Telematics industry dynamics and strategies for converging technologies

Abstract

The Telematics Industry faces tremendous challenges for growth. Regardless of the efforts and investment from vehicle manufacturers and suppliers, telematics has not been that profitable industry that many analyst forecasted five years ago; a 40 billion industry by 2003. This paper presents an analysis of the dynamics of the telematics industry and emphasizes on factors affecting the diffusion of telematics innovation. These factors are related to openness of telematics systems and establishment of standards, network externalities effects and attractiveness of complementors, customer's willingness to pay, telematics services pricing, and consumer knowledge of newer technology. Based on an in-depth analysis of the telematics architecture and the technologies converging in the telematics system I suggest a mixed strategy with respect to standards. This strategy favors the growth of this industry. Based on this strategy there are developed some scenarios of how the telematics value network will look like and how the interaction among the players would take place. Finally, a conceptual system dynamic model is presented to illustrate the dynamics of the industry and how the factors influencing the adoption of the telematics all play together to favor or affect the diffusion of the growing telematics industry.