Babson Case Number: BAB077 | Length: 34 Pages

Abstract

This note provides an overview of the telematics industry in 2002. It may be used with to stimulate a discussion on the industry, as a vehicle for industry analysis, or as an adjunct to other cases about companies within the telematics industry.

Would cars in the future be part of an integral information portal in a wireless world? The technology that would enable this revolution was called telematics, which was defined as “mobile services delivered wirelessly to in-vehicle devices.” Was the next step into full-scale wireless services obtainable or desirable? Certainly the financial potential for telematics was creating excitement amongst automakers that competed in an industry plagued by steep competition and razor thin margins.

If the automakers could successfully capture some of the financial value expected from the nascent telematics market, their profit margins would improve. However, telematics was also creating anxiety in Detroit, as auto manufacturers would be leaping into an uncharted world of wireless communications and services, far removed from their core competencies in automobile manufacturing, design and marketing. The automakers still faced a number of unanswered questions regarding this exciting new territory as they were making their decisions on their new product models that were to be launched in two to three years time.