Although it was once thought that telematics systems would be provided by single, giant companies (e.g., IBM, Microsoft), what is occurring instead is the development of what can be considered a “telematics ecosystem,” a more fluid arrangement wherein specific areas of expertise are addressed by various companies. At the simplest level it consists of:

• Hardware suppliers for the devices that send and receive wireless signals
• Software suppliers for infrastructure and/or specialized applications
• Telematic service providers (TSPs) for call centers and the analysis of diagnostic information
• Wireless carriers for the bandwidth
• Content providers that generate the information sent to the vehicles
  
• Automakers who must ensure that it all comes together in a way that meets their brands’ needs.

Hardware. The in-car hardware for telematics usually consists of a “black box” module mounted behind the dashboard that integrates a phone, a global positioning satellite (GPS) receiver, a digital signal processor and a microphone for voice recognition. It also taps into the vehicle’s electronic bus to gather diagnostic information from sensors. Big Tier 1 electronics suppliers like Delphi, Visteon, and Johnson Controls make these units using chipsets provided by Motorola and Texas Instruments, among others. The cost of these black boxes has been one of the factors delaying the widespread adoption of telematics systems, but the introduction of faster, cheaper microchips is forcing down prices.

Another key hardware piece is the backend server. Made by specialists like IBM and Sun Microsystems, they play the same role in automotive telematics as the ones used to power the Internet: they do the heavy lifting by running power-hungry applications (e.g., analyzing engine diagnostic data) so that on-board modules can be simpler and cheaper. Since they don’t have to meet the same temperature and vibration testing required for on-board automotive electronics, servers can stay on the leading edge of processor speed, and automakers can improve and expand telematics services without replacing components on the vehicle.

Smart handheld devices like web-enabled cell phones and PDAs (personal digital assistants) promise to really open up automotive telematics. The thinking goes: why install an expensive on-board module (the units still cost several hundred dollars each) with a built-in phone when most people bring their phones with them? Smart devices equipped to transmit via Bluetooth not only allow black box makers to eliminate built-in phones, but help keep the technology more current. Handheld devices go through many generations in the time it takes for automotive electronics to advance one.

Software. Applications are developed by companies ranging from module suppliers like Delphi, to component suppliers like Motorola, to smaller software companies that specialize in a particular telematics function. The general rule is that companies stake out applications relating directly to their devices or other narrowly defined expertise, rather than supply an entire application package.

As with home computers, the operating system is the basic piece of software infrastructure for automotive telematics. Unlike PCs however, Microsoft does not dominate the landscape, though it eventually plans to through its Windows Automotive operating system. (The bigger player right now is QNX Software Systems, whose development partners include Ford, Johnson Controls and Delphi.) The first order of business for automotive operating systems is stability, and developers recently have been adding functions like Bluetooth and voice recognition to reduce the custom applications makers have to undertake.

On the server side, infrastructure software is needed to make the secure “handshake” connection between the car and the backend. IBM has targeted this area with its Websphere solutions that handle behind-the-scenes functions like message queuing, encryption, and authentication. Microsoft also competes here with its .NET initiatives, as does Sun Microsystems with Java.

Telematic Service Providers. TSPs pull together the service side of automotive telematics so that automakers can offer customers functions like emergency and concierge functions without having to start up a new division. They provide call centers with operators and work with the various software and content suppliers to provide an overall package of services. The two biggest players are OnStar and ATX.

Going beyond safety and security functions, ATX markets what it calls vRM (vehicle relationship management) to provide real-time diagnostic data from vehicles directly to dealerships. The idea is that by keeping the dealership closely attuned to drivers’ habits they can better sell services like oil changes and tune-ups, and offer the customer an experience that will bring him back in when it is time for a new vehicle. Dealerships, not car owners, will pay for the service.

Wireless Carriers. Telecommunication companies like Sprint and Verizon carry the wireless signals between vehicles and TSPs. Currently the choice of carrier is made by automakers as part of the overall telematics package offered, so even if your cell phone service is with Verizon your car may be contracted to Sprint. But as automotive telematics grows, carrier choice and consolidated billing will become the norm so as to reduce the hassle for customers. As more vehicles are equipped with telematics systems, incremental air time minutes should increase, though the number of providers may decrease before that happens.

Content Providers. Many of the companies that are vying for your attention on the Internet are trying to wheedle their way into your car, as well. Yahoo, AOL, MSN, newspapers and financial services companies that have mastered the real-time, customizable information feed to the home PC are looking to do the same for the car. And in addition to the stock quotes and headlines, real-time traffic reports can be fed directly into the navigation system that automatically re-route around bottlenecks. Taking the technology a step further, modeling software is being developed to predict traffic jams based on information from roadside sensors and change routes to avoid delays before they materialize. Of course, that requires a new layer of infrastructure, something cash-strapped cities and states may not want to pay for.

Automakers. Car companies ultimately decide whose software, devices and content are part of the overall package. Until now, many automakers have been content to buy an off-the-shelf system from OnStar just to ensure that they don’t fall behind the competition. However, now they are starting to determine how the systems look and feel as a way to both project and protect their brand identity. Indeed, many people in the telematics industry think that the graphic design of in-dash displays and the ease of use of voice-activated systems will become a big purchasing factor for customers. And all automakers have learned from the mistake BMW made with its overly complex first generation I-Drive system. So, “keep it simple” is the new mantra.