Hi Daniel, You run the group ‘Telematics Business Arena‘ could you tell us a bit about the group and it’s goals?
Yes, it’s one of the main groups related to Telematics in LinkedIn, there are more than 4000 members that share useful info such as trends, promote their solutions, search for partners and more.
The main goal is connecting people interested or working in the Telematics field, including Fleet Management, Automatic Vehicle Location (AVL), Tracking, machine to machine communications (M2M), Internet of Things (IoT), Location Based Services (LBS) and more.
You recently wrote an article “An innovative approach for Telematics Service Providers (TSPs) Asset Management and Tracking” which i wanted to ask you more about….. You note that the barrier for entry into mainstream vehicle and fleet tracking is now low due to the availability of white label tracking solutions. How do you think that companies that wish to stay solely within this mainstream area of vehicle and fleet tracking can stand out?
This is what actually happens worldwide, it’s very easy to become a service provider renting a white label software and buying cheap devices you have very low operative costs and can actually compete with big and established companies. The problem here is that “apparently” in the eyes of the end customer these new companies are offering something similar and considerably cheaper.
The disadvantage of “cheap” in this field is that it will become expensive, since in most of the cases the end customer may experience problems in installations, customer service, failure of the tracking device, lose working ours to replace the device and more.
There are 2 types of end customers: a) The ones that search for high quality solutions, take advantage of them and are ready to pay more, and b) Others that install them because they have to (legislation, etc.), so they will search for the cheapest one. The best end customer type is ‘a’ of course, where you can build a relation based on value, and not ‘b’ that will change provider for $1 less. Unfortunately there are no shortcuts for companies that want to stay within the mainstream, they will need to be the cheapest, or a huge company with years of reputation that takes advantage of economies of scale to buy and sell at rational prices, or provide another type of added value. The rest will slowly be out of business unless they start doing something different.
You mention the need for TSP’s to invest in high quality hardware from the start to build a good reputation. How can a company be sure that the hardware they buy and use is of the highest quality?
Usually price is an indicator but not the only one. They need to buy a device with reputation in the market, that is developed with high quality components such as modem and GPS receiver, that has different features and interfaces that will enable them to provide advanced services in the future even if the end customer wants to start with a basic solution.
What are some first steps a company needs to take in order to enter into the more specialized sector of Asset Management And Tracking?
Understand the market they are in and what the competitors are currently doing. After this, the company will be able to map some unattended segments where they must invest efforts to search for problems that in some cases even the end customers may not be aware of. In my article there are several examples of segments that can be analyzed by service providers.
Asset management and tracking is obviously very specialized with more tailored data and functionality required depending on the asset. Is it fair to say that this creates a barrier to entry for smaller companies and start-ups due to less availability of white labelling options? What would be an ideal type of company to move into asset management and fleet tracking?
I believe it represents a barrier for smaller companies due to the reason that companies that want to penetrate and be a player in this market segment will need to be flexible in terms of software development, adapting their solutions for new needs, buying different hardware and accessories that may cost a bit more depending on the solution Margins will increase for sure, the number of companies in this segment is limited or null in some places. Probably companies with more years in the market and experience in basic solutions understand more and are more mature to penetrate new segments. This doesn’t mean that a start-up can specialize only in this segment and become a main player, it’s a matter of focus and providing something innovative.
What advantages can the first “consolidated” companies achieve from entering the asset management and tracking sector early?
Becoming the main or one of the main players in the segment. Of course the selling price will be higher all the time that it’s a specialized segment and there are not many competitors.
What other specialist areas within telematics with untapped high revenue potential do you see evolving more in the future that companies can use to differentiate themselves?
I believe that driver behaviour and eco-driving are also very interesting areas. The focus here is different: saving money in fuel, optimizing maintenance and wear of the vehicle, being more efficient, reducing accidents and caring more for the environment among others.