavy vehicle related applications or for tool tracking. Today, you only have one vertical; you do fleet management for commercial trucks. But tomorrow, based on the same platform, you can do heavy equipment or you can do heavy tooling tracking and usage. You can use your imagination. You have the baseline of the IoT platform in place and you need to pivot.

{audio:0:26:29} For me, they already sit with the B2B relation and scaling from there is easier than if you are only in a B2C, doing stolen vehicle tracking; it’s very niche.

{audio:0:26:42} What is the difference in the architecture that makes it very difficult to shift from the stolen vehicle tracking?

{audio:0:26:48} Technology wise, I don’t believe the architecture is very big difference. I think it is more the brand awareness – B2B versus B2C – the knowledge and the relations. If you already do fleet management, first of all, I think you can add on capabilities of the fleet management. You can start to do tire pressuring, you can do trailer tracking; you can do so much more, just in that space, before you need to pivot and say, now I should also start to do heavy equipment and excavators, because it’s similar. These are the same type of customers and my brand is well-known there.

{audio:0:27:24} But if I’m a cool brand today, doing only stolen vehicle tracking, in a direct B2C type of mode, even if I might have some distributors, for me to pivot into something completely new is a bigger pivot than if I am already in the ecosystem. Technology wise, the difference is small.

{audio:0:27:47} The actual architecture, the device plus the backend platform, is somewhat similar and I guess the way you transmission the data is similar, based on different verticals?

{audio:0:27:58} Think of it this way. You have a piece of hardware and you put that piece of hardware into something else. It could be a truck, it could be a private car; it could actually be an air compressor. You integrate the piece of hardware into that whatever it is, through its IOs and its ports. You configure the device to say what comes in on the different ports; this is RPMs, this is temperature, this is vibration. Then you flush the data to your backend and your backend is your IoT platform. Once you have the data in there, basically, you build web apps or integrate to third-party platforms and those web apps are based on the use case.

{audio:0:28:57} Do you want a fleet use case? Yes. So I do this web application. You want to have tire pressure on top of it? Yes. So I enable this function. For me, once you have all the data – obviously you need to know the verticals – building the vertical applications, that’s fairly straightforward.

{audio:0:29:22} Let’s take the customer journey for fleet management now. We touched on this already, but just to go into a bit more detail. Let’s say I’m a multinational company and I need a global fleet. How is the decision made for the telematics software in the vehicle?

{audio:0:29:46} If you are the fleet company and you are deploying your trucks over multiple countries or regions, as I said before, you will struggle. You will struggle if you are utilizing different types of brands on your vehicles. What can you do? Firstly, you can go and buy the different embedded fleet systems that come with the truck, but you will end up in this defragmented solution. Or you go and buy a third-party solution that you put into all your trucks and that then communicates to one platform that all of your company will use.

{audio:0:30:35} I will take TomTom again, which I think is a good example. They may not be totally into the very heavy trucks, but at least they are across multiple areas. They provide one third-party type of solution across multiple markets and it bridges whatever vehicle you have.

{audio:0:31:03} So the customer, me, as a multinational, gets one dashboard with all my vehicles that are deployed globally, in terms of how they are performing?

{audio:0:31:13} Correct. You have one platform to integrate into your downstream systems that you might have, as well.

{audio:0:31:21} How could the OEM, at some point, actually build a solution that could disintermediate that?

{audio:0:31:31} As I said, if the OEMs truly want to tap into this, they need to be brand agnostic. If I take Volvo, again, as an example, and look at their embedded fleet management system that I get with my Volvo truck, they need to have some type of third-party integration, where I can integrate my Daimler trucks. Regardless of the different truck brands I have and the embedded telematics system, they can all integrate into the Volvo platform. For me, can this happen? Absolutely. But I think it’s a long journey to get there, because it’s not just about Volvo saying, yes, now you can integrate. It’s also for the other vendors to say that they open up, so once you have your data in a Daimler fleet management system, you can plug that into Volvo and you can use Volvo as your master. It’s a long journey to get there, if you truly want to get into this.

{audio:0:32:38} Or the fleet owner needs to decide that they go all in on truck manufacturer A or truck manufacturer B. But this doesn’t happen overnight because there is a legacy fleet and a new fleet.

{audio:0:32:53} That’s going to be pretty difficult for an OEM.

{audio:0:33:01} You are, at least, giving away your user experience, in that sense. Potentially, you are, indirectly, also giving up your access to the fleet company as such, because they are not using you as the Tier 1 system. For me, it’s a little bit far-fetched and this is where I think a lot of the third-party players can definitely play a role today. As I said before, I think that the fleet management, third-party aftermarket players in fleet and commercial vehicles need to figure out how they scale, globally, and how they can provide a more coherent service across the globe. But you are probably better situated than the commercial vehicle area which, in a way, have access to the global market, but needs to open up their brand for third parties.

{audio:0:34:05} Is the OEM-embedded device not as great as the third-party device or is it really just the fact that it’s the holistic platform for the customer that actually wins, rather than the actual product or data being better?

{audio:0:34:27} From a technology perspective, there are good and bad factors of having stuff deeply embedded versus not. I think, if you are deeply embedded, from the OEM, you can probably access a few more data points versus if you are a third-party and sit on an OBD dongle or whatever it is. That’s one. But on the other side, the OEMs are usually very slow to drop new features or new functions, versus a third-party player that lives on providing the best in class telematics platform experience. They are all about providing new capabilities on a recurring basis. You have both, in that sense, but I think they are very different in what you get.

{audio:0:35:20} Going through the journey again, if I’m the multinational, using the vehicles, I would typically lease them from the fleet management company but in those vehicles, there would be an embedded OEM device, but I would choose to put a third-party device in. What happens when I give the vehicles back, after the lease, and get new vehicles?

{audio:0:35:55} Correct. If it’s embedded, you cancel the service with the vehicle manufacturer, once you give the vehicle back. If it is a third-party aftermarket product, you can pull it out or you can cancel the service or you just move it to a new vehicle.

{audio:0:36:23} So the multinational would just keep having a new device implemented in the new vehicle, the new fleet that they get?

{audio:0:36:33} Correct. Once you get a new truck you implement the third-party solution in there, if you have an aftermarket. You can move it from another truck as it is still modern, from a technology perspective. If you have the truck OEM system, then you cancel the truck you give away and you pull out the new system on the truck you get. Think of it as a subscription service, basically.

{audio:0:37:00} If you were running an aftermarket, fleet management service today, how would you look at scaling, globally?

{audio:0:37:17} There are a couple of things to look at here. Firstly, obviously, to have a platform that is flexible enough that you can build both the global application approach, as well as with regional flavors. The fact is that rules and regulations differ from market to market, so you need to have both. Having a technology platform that you can really scale globally, with regional flavors.

{audio:0:37:54} Secondly is access to the customers. This is probably something to do through acquisitions and so on, where you can get access to existing fleets. Over time, you migrate them to your new platform. When they change truck or the hardware reaches end of life and they get new hardware you also migrate them over to the new platform.

{audio:0:38:23} Thirdly, which I think is a must if you truly want to do this globally, is the connectivity piece. You can do what I said before, but you will still need to have regional pricing, regional flavors of the capabilities you provide. If you truly want to get to a global one, you need to crack the connectivity piece, as well.

{audio:0:38:47} Buying customers to get access to them and then one truly centralized platform that can scale globally, but with regional variations.

{audio:0:39:00} If you were to roll up and purchase all the local fleet management telematics providers, could you integrate the technology to one platform, reduce the R&D and then almost buy the customers?

{audio:0:39:16} I think it depends what you are acquiring at that point in time. Can you merge the technology in the backend? Maybe. Usually, I would say that it is fairly hard to merge two platforms. Could you update the software on the device that is in the vehicle, so that the device now sends the data to your new platform and the customer uses the new platform to get access? Yes, that is probably feasible, if the hardware in there and the device in there, supports remote updates. Thirdly, you basically need to change when the customer changes. When a truck reaches end of life or the device that you have in the vehicle reaches end of life, that’s when you migrate the customer.

{audio:0:40:10} There is not a black and white answer on this one. Seeing all the different technology issues here, this is case by case.

{audio:0:40:18} We’ve touched on this briefly, already, but what are the real barriers to, specifically, the aftermarket players in fleet management services, on the commercial side? What are the barriers to consolidating various different markets?

{audio:0:40:44} There are two questions there, I think. On the technology side, I think we just talked about it; the three issues relating to migrating them to one platform. When you have them on one platform, this is when you start to get the scale effect. Then there is a commercial piece, as well. Should we have global big fleet providers? Absolutely, but a lot of them have their own home-built system. Then you have the big fleet providers, but they are not necessarily global. They are usually regional. They are very active in Europe, driving north to south or east to west, or they are very active in North America. It’s more regional.

{audio:0:41:32} I think it’s more about what makes sense from a business perspective. Where do you want to expand your base? If you are a telematics third-party provider today, doing telematics in the Nordics, would it make sense to then enable and jump into the US? Or would it make more sense to buy and acquire an asset in Europe, because that can fuel you to higher expansion in the region? For me, top of mind, I would probably do the latter, of fueling it in the region and expanding your presence there, before you jump the pond and go to the US or vice versa.

{audio:0:42:14} Given that these businesses now have a higher software or service element to them, if you do compare this industry to other software industries, there are always a couple of big global players. Obviously, this has a physical, device element that has some limits, but I was just wondering if there are any very specific regulatory issues, or issues around transmission of data?

{audio:0:42:44} As I mentioned before, there is an issue around transmission of data when it comes to cost, but that’s when you start to go truly, truly global. There are regulatory aspects both from what the telematics system and the fleet management system need to cover in the different regions. Thirdly, there is a regulatory aspect of the device in the vehicle. It’s not necessarily that a device in the US is certified for Europe and vice versa. Again, I don’t think there is a black and white answer on this one. I truly believe it should be, where does it make sense, from low hanging fruit, to scale? I would say, start in the region and scale in the region and when you have Europe, maybe you move over to another region. At that point in time, you need to figure out, can I replicate the same hardware or do I need a recertification. Can I replicate the existing connectivity agreements I have in place or do I need two, and so on and so forth?

{audio:0:43:45} As soon as you break out from one region to another, the level of complexity multiplies, without any question.

{audio:0:43:53} But it does seem as if it is possible; it’s not impossible to have a global consolidated player in the fleet management side of telematics?

{audio:0:44:01} No, I don’t think it’s impossible. As I said before, the technology is going to help us there, both from the software piece and the simplicity of the device, over time. Then the connectivity today, which is big blocker, will help with the simplicity as well. I think it’s more about, how do you get the regional experience, not just from capabilities that are regulated regionally or even country specific, but also language and things like that. It’s more about the customer experience to make sure you meet the regulatory aspects.

{audio:0:44:45} Which player, in the aftermarket fleet management services, is best positioned, in your opinion?

{audio:0:44:53} To become a global player? I don’t have a good answer there. I think there are a few that, over time, could potentially grow if they truly want it. Masternaut is one, CalAmp if they decide to go outside of their space in the US and expand. They do so much more that is not telematics related. They do remote worker, they do office connections, in a way. TomTom I think, probably, is one of the few that is in so many markets with their TomTom fleet services, but do they have the right proposition for heavy trucks? Doubtful; they are probably in the mid-tier trucks and lighter trucks. I don’t think there is an easy answer to that. I think what we see, right now, in the market, is that it is much more about consolidation around getting from one, two, three countries, to become regional. This is where I would say the market is, at this point in time.

{audio:0:46:14} What was TomTom’s story in how they scaled their business?

{audio:0:46:18} TomTom cover so many different types of areas. They started from the portable navigation device, the PND. Then it got connected and once it got connected, they figured out that they had a connected PND, so why don’t we provide fleet management services and go after the fleets. So they did that. Then they understood that there was so much value in some of the data. They have everything from the live traffic to the speed cameras to the maps that they owned the rights to. They started to sell those as a data service that gets plugged into multiple vendors. I think Garmin and TomTom even tried to get into some kind of a Tier 1 approach to the OEMs where they basically provided some kind of infotainment navigation system, embedded into the vehicle. I’m not sure they still do that but they used to do it.

{audio:0:47:33} As a multinational, how do I choose which aftermarket fleet management service provider to use? There seems to be so many; you just mentioned four or five. There are probably another 10 more, in different regions. They all seem to have the same offering, the same services, to some extent. How do I make a decision?

{audio:0:47:59} That’s a very good question. I agree with you, their service propositions are very similar. Obviously, if you look under the hood, there are different kinds of features and functions, so I think it comes down to what your need is. Do you need a lot of features or less features? The second thing is, the geography that you want covered. It’s just a fact that some of these players just cover one or two countries, some cover a region and some cover two regions, so that’s a factor, as well.

{audio:0:48:37} I agree with you; it is a complex market with multiple actors and it’s not crystal clear as to why I should pick vendor A over vendor B. I share that view.

{audio:0:48:56} How much does price matter for the customer?

{audio:0:49:04} Priority number one is operational uptime. This is a critical system for a fleet owner and it needs to work. You need to be able to send your notification to the different vehicles. Then I would probably say that features and functions and price is a combined number two. What do I mean by that? There is a price for the service, and that could be high or low. But there are also features and functions that could, potentially, help you save money. Some telematics and fleet services provide you insight into the vehicle, to do preventative maintenance and, thereby, save costs before it breaks, or measure other components in the vehicle. Are you ready to pay a little bit more for some services, to potentially save at the other end? Yes, to a certain degree.

{audio:0:50:00} Operational efficiency and then pricing and value add and features and functions is a balancing act, depending on your needs.

{audio:0:50:09} Is there ever a situation where the customer will have multiple providers, such as TomTom and Masternaut, with all these different providers in different regions?

{audio:0:50:27} I would probably say yes. You have truck and fleet companies acquiring other truck and fleet companies and they have a legacy system in there and they need to figure out what to do, so I would probably say there is a few of those. But my general feeling is that a fleet owner tries, as much as possible, at least when they use a third-party system, to be on the same third-party system as their old fleet; it just helps, especially in one region. It could be the case that Northern Europe uses system A and for Southern Europe you use system B, but as much as possible, they try to stay coherent.

{audio:0:51:10} That goes back to the regional focus of the players?

{audio:0:51:14} Correct; you might get a player in the northern part of the US and Canada, but that player doesn’t have US and Mexico. Again, you need to figure out what the geographies are that you need to cover then quality of service, then features and functions versus pricing and capabilities there.

{audio:0:51:49} When we get back to the essence of the aftermarket fleet management providers, it seems as if the technology is somewhat commoditized and that they all have similar devices, similar features, similar product offering and use the same data transmission process. Is the value just really in the customer relationship in that region?

{audio:0:52:15} I think the value is in three areas. One, the customer relationship and the service that they provide. Good quality of service builds strong customer relationships which builds high NPS. Two, the platform. How quickly can they deploy new features, new functions and adapt and adjust for new regulatory aspects? Are they a fast mover or a slow mover? Three, the whole UI experience. There are fleet management systems and telematics platforms out there that that holds a UI that is so bad in many ways, versus how a UI today is expected to look like. I truly believe that UI will also be an impact, over time. For me, those are the three cornerstones of what drives the relationship, as such.

{audio:0:53:19} So there is a core element there in how the customer uses the dashboard, interacts with the data, consumes the data, even though the backend might be somewhat limited?

{audio:0:53:29} Even the UI could be good or bad, in a way. There is probably a fourth, as well, and that is the whole API. A big trend that we are going towards is that a lot of software today is based on dashboarding and things are done on the dashboard. In tomorrow’s ecosystem you are going to have more and more one tool, one software, to a new work-in. That tool plugs into all your different systems. One of those systems could, obviously, be your fleet management system.

{audio:0:53:59} I think, over time, API integration and availability will also be a key factor for a customer to look into.

{audio:0:54:10} I want to go back to the point you made around how the value chain is changing but, also, differences between consumer and fleet management or commercial. If I’m a big multinational and I’m using a fleet manager to lease the vehicles, how could the OEM disintermediate that and actually start to own the customer relationship? If the OEM is now moving, as you said, to the service model, they really have to start recouping the profits in the industry as much as they can. How do they encroach on the aftermarket?

In-Vehicle Telematics Value Chain Structure

Technological history of in-vehicle telematics and connectivity

Potential impact of 5G and other technological developments over the next decade

Value chain structure for in-vehicle telematics

Why the market is fragmented and barriers to consolidation

Positioning of the auto OEMs in consumer and commercial auto telematics solutions

Core differences in value chain structure between stolen vehicle and fleet management services

How a multinational customer chooses a third-party aftermarket provider

Challenges and opportunities for aftermarket players such as Calamp, Ituran, etc.

In-Vehicle Telematics Value Chain Structure

Former Vice President IoT at Sierra Wireless

inpractise.com/articles/auto-telematics-value-chain

Why is this interview interesting?

Executive Bio

Dan Mårtensson

Former Vice President IoT at Sierra Wireless

Interview Transcript

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In-Vehicle Telematics Value Chain Structure(October 21, 2020)

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