Related News
Home » Business » Autotalk Special
Telematics: finding what people will pay for
June 24, 2013, Monday
|
Print Edition
Print Edition
TELEMATICS is the technology of sending, receiving and storing information via telecommunication devices. Vehicle telematics is growing fast. According to Visiongain's latest forecast, the market size of global vehicle telematics will exceed US$20 billion in 2013.
Vehicle telematics has developed quite well in North America and Western Europe. In those countries, telematics has widely been adopted in the commercial vehicle sector since large-scale fleet management needs close monitoring and supervision.
A good telematics product or service usually is the result of seamless collaboration of a group of players that includes a device hardware provider, a software provider, a services provider, a telecommunication operator and a content provider.
There are some well-known vehicle telematics applications in the China market, for example, GM's OnStar in the passenger car market and Shannxi's Tianxingjian application for commercial fleets. However, while there are many companies entering the vehicle telematics market in China, the market is still at its early stage of development, mainly due to lack of a clear, profitable business model.
Different parties are usually working separately, without effective collaboration or coordination. Also lacking in the industry are established standards and systems. These existing challenges currently prevent the market from growing at the expected pace and from reaping the necessary profits for the parties involved. In general, major players have yet to find the key to market success, either because they are overly optimistic about profits or are too ambitious with growth targets.
Key questions need to be addressed. How to accurately define customer needs? How to ensure an excellent user experience and create value? How to make the customer willing to pay for the telematics-based products and services?
The current business model to commercialize telematics technology in China is very simplistic. Its profit relies fundamentally on hardware sales and on regular monthly service fees. However, this model is not sustainable. For example, OnStar, which provides free services for a trial period, reached only a 30 percent take-up rate after the trial expired.
Compared with applications in Western markets, telematics has better business models. It is similar to the mobile phone consumption differences between China and the West. In China, changing mobile phones every year and purchasing the most recent models are fashion statements. However, in Western countries, consumers are more focusing on practicalities. They recognise the value-added services provided by telematics and they are willing to use the products and services.
Foreign business models could provide ideal reference points for domestic vehicle telematics players. While developing a feasible business model, it is essential to identify the target market first. It will be easier to execute the business plan if the target is a specific market. For example, telematics companies need to decide whether products and services are targeted at large-scale logistics companies or at taxi enterprises. Different final users will have specific needs and some of them may require high-level technologies.
The goal of designing a favorable business model for telematics-based products or services is to provide a good level of service to the customer and to ensure outcomes that result in acceptable profits. Different services require different partnerships.
How to make a breakthrough?
First of all, a good business model should provide free hardware and then rely on good services to create sustainable profits. In terms of services, companies should consider innovative pricing strategies, such as the pay-per-use model, with increased one-time usage fees. Companies could consider a model, for example, where customers could provide some useful information to offset their service fees.
Telematics should be created as an open, safe and trusted platform, which allows different parties to collaborate to drive revenues. Of course, we need more diversified and innovative ideas to create good business models.
From a technological perspective, there is not a great disparity between China and developed countries, and technology is easy to obtain. The key to the growth in vehicle telematics is to provide a service that customers are willing to pay for.
Vehicle telematics has developed quite well in North America and Western Europe. In those countries, telematics has widely been adopted in the commercial vehicle sector since large-scale fleet management needs close monitoring and supervision.
A good telematics product or service usually is the result of seamless collaboration of a group of players that includes a device hardware provider, a software provider, a services provider, a telecommunication operator and a content provider.
There are some well-known vehicle telematics applications in the China market, for example, GM's OnStar in the passenger car market and Shannxi's Tianxingjian application for commercial fleets. However, while there are many companies entering the vehicle telematics market in China, the market is still at its early stage of development, mainly due to lack of a clear, profitable business model.
Different parties are usually working separately, without effective collaboration or coordination. Also lacking in the industry are established standards and systems. These existing challenges currently prevent the market from growing at the expected pace and from reaping the necessary profits for the parties involved. In general, major players have yet to find the key to market success, either because they are overly optimistic about profits or are too ambitious with growth targets.
Key questions need to be addressed. How to accurately define customer needs? How to ensure an excellent user experience and create value? How to make the customer willing to pay for the telematics-based products and services?
The current business model to commercialize telematics technology in China is very simplistic. Its profit relies fundamentally on hardware sales and on regular monthly service fees. However, this model is not sustainable. For example, OnStar, which provides free services for a trial period, reached only a 30 percent take-up rate after the trial expired.
Compared with applications in Western markets, telematics has better business models. It is similar to the mobile phone consumption differences between China and the West. In China, changing mobile phones every year and purchasing the most recent models are fashion statements. However, in Western countries, consumers are more focusing on practicalities. They recognise the value-added services provided by telematics and they are willing to use the products and services.
Foreign business models could provide ideal reference points for domestic vehicle telematics players. While developing a feasible business model, it is essential to identify the target market first. It will be easier to execute the business plan if the target is a specific market. For example, telematics companies need to decide whether products and services are targeted at large-scale logistics companies or at taxi enterprises. Different final users will have specific needs and some of them may require high-level technologies.
The goal of designing a favorable business model for telematics-based products or services is to provide a good level of service to the customer and to ensure outcomes that result in acceptable profits. Different services require different partnerships.
How to make a breakthrough?
First of all, a good business model should provide free hardware and then rely on good services to create sustainable profits. In terms of services, companies should consider innovative pricing strategies, such as the pay-per-use model, with increased one-time usage fees. Companies could consider a model, for example, where customers could provide some useful information to offset their service fees.
Telematics should be created as an open, safe and trusted platform, which allows different parties to collaborate to drive revenues. Of course, we need more diversified and innovative ideas to create good business models.
From a technological perspective, there is not a great disparity between China and developed countries, and technology is easy to obtain. The key to the growth in vehicle telematics is to provide a service that customers are willing to pay for.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
