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Why Telematics (Think: Driverless Cars) Is the Future

Guest Writer
CEO of Integrity Marketing & Consulting
5 min read
Opinions expressed by Entrepreneur contributors are their own.

From driverless vehicles to the “Internet of things” -- the interconnection of everyday objects via the Internet -- the global telematics market is exploding in connectivity and growth. 

Related: Driverless Cars Won't Make Roadways Perfectly Safe

Telematics has been defined as “the blending of computer and wireless telecommunications technologies, ostensibly with the goal of efficiently conveying information over vast networks to improve a host of business functions or government-related public services.” And in the short term, this technology is coming to an automobile near you: Ernst & Young predicts that 88 percent of all new cars will feature embedded telematics by 2025, amounting to 16 million new cars in the United States.

With the dawn of Telematics 4.0, several important trends are happening: Global carmakers have a new way to interact with their customer base and expand their brand experience. Dealers will understand their customers better. And automobile suppliers will be able to develop innovative human-machine interfaces (HMI).

You don’t have to be building the next driverless car, however, in order to capitalize on the telematics revolution. Everyone from telecom operators to insurance brokers will be affected by the telematics revolution and need to continuously adapt their business strategies to maintain a competitive edge. 

"The biggest innovation opportunities within the telematics industries are developing applications for translating data into meaningful and actionable information," says Robert Prime founder of, who has been tracking industry evolution over the last decade.

“The industry is wide open and the opportunities for innovation are huge here," Prime continues. "While data gathering is certainly an important part of telematics, equally critical is the application of this data in a meaningful way,” 

So, is your business ready to be a telematics leader? Here’s what you need to know to capitalize on telematics' innovation opportunities:

1. The car as smartphone 

Telematics is transforming cars into smarter, safer and better-connected vehicles. While most of us are familiar with basic in-care telematics features like GPS navigation and on-demand infotainment, new telematics services, like wireless network connectivity, in-vehicle diagnostics and vehicle-to vehicle communication hold the potential to transform the in-vehicle driving experience as we know it.

Innovation opportunity: Pay-per-use and premium subscription services sold on a contractual basis for everything from maintenance diagnostics to infotainment and content streaming.

2. Fleet vehicle optimization 

“Telematics” is literally a combination of the words “telecommunication” and “infomatics” and nowhere is this more obvious than in cars. Fleet vehicles have already been transformed by the use of GPS technology to monitor a vehicle’s location, status and speed. Businesses know when a vehicle is started, when it’s en route to a delivery and when it’s sitting idle. This information can help businesses better optimize fleet vehicle usage, control fuel costs, reduce operating expenses and labor costs and increase overall vehicle productivity.

Innovation opportunty: Data management platforms for analyzing the stream of incoming fleet vehicle data and making real-time recommendations for fleet optimization.

3. A new kind of car insurance 

Are all young drivers risk takers who should be charged higher premiums? What about older drivers who may have slower response times or difficulty seeing clearly? For decades, insurance providers have relied on crude demographic data to determine insurance premiums. However, charging millennial male drivers higher premiums than middle-aged female drivers are charged -- based on demographic assumptions -- no longer makes financial sense for drivers or insurance companies, reports The Economist.

Telematics is poised to help, disrupting the insurance industry by rewarding safe drivers regardless of any demographic image about their driving habits. Telematics car insurance relies on a “black box” that collects information on the distance the car travels, the period of time the car is used, the location of the car, the car’s speed and the driver’s braking behavior.

Related: Tend to Get Carsick? Steer Clear of Self-Driving Cars.

Insurance underwriters can use this information to lower premiums for safe drivers or even offer discounted “mileage policies” for drivers who rarely use their cars or avoid driving at peak rush hours when the risk for accidents is higher.

Innovation opportunity: Developing a future-proof platform for black box vehicle standardization and tracking driving habits while balancing privacy concerns.

The Bottom line

Driverless cars, fleet vehicle optimization and lower car insurance premiums are just the beginning: The opportunities for telematics innovation are truly limitless. Right now, the industry's biggest need is to create new platforms for managing the enormous quantity of data generated by telematics reporting, then develop effective systems for translating this data for real-time, actionable changes.

These things are expected to happen soon. Get ready.

Related: How Telematics Has Completely Revolutionized the Management of Fleet Vehicles

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