Global telecoms giant Telefonica has announced a new partnership with Canadian fleet telematics provider Geotab. Fleet telematics is hardly the most glamorous aspect of the Internet of Things; unlike some of the cool/wacky ideas that get lots of coverage, it’s been around for a while, so that there are real users on real services, paying real money to companies that actually have a sustainable business model.
At the end of 2013 there were approximately 11 million Fleet Management connected devices worldwide. By 2023 we at Machina Research expect that to grow to 60 million, plus another 10 million vehicles connected via a factory-fit connection. In revenue terms, it will grow from USD2.9 billion to USD11.7 billion over the same period.
The Telefonica announcement is interesting, for several reasons.
Firstly, because Geotab is an OBD (onboard diagnostics) solution for fleets – mainly trucking companies, but also car rental and van fleets. OBD is a retrofit solution, which makes it intrinsically interesting in my book – it’s not limited to new vehicles and doesn’t require a complex installation.
In case you haven’t noticed, the OBD port is a little thing a bit like a SCART socket that sits somewhere near your knees when you’re at the steering wheel of your car. It’s a defined data interface for vehicles, so that you can plug a compliant device into and extract also sorts of information about the performance of the vehicle.
Although it was originally intended for diagnostics, it’s increasingly used as a way of gathering real-time data from vehicles while they are moving. In fact, Telefonica launched an OBD2 product for consumers in Germany just a couple of months ago, which I wrote about here. Geotab’s OBD product for fleets is well established in North America – there are some 400,000 users - but it’s not been available in Europe.
Secondly, because despite its maturity, the fleet management domain is in something of a ferment at the moment, with lots of mergers and acquisitions both within the sector and by outsiders. This may be jockeying for position, because no-one knows exactly how some of the key technology uncertainties – like the future role of the big mobile app ecosystems run by Apple and Google – is going to play out.
And thirdly, because Telefonica already has a well-established partnership with another fleet telematics supplier, Masternaut. The latter is one of the big boys of the fleet management market, with an estimated 15% share of the European market. Masternaut merged with Cybit in 2011, one of its key competitors in the UK market, and was itself acquired by FleetCor, a fleet payments provider, in June 2014. In Spain, Telefonica is the main channel for Masternaut products and the products are co-branded as “powered by Masternaut”. In the UK Telefonica’s subsidiary O2 (well, today anyway, though O2 is up for sale itself) is selling the Masternaut solution O2 Drive.
So what is Telefonica up to? It’s mainly a matter of horses for courses. The Masternaut offering makes sense for big trucking fleets with a need to manage driver efficiency and comply with complex European regulations like those governing the digital tachograph, used among other things to ensure that drivers don’t go over their regulated hours.
Telefonica thinks that the Geotab offering could be more suitable for small and medium fleet operators, where there is very little penetration of fleet management systems. That low take-up by smaller operators is an interesting phenomenon in itself, particularly since the telematics industry has for years been insisting that fleet management systems have an easy to understand return on investment and pay for themselves through reduced fuel consumption and maintenance costs.
Perhaps an OBD solution is what’s needed to tip the balance. Telefonica says there are lots of reasons why it picked Geotab over other potential suppliers. It was impressed by the Canadian company’s track record – it’s hard to argue with 400,000 deployments. It liked the fact that there was synergy between the two companies’ international footprints.
It was pleasing to see that Geotab already had experience working with other telcos – it frankly admits that it isn’t always easy to partner with a telco, so the fact that Geotab has done it before was encouraging. And it liked Geotab’s engineering smarts, including the fact that its solution was based on its own OBD device (and not a bought-in third party device) and that it could demonstrate its ability to gather valuable data from the port.
That last part is really not trivial – not all OBD devices are alike. Having bought a Chinese-made off-the-shelf OBD device myself and then attempted to use it with a US-oriented free app, I can testify that it’s possible to spend an enormous amount of time configuring the set-up and then get almost nothing out of the data. So detailed knowledge and experience of working with the OBD port really counts here.
There is a good fit, too, between the two companies’ business models. Telefonica is committed to working with partners for its M2M solutions, and to building up its portfolio in transport, which it unsurprisingly sees as a key vertical for a telco with enormous mobile assets. And Geotab is committed to focusing on developing its product, and refrains from any direct sales.
I hope that this initiative bears some fruit, and not only because it’s a shame to see little fleet operators eschewing a technology that could help their businesses run more efficiently. According to the Logistics Research Centre at Heriot-Watt University in Edinburgh the “freight transport is responsible for just over 21% of all CO2 emissions from the transport sector and roughly 6% of total CO2 emissions in the UK.” So getting more fleet operators to adopt solutions that reduce unnecessary fuel usage is a good thing for everyone, not just trucking companies.