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Telematics 2008: A Global Snapshot

Steve Millstein
President and CEO

Table of Contents

  • THE MARKET LEGITIMACY OF TELEMATICS
  • T3 – TELEMATICS' THIRD GENERATION
  • THE CAR AS NETWORK NODE
  • DATA EXTRACTION
  • SOCIAL NETWORKING
  • TAKING CARE OF ORDINARY BUSINESS
  • DAILY USE EQUALS DAILY RELEVANCE
  • THIN CLIENT FUTURE
  • SYNC TO THE FUTURE?
  • OPEN SOURCE PROTOCOL
  • SHRINK-WRAPPED SOLUTIONS (THE "SHOPPING MALL" MODEL)
  • AN END TO FIRST-MOVER ADVANTAGE
  • CONCLUSION

THE MARKET LEGITIMACY OF TELEMATICS
When the first navigators set off on lonely voyages to uncharted waters, they were called "explorers." Some came back with great wealth, or grand discoveries. Some failed. Some didn't come back at all.

It's possible that some people in the age of exploration felt that opportunities had ended when the last big discoveries were made. After all, how many times can China be discovered? How many Americas are out there over the horizon? Observers would have been quite correct in noting that there was less and less room for original exploration.

The market in horizons diminished rapidly as the world became better-known. Analysts could have said "the rewards of sea travel are limited; we don't see much of a future in voyages."

Later, when ocean liners sailed the same sea routes, the people on board were called "tourists." The ocean was the same as it had been when "explorers" sailed it, but the nature of the trip had changed. The travel routes were known and the dangers were marked; and because of that tens, then hundreds of thousands of people were willing to risk sea travel.

They did so because ocean travel turned out to be less about getting across an ocean to an unknown goal, and more about what you did with the trip.

Likewise, Telematics had its early phase in which the prize was supposed to go to the "early adopters" who discovered and monopolized a new discovery. Once those fast movers were done, observers held that Telematics didn't seem to hold many future rewards. The technology bubble burst, some ventures ended, others didn't pan out, and the market in Telematics horizons diminished rapidly.

The age of Telematics explorers is over. The nature of the trip has changed.

Now it's time for some postcards from the emerging world of Telematics where the prize isn't limited and reserved for the first-to-market, but instead growing and shared among the best in class.

If I were a Telematics tourist, here are the cards I would write back to the home folks.

  • North America: Having a good time, wish you were here!
  • Europe: Not much has changed over the years --- but there's excitement in the air, we hope to reach every country!
  • Asia: We're here, not sure where we're planning to go, so much to learn!
  • All postcards end with exclamation points because every trip is exciting, and it's the same with Telematics today. Every car company, because of the competitive nature of the industry, is making their plans at this point in time. I believe the Telematics industry has gone from an early exploratory phase, in which automakers could think about whether they would or would not "offer" telematics, into a new legitimacy in which some form of Telematics is simply going to be in cars. It's becoming as central to the driving experience as those once-upon-a-time luxury options power steering and power brakes. When was the last time car buyers faced a choice between manual and power steering?

Similarly, there will soon come a time when car buyers wonder why Telematics would ever have been an option. Our estimates are that 40 to 50 percent of new cars sold in North America will be Telematics-equipped off the line in 2011. It is continuing to grow and we think it will be standard over time.

So the newest trend is what I would call "market legitimacy." I believe the industry in the past years has become legitimate, and with legitimacy comes competitiveness. More service providers and technologies are coming into the market and that's creating new business models, new infrastructures, and new protocols. We call this new era "T3" --- telematics' third generation --- and it promises to be a radical departure from the past.

T3 – TELEMATICS' THIRD GENERATION
Telematics for over a decade has been defined by a single business model pioneered by ATX and our industry colleagues at General Motors who provide the OnStar service. Both have developed a steady market that has created consumer value, benefits to public safety and a dependable revenue stream for shareholders. ATX has had a steady market of about 850,000 subscribers, closing in on the 1 million mark at the end of 2007. With the raw growth of the existing business model, we anticipate that over the next few years we will reach 2.5 million subscribers just based on overall Telematics offerings within the automotive industry, and there are other factors that could launch even more significant growth for us. But future growth, exciting as it is, is not the heart of the telematics story as the industry embarks on its 12th year.

ATX has been a Telematics leader since the earliest days of the industry. That's not PR-speak. It's fact. We have been unique as a profitable third-party provider of OEM-offered Telematics services longer than any competitor. We've taken heat over the years for seeming isolated or for pursuing a course different from that of self-proclaimed industry thought leaders. Our view has always been that our own brand name is less important than the brands of the OEMs we serve, that OEMs must never surrender their "real estate" and, thus, their customer inside their cars. Telematics is always about the customer experience and reinforcing their purchasing decision. Even with all of the changes that T3 technologies and applications will bring, we remain steadfastly convinced of these principles.

So, what do we see ahead in the telematics waters beginning in 2008?

  • The gradual demise of subscription-based, event-driven telematics, relegated primarily to luxury class and near-luxury class vehicles.
  • The emergence of a global telematics platform.
  • More flexible telematics systems that will open up the vehicle to receive a variety of best-of-class applications from various providers rather than simply tied to just one. Telematics may no longer be linked to a single "box" in the vehicle, but could be channeled to and from the vehicle through other devices.
  • Telematics services become less about responding to an event (e.g., a crash, a stolen vehicle, a disabled vehicle, a lost driver) and more about an always-on experience wherever you are mobile. It will be less about technology and more about personalization of services and strict protection of vehicle owners' personal information and preferences, delivering to them a unique ownership experience compatible with the OEMs brand values.
  • Within all of those predictions, our experience tells us that successful Telematics providers will need at the very least to offer a global footprint, with true involvement in the regions served, and that providers will do well to give maximum flexibility to implementation. Our experience convinces us that automotive companies do best with Telematics when a provider offers them a solution that allows selection of the hardware they want, the wireless protocol they need and the freedom to offer a variety of content.

We think there are some recent entrants to the Telematics market with very different business models with unproven cases so far. It will be interesting to observe the various inflection points they reach on service provision, government accommodation, branding and, most important, profitability. In the automotive product class – which has a ten-year, 100,000-mile-plus lifecycle – lack of sustainability is the cardinal sin.

For example, just to create a USB port designed to automotive standards, for example, took a major working group several years. And that was simply to duplicate in car-mode what already existed on consumer electronics. There's no value-added aspect to the in-car USB port for the eventual consumer, who does not care about the automotive duty cycle. The consumer just wants the port to work and doesn't think about having it last 10,000 cycles, or whether it can be used with a gloved hand, or the fact that it has to work at minus-40 Fahrenheit. The customer will absolutely care if the USB port fails to work at any point during their car's lifespan. Who will they blame if it stops functioning? The car manufacturer, not the electronics supplier. And that's just for one simple piece of hardware. Picture the car owner if the heart and soul of their car's Telematics communication system dies.

We don't have to work very hard to understand that customer's feelings, because we've seen it demonstrated in the past year. As you know, the earliest Telematics systems in North America came out using the cellular technology of the day, the analog signal. In 2007, phone service providers made the long-planned switch to digital signals and older phones were no longer provisioned.

One of the brands we have served, Mercedes-Benz, was an early entrant into Telematics. Mercedes later decided not to move forward with more-advanced Telematics service for a few years and, through 2006, remained an analog-based system.

When we went to our Mercedes-Benz customers last year to start shutting down the analog service, we were amazed. They didn't want to disconnect. When we started reaching these analog customers, we gave them three options: shut the service down now, go to the dealership for a retrofit to digital service, or continue the existing analog service on a prorated base for whatever time was left during which that service would continue to connect. Incidentally, our renewal rates for those customers had been in the mid-70-percent range year over year. We had forecast that our renewal rates would decline by at least 10 percent due to the analog changeover. That didn't happen at all. They took whatever fraction of a year we could give them.

So there's something going on there, something consumers are happy with. Our industry, and the automakers we serve, must understand that as we go forward. We can't promise a relationship and then back out on the consumer. Legitimacy as a Telematics industry must carry sustainability as a part of driving.

Meanwhile, other events are moving the Telematics market in new directions. I can't tell you enough about the degree of interest we at ATX are getting based on our announcement of entering the Chinese market. Companies are rushing, and I mean literally rushing, to be among the first to bring Telematics to China. You will see Telematics on cars in China within the next year. The plans aren't stopping there. We're seeing something new emerge because of this focus on China as well as other Asian and Pacific Rim markets. We're seeing car companies starting to develop global – truly global – Telematics approaches. Everybody's planning it, and they're not just planning it for one market, they're looking globally.

I'm not suggesting a one-size-fits-all approach. I'm not suggesting all the telematics products will be identical. We are working on a joint study right now for the Chinese market, and we're going to be doing a similar study for the Indian market, examining cultural needs, willingness to pay for certain services, priorities and the like. Theft recovery and automatic collision notification both appear to be becoming ubiquitous around the world, for example. But for automakers with a global strategy there can be one piece of equipment on the car, and wherever it goes we can provision it, customizing our services on the server side.

The Telematics markets still remain fairly divided into thirds: North America still prizes safety and security above other applications; Europe focuses on navigation and traffic systems and the Asian market is more attuned to infotainment and personalization. As the global market expands, though, we see a potential blending of these demands. With the expansion of the EU, for example, we're beginning to see some of the safety and security advances becoming uppermost in the minds of Europeans. A convergence is just beginning. Delivery mechanisms for the services will, of course, differ, but desire for the full suite of Telematics services is growing.

Now I'd like to take some time to discuss a few specific drivers for the market trends I've indicated. I'm going to mention some specific competitor names and products as part of this, so don't be shocked; at ATX, we've been in this market long enough that we're secure in our own business and we don't have to pretend that there aren't competitors out there, many of them with good ideas.

THE CAR AS NETWORK NODE
We said two or three years ago in Hanover that the car companies need to begin focusing on "connection" and not on "content." Automotive lead times are such that it's difficult to stay competitive with the consumer electronic marketplace; consumers need to be able to bring devices, protocols and ways of connecting into the car and have the car simply work seamlessly with consumer expectations.

We don't see portable devices as competitive with the Telematics business model at all. We'll connect to consumers through those devices. And we see those integrating, in the eyes of the driver, into the vehicle. Your car's a node on the network. It's going to become a multi-modal device.

Telematics providers have the ability to provide optimal connection for the multi-modal car. This ranges from determining least-cost-routing for the signal itself, to helping all the devices in a vehicle to work together on something other than operating system disagreements. In the Telematics future, the application will determine which way is best. Because devices are interacting, consumers will want the ones they use the most to dictate how the other devices will operate. The driver isn't interested in having a "Telematics" experience, per se – they are interested in getting things done using familiar commands and interfaces.

Customers are also interested in subscription efficiency. During a recent visit to Korea, I signed up for Internet access on my laptop in my hotel. But as I told the hotel desk, I've also got a smartphone, and I want Internet access on that as well, if I'm jogging or whatever. The answer was that I had to buy another subscription. Why? I'm not using any more minutes; I can't get twice as much Internet just by having two devices connecting to the same node. It's not the time that's valuable, in other words – it's the accessibility. Telematics offers the network node accessibility that will help a car logically manage its driver's connections.

DATA EXTRACTION
While I've focused a lot on consumer desires for Telematics, pulling information from the vehicle to inform Vehicle Relationship Management programs and to bring data to the car companies in order to reduce defects and improve warranty costs is clearly a major role for our maturing industry.

BMW, for example, has built four years of its Assist and teleservices built into the manufacturer's suggested retail price of each car. We see that trend continuing among other car companies. Why? Because the data download from hundreds of thousands of vehicles, aggregated, reveals trends and indicators that are vastly valuable to an automotive company while being minimally useful to any particular driver. Which individual is concerned about a transient catalyst error that may occur only at speeds of 103 kph during left turns? Few drivers could gain any benefit from such information, but this theoretical example might have major implications for total vehicle lifecycle costs for an automaker. Something is happening there, an "event of interest," as technologists might say, that could reveal a correctible flaw in overall engine management.

Such transient events were unprofitable to consider in the past; now, they can be correlated across a vehicle fleet. And, by the way, BMW doesn't have catalyst errors. But manufacturers overall saw far fewer warranty problems last year. Data from the National Highway Traffic Safety Administration showed that total safety-related recalls in 2007 fell to 123 recalls, affecting 12.3 million vehicles, the lowest number of recalls in four years. In 2004, for example, there were 231 auto recalls affecting 30 million vehicles. A majority of the 2007 recalls involved cars less than two years old; automakers are crediting early feedback allowing them to catch problems in production.

While automakers identified "dealers" as the source of much of the information, Telematics, to my way of thinking, simply must be playing at least a small role in this. VRM programs and the ubiquitous rollout of OnStar across General Motors vehicle fleet at the very least have increased the raw amount of vehicle data being piped to both automakers and dealers.

At ATX, we see this same data flow as easily mined so that drivers also begin to receive a direct benefit from it in various ways. You're retrieving data already; why not re-skin it and let the drivers use it? These applications range from sets of parental controls (see on a real-time basis just how fast the family car is going and whether seat belts are actually being worn) to other applets that allow you to interact with your car. We are building such a set of data interactions for a major OEM which will have them on the market by calendar year 2011.

Clearly, data flow from the car to the automaker is a major part of any future Telematics business, and so is data access management, data security and data protection. We must use caution with how far we go with the use of the information; Telematics must remain a trusted source in terms of OEM-consumer connections.

SOCIAL NETWORKING
We've all heard about various social networking successes and the over-the-top stories when providers or others make chilling use of data. Facebook page removals may begin to rival tattoo removal as the current generation of college students suddenly finds itself out in the "real world" where some photographs and attitudes can impact job searches!

There's a different sort of social networking that Telematics will provide: enhanced, geo-coded data. That's a fancy way of saying drivers communicating with other drivers indirectly. For example, it's possible that BMW's 7 Series customers who are all part of the same network will receive digitized data on where the worst potholes are, based on feedback from other 7 Series drivers. That data will merge seamlessly with other geo-coded streams so that the driver receives it on a need-to-know, just-in-time basis.

Mini drivers may post what sorts of restaurants they favor, allowing an interest-group community to find a nice place to have breakfast where it's pretty certain other enthusiasts will show up. But social networking Telematics communities don't have to be like-minded individuals; they may come from a group of people from a totally different set of demographics who share a need for particular drive- and location-based information. The key is that the information will be germane, pointed and not anonymous. We're seeing social networking as an emerging Telematics application.

TAKING CARE OF ORDINARY BUSINESS
No matter how technology advances, it's the simple and ordinary things people still have trouble with. Talk to a roadside service provider, and they'll tell you that the four of the most common things they have to dispatch for are already monitored in the car, often with great big displays.

People still run out of gas, tires go flat, batteries die and keys get locked inside the vehicle even when chimes are ringing and lights are flashing as a warning. The difficulty is that monitored systems are not fully interactive. If Telematics is about anything, it's about the experience of bringing a vehicle to life for the driver. When you bring that cell phone into the car that has navigation capabilities, we want to maximize the value of that to you. Connect it to the vehicle, integrate it into the displays in the car, and download an applet to let you start interacting with the car seamlessly – without paying for another subscription.

Telematics is going from an event in the vehicle to a lifestyle, and it will do so by taking care of ordinary business. While it's wonderful to hear phone calls between a driver who has locked her baby in the car and the operator who remotely unlocks the car doors, we're at a technology point now where we need to ask, "Why does it take an operator? Why can't I call my own car and tell it to do what I need it to do?"

DAILY USE EQUALS DAILY RELEVANCE
In North America, consumers have changed focus. We don't wait for the Encyclopedia Britannica to come out to be the authoritative source. In fact, consumers aren't waiting for authoritative sources for decisions that don't require authority. Most of us have become accustomed to going to the Web and "triangulating" with a number of sources that get us pretty close to an answer. The answer doesn't usually need to be 100 percent accurate; just close enough to solve our immediate need or particular problem. Humorist Stephen Colbert may joke about "Wikiality," the idea that false information can be made real simply by entering enough things in the online Wikipedia database, but most individuals don't have a lot of reason to fib about things like the locations of gasoline filling stations.

So if I'm a driver and I want to know where the best place locally to get gasoline might be, why must I rely on an expensive and "authoritative" database of "points of interest" that may be two years out of date on my onboard navigation system? Why should the in-car provider be involved in the information at all, in fact? There's only one way for drivers to receive the most relevant information, and that is to let them do it themselves.

I believe in the long run our job as Telematics providers will be to let you search from the vehicle, free or at no additional charge, and to receive the route and the information you need in a general sense to achieve your goals. Without that kind of search function, Telematics will remain event-driven; my airbags went off, or I touched a button for concierge service, or I made a call to admit that I was lost. With search functions, Telematics becomes a matter of daily use. With daily use comes daily relevance and an improved value stream for the Telematics provider and the automaker.

THIN CLIENT FUTURE
As long as vehicles must carry an individual database with them, in a hardened form that can withstand automotive conditions in the field, an awful lot of work will need to continue to go into non-value-added services. In addition, relatively fragile equipment will continue to ride in a harsh world.

I recently drove with a friend whose late-model luxury vehicle held a beautifully integrated navigation system in the instrument panel. But there, on his dashboard, was a standalone portable unit. I asked, "Why do you have that?" and my friend responded "Have you played with one? Try it!"

Sure enough, the portable unit was much more fun – and much easier to use – than the in-car system. It's exactly the same circumstance that happened when car phones became portable cell phones; all the effort of trim, fit, durability and surface texture made by OEMs to permanently install mobile phones in cars couldn't compete with the improved functionality of carried-in devices, especially when those devices rapidly became cameras, MP3 players and text-message devices.

Automakers are going to need to look off-board for future functionality, and Telematics providers are the ones who will bring it to them. Thin client servers, more than in-vehicle hard drives or dealer-installed navigation DVDs, will increasingly become the source of product improvements and updates in the years ahead. Thin client will allow an OEM to put a 2008 service menu into a 2005 model-year car.

The industry has an example of just that kind of change right in front of their noses in the merger attempts of Sirius Satellite Radio and XM Satellite Radio. The concept of satellite radio was good – personalized, high-quality music in the vehicle – but it took them too long to get there. In the meantime, the iPod happened. People said "You know what? Let me take this nice 16-speaker system in my car, but you know what else? Forget about the radio; I know what music I want."

You have to make the car fit into the lifestyle of your consumers. You're not going to drive them to buy your cellphone or drive them to buy your navigation unit any more. Using thin client content, though, the provider becomes much more ingrained in the daily drive. It's a much more intimate relationship, enabled through Telematics.

SYNC TO THE FUTURE?
People have asked us at ATX whether Ford's introduction of its SYNC system, which connects carried-in devices to in-car entertainment systems using Bluetooth wireless, doesn't spell the end for traditional Telematics service providers.

Actually, I think it's consistent with our philosophy going forward that something like SYNC would show up in a mass-market vehicle. Ford seems to us to be starting at the periphery of the Telematics future for the car, and may ultimately end up at the point we've been talking about.

With SYNC, Microsoft provides the content, its connectivity is limited and there's very little in that system for a Telematics provider to tap to add value. Drivers will of course like SYNC because it allows them to personalize their vehicle beyond adding floor mats or hanging fuzzy dice from the mirror.

But where Ford is going with SYNC is toward integrating a lifestyle, and when there are servers involved, at the point in time when it's a multi-modal product, then Telematics will have a role. Microsoft essentially wants to put software in every Ford vehicle, which is great for Microsoft. If that software comes and talks to a TSP, and we give that multi-modal bandwidth, then in terms of the back office applications and integration into the vehicle, those are the things that Telematics providers can offer far better than can Ford or Microsoft.

There are other issues at play with something like SYNC as well. At this point, it is an entertainment unit positioned on the car's CANBUS network, but with strict firewall control between it and any other in-car system. Once safety and security are involved, we believe an embedded Telematics system ultimately will be required. The value proposition of having infotainment on a non-embedded device, but other delivery systems on an embedded one, is not clear so far.

We're certainly glad that Ford has seen customers want to interact with their vehicle and personalize their experience. We think that such systems mark a gateway for more Telematics business in the future, rather than challenging that future in any way.

OPEN SOURCE PROTOCOL
The recent announcement by BMW that it will implement an open source protocol for Telematics service delivery to its vehicles is an interesting development in the telematics arena. BMW's Next Generation Telematics Protocol (NGTP), was developed in collaboration with two Telematics-interested companies. Its aim is admirable; the NGTP effort is meant to create a flexible protocol platform open to all telematics providers and vehicle manufacturers, within which changing industry needs can be rapidly met by software changes rather than by switching out custom programming or unique hardware.

I want to say that the philosophy and theory behind this effort is spot-on. It represents the undoubted future for serious Telematics offerings. Technology neutral interfaces and open-source coding are, indeed, the direction we should be taking. ATX's technical and product service architecture can support any open interface. The NGTP effort may have two challenges, though, which concern us for the Telematics future.

One is the introduction of an entirely new layer within the communications spectrum, that of the "dispatcher" which connects Telematics units in the field, with the Telematics Service Provider at the head end. It is unclear what service area, and what sorts of mandated connections, this additional layer in the communications chain will occupy and require.

The second challenge is that global automakers may not be eager to conform to an open-source standard brought by a stand-alone, European luxury automobile manufacturer. BMW has made significant strides in the automotive mobile electronics field, it is true, but their experience has not been germane to other automakers, specifically the Japanese luxury marquees or the North American "Detroit 3" OEMs.

If the open source protocol being offered at this time indeed carries benefits that other automakers see as significant, it is possible that the NGTP initiative will have long-lasting effects in the Telematics market. If this is a system being imposed by a single automaker operating with a two-party consortium, it may find itself occupying the same position as some of the more advanced in-car data bus protocols adopted by European automakers, but largely ignored by the rest of the global automotive world.

We at ATX applaud BMW's initiative in this area. It is exactly the right model for a Telematics future. If the NGTP offering limits Telematics development in any way, we foresee the standard being bypassed by clever use of carried-in devices that might provide a Telematics-like environment without adding layers of management to the Telematics signal.

In many ways, Telematics is like electricity. Service provision will always follow the shortest, most-efficient pathway to reach the consumer. There is no question that the traditional, call-center based model will change over time because it is not necessarily the shortest pathway in many cases. Introducing yet another intermediary into Telematics is clearly not in the interest of Telematics users or providers. Open-source protocols may offer advantages and we look forward to their proper implementation.

SHRINK-WRAPPED SOLUTIONS (THE "SHOPPING MALL" MODEL)
We have been intrigued to watch the emergence of a Telematics model in which an intermediary is allowed to "lease real estate" within the car in order to provide Telematics service, and, in return, the car maker is promised a piece of the revenue from the transaction.

This appears to be the model being followed by new-entrant companies such as Hughes Telematics, and we are interested to see a potential provider isolate a market niche and function within that niche. After significant analysis, however, we believe the application is limited. It might be a reasonable initial strategy to enter the market, but over the long term, it may fail.

This is because it does not dovetail with the interest of the automotive company. Very few automakers will allow unbridled access to their customers. Under the shrink-wrapped model, the Telematics provider must "own" the customer, rather than the automaker. While many things are possible between provider and automaker, the strategy very much abdicates the automotive strategy to the would-be Telematics provider.

The model indeed allows an automaker to quickly equip its fleet with black boxes capable of Telematics delivery, but the model has been attempted several times at the earliest onset of Telematics and each time has been found to be defective. It does not allow for the maturation and growth of the automaker's initial strategy beyond the point at which hardware equipping of its production vehicles gives an economic benefit.

Even automakers such as Hyundai are now looking at global strategies, and in being a global provider, Telematics becomes a strategic issue rather than a tactical one. As an automaker, you don't want to "rent" space to anyone willing to put up a shop. Instead, you want to have functionality that will benefit both you as an automaker, and bring a high value-added feature to your consumer.

While we don't quibble that the shrink-wrap model has a short-term place, or that it is a good entry strategy for a manufacturer who desires quick entry into the Telematics market, there will be quick maturation within the automaker market for such systems. When automakers find that the advantage of buying a turnkey system is outweighed by the potential limits of such a system, the Hughes model is likely to change.

Again, from our experience in observing the Telematics field, we believe that the shrink-wrap model can indeed pick off some of the low-hanging fruit. Its difficulty is that, once that early advantage is done, there may be no continuing advantage to an automotive brand. We don't see a trend towards shrink wrapped, in fact it is a model that OnStar offered to OEMs years ago. Those who chose it then have abandoned it and BMW, with NGTP, is clearly moving in a different direction.

AN END TO FIRST-MOVER ADVANTAGE
At the beginning of the Telematics era, the vision was extremely limited. Industry observers believed that those who moved first, and fastest, would dominate the industry for all time. Once the turf was carved up, in other words, the pie would be limited and those who grabbed the biggest or best parts would "own" them for eternity. That vision was short-sighted, as the T3 generation is proving today. Yes, early movers gained key market share, but some of the earliest movers became bogged-down with a primitive vision of what Telematics would eventually become.

As an example, the most-successful Telematics companies, ourselves included, based much of their business model off of a call-center approach. That was fine for the first decade of Telematics offerings; today, it's not so certain that a Telematics provider would want to go to the expense of building a call-center. Instead, such a competitor would invest in technology that limited or bypassed the need for such a center.

That's not to say that ATX and other providers intend to do away with call-center Telematics. The industry has been built on service standards and expectations created largely from the call-center experience. But future adaptations in Telematics will need to be scalable, international and fast-moving.

The old credo of first-mover advantage is like the metaphor of the explorers threading their way across the ocean to distant lands. It's an outdated model for today's world of Telematics.

Best business models will certainly overcome those who believe that first, or fastest, somehow offer strategic competitive advantages.

CONCLUSION
We're on a new voyage in the Telematics space, one that is going to reveal detailed cultures and unexpected complexity in the service delivery model. The old model of "explorer" companies is done. The new model of service provision is emerging with this new generation of Telematics seriousness.

Rapid growth and expansion in North America, opportunities and the creation of a Telematics culture in Europe, and exciting exploration of new Telematics needs and uses in China and Asia all mark the growth pattern for the T3 generation.

Rumors of the "death" of Telematics some years ago have obviously been inaccurate. In the same way, observers eagerly watching for one Telematics company to fail as others take over its business are failing to see the big picture. The Telematics field is

widening and deepening so much that multiple models are at work now. Some will have short-term success. Some will set long-term trends. Others are, at best, a guess – a departure point for a new attempt to exploit a complex market.

At ATX, we believe our business model is sound and strong. We will be growing our subscribers at a top-line rate of over 30 percent compounded annual growth rate over the next five years.

We have had the advantage of working with many great customers through the first generations of Telematics provision, and now we see that not only is the industry growing, but that larger customers may be coming forward eager for service provision in important new ways.

We, like the other traditional Telematics competitors, do indeed face competition from new entrants to the field. As in any maturing business, new methods and new niche strategies must be tried in order to find growth patterns.

But there is plenty of runway for existing Telematics still, and experienced providers such as ATX are far from sitting still to wait for their relevance to fade. We see an expanding world, and an expanding definition of what Telematics is meant to accomplish, as validation of the early explorations.

Now it's time for us all to work with our automaker friends to help deliver the absolute best experiences possible for the millions and millions of consumers who are just now discovering the possibilities inherent in Telematics. They are now clamoring to cross those oceans of technology, to explore the culture and excitement of the Telematics world. The opportunity to serve them is simply huge.