Cyril Zeller is the vice president of global telematics at Telit, which is working to assemble a standardised back end infrastructure for fleet management and asset tracking to complement its well-established portfolio of cellular and GNSS modules. A turn-key back end platform is necessary to enable service providers to focus on the front-end services they provide and blow the market wide open to a vastly increased number of organisations.
M2M Now: How do fleet and asset management solution deployments differ according to the size of the fleet involved?
Cyril Zeller: If you look at the larger markets of traditional Telematics Service Providers (TSPs)in North America and Europe, small fleets are their key customers. Such smaller customers are looking for turnkey solutions to help improve and manage their return on investment and, of course, to keep their fleets under control.
Obviously, as a company grows, people get more involved in the software and, instead of turnkey solutions from the TSP, they look for a hardware platform from a specialist supplier.
The market now is still awfully fragmented. In Europe and North America you have only a handful of TSPs that ship more than 100,000 pieces per year. With 100,000 shipments in telematics per year, you’re a giant. Of course, there are also a lot of TSPs shipping fewer than 100,000 pieces a year.
So long as the market remains as vertically integrated as it is now, it will remain fragmented and with a much lower penetration rate than it could achieve. What I mean by ’vertically integrated’ is each TSP building all elements of their solution from scratch and for a specific sub segment – taxis versus long haul shipping, for example.
M2M Now: Is that the main barrier to further adoption?
CZ: When it comes to fleet management, the return on investment is already well proven. In fact, it has become very obvious. Take driver profiling, for example. When personnel know they’re being monitored, they improve their driving behaviour. As a result, both fuel consumption and accidents decrease.
The problem is that there are lots of small providers all with very vertically integrated solutions which lack flexibility. Whether a customer provides ambulance, taxi or garbage collection services, technically speaking, they all have similar requirements: their businesses are about moving people (or garbage) from point A to point B.
Not so long ago most TSPs used to design their own hardware. Now there is a solid trend towards outsourced hardware. Certainly the availability of more choices together with price pressure is driving that change. In fact, that pressure has become so great that a small service provider can’t afford it. Or, their private equity backers won’t accept the cost and time involved in developing proprietary hardware.
M2M Now: What are the key considerations for those looking to create or adopt a new fleet tracking solution?
CZ: You have to bear in mind the different requirements of fleet operators and the requirements that are placed upon them. Maybe cost is their primary reason for adopting a telematics solution. Maybe it’s driver monitoring.
Maybe it’s to increase on-time delivery. Maybe their chief reason is to comply with a new law. The key is to fully understand the principle metrics, adopt a solution accordingly and measure your return on investment based on those parameters.
For example, when you have a mandate imposing some sort of telematics box in a truck, no one wants to have two or three SIM cards – so the discussion turns into one about how to achieve regulatory compliance with the features the organisation requires all in one box.
This is where it potentially becomes quite challenging. Not all applications can be managed from an internet-enabled back end, and you don’t generally have telematics boxes running an open operating system.
Unlike a smartphone, telematics boxes can’t simply download an application in Java. That should exist in telematics, and may be coming, but it doesn’t exist today.
M2M Now: What are the obstacles to and drivers for adoption? To what extent do legislation and factors such as driver safety have influence?
CZ: It really comes down to what turned our cellphones into smartphones. Without Android, iOS and Windows CE, smartphones would still be cellphones – like today’s telematics solutions – only existed in a super narrow, vertically integrated, purpose built space. We would never have the proliferation of smartphones we have today. This must also happen to telematics because, as soon as you implement an M2M solution in your fleet, you will instantly generate new needs. Once you can track your truck, you want to manage the number of miles per delivery, for example. Standardisation and operating systems make it considerably simpler to add on to your existing solution in a way that is a perfect fit for your application.
There are, of course, differences to take into account. If I’m working in downtown New York City or London, it’s very likely I’d want real-time traffic information taken into consideration in my route calculation. If I see drivers misbehaving all over the place, I’d like a driver profiling solution to be embedded.
For the time being, solutions remain vertically integrated, so every time I want to bundle third party applications it’s extremely challenging, if possible at all.
eCall in Europe will come soon and you already have electronic tolling systems. The eCall organisation has no problem with the eCall box being used for other services but the specifications of eCall have been changed a few times since it’s origin so its hard enough to be ready with the right box to be compliant without talking about the additional apps you would like to run.
In the US, with the UBI solution for Fleetline, for example, most of the time, fleet owners that are interested are those that are open to new technologies – early adopters, you might call them. Nevertheless,they don’t want to have two separate boxes in their trucks.
M2M Now: What does the future of fleet tracking look like? What innovations do you expect to see in the next five years?
CZ: I don’t see why telematics would escape the trend that is experienced in every high tech industry as it approaches maturity of greater standardisation. We were talking about cellphones becoming smartphones earlier, but a more accurate comparison is the PC market 30 years ago. We had proprietary computers from Amstrad, Commodore and Sinclair. They were all completely vertically integrated solutions and all those companies provided turnkey solutions including hardware, software and firmware.
That sounds familiar to telematics today. But if we are to learn from our past, we’ll recall that all these companies died with the introduction of Windows. Today, you see companies shipping millions of PCs or software licences per year – but almost none of them dare to do hardware and software together, with the exception of Apple.
There will be connected vehicles as much as there will be connected homes. Those connected vehicles should run on open, connected platforms, which should be able to run any application you want either because it’s a requirement, it’s a need, or it’s a nice to have. For instance, if you deliver Coca- Cola in North Dakota you probably don’t need a traffic information app but if you’re in New York City, you do.
An important point is that there’s no killer app in the space today apart from the app you need at the time you need it.
This market will never feature 300,000 apps, but if you buy a truck you might like a choice of three or four fleet
management systems, or a choice of insurance and roadside assistance apps. I can certainly see the need for 20-50 apps, but not necessarily more.
Unfortunately, this is very unlikely to happen if you don’t have strong adoption for an open operating system inside the platform. There are initiatives and organisations working on this, but to date there is no strong adoption. As a result, the market remains extremely restricted as people continue to build customised solutions instead. Ultimately, the price of the systems is raised dramatically by this fragmentation and as the savings created by fleet tracking become the norm, customers will start looking for new ways to save.
M2M Now: How does Telit approach this market?
CZ: The key message I’m trying to get across is that we must get out of our silos. If we don’t, we will still be talking
about a few hundred thousand shipments, not the millions analysts predict.
What we see, because Telit is global and fairly large today, is that we want to leverage our horizontal experience and help solutions providers and box vendors go to market as fast as possible. We do that in two different ways.
For the most part, fleet managers are not wireless communications experts, which is why many end customers don’t really realise all the elements you have to bring together in order to build the complete ecosystem. If you want a fleet management solution you need: a box with a modem inside and a SIM card; then you need a data plan from a carrier; then you need an administration portal and a back end and a front end.
Fleet managers – consumers just like the rest of us – don’t necessarily have this vision because, if you are using a
smartphone, you have the app and the device. You download it and there you go. You have companies like Google, Apple and Microsoft to build the infrastructure for you. But in telematics, there’s no one to do it for you, because there’s no standard operating system.
The value chain can be tortuous. Think of a TSP serving a few thousands customers a year. Often it would have to design hardware and take care of the quality and manufacturing of that. Then they’d have to do a deal with a carrier to get a good data plan before turning their attention to administering the management portal and building the back and front ends. Then they’ll need to maintain it all, sell and administer the services.
In this description the front end and the box are the only pieces of the puzzle customers see.
M2M Now: So what role does Telit have?
CZ: What we want to do is bring together all the hidden pieces of that puzzle – everything the end customer does not
see. On the hardware side, we want to be inside the box with our modules. We have a strategy of pin-to-pin compatible modules across all technologies – 2G, 3G, EVDO, 1x CDMA and LTE. When you have a box vendor selling 2G tracking devices in Europe but 3G in Australia or CDMA in the US, they can use the same board.
We can do the same thing with geo-positioning pin-to-pin across any available constellation and those to come. Plus, we’re certified with every major carrier.
In the software side, we want to be behind the front-end app so we can offer SIM cards, airtime and the admin portal, in essence the back-end platform.
In the software side, we want to be behind the front-end app so we can offer SIM cards, airtime and the admin portal, in essence the back-end platform.
