Vodafone has just made a big investment in the telematics game, dropping a whopping £115 million on Italian car tracking firm, Cobra Automotive Technologies SpA (Cobra Telematics Group). This is part of an interesting trend of mobile and telecommunications providers entering the telematics business, giving them a taste of the hardware and software development side, as well as the very airwaves that the tracked data is transferred on.
However telematics can sometimes represent a lot more than that, as it’s part of a growing number of fields of machine to machine communication, often known as the internet of things. It’s the kind of network that will likely be talked about for some time to come as the potential breeding ground for self-aware AI, but for now at least it’s a burgeoning market that companies like Vodafone are looking to exploit. Since carmakers are one of the largest contributors to the M2M market, clearly it makes sense to get in bed with them early on, which is what telematics firms are doing across the board at the moment, as they all rush to make their hardware and software the standard for car tracking in the future.
As it stands, no companies has been able to net a monopoly – and here’s hoping they won’t – but there are some firms that are managing to get in on the ground floor and have their hardware and services installed in the vehicles during the main manufacturing process. While customers can still opt out of the service, since it comes as standard, they’re much more likely to use it. That’s what Vodafone is likely to bank its future on with this sort of investment, but it’s also going to be able to enjoy fees from insurers as they too look to have their own installed hardware solution in customer vehicles – as the used car market is far, far larger than the new one.
“The combination of Vodafone and Cobra (Cobra Telematics Vodafone) will create a new global provider of connected car services,” said Erik Brenneis, director of M2M at Vodafone (via FT). “We plan to invest in the business to offer our automotive and insurance customers a full range of telematics services.”
While Vodafone’s cash payout to Cobra – at one euro 49 per share – was quite hefty, the company is currently in debt by around 50 million euros. Vodafone will absorb this without too much difficulty though, since it has revenue streams of over £40 billion a year. It’s yearly profits however are less than one per cent of that.
With Cobra’s Italian base (Cobra Offices), Vodafone is also positioning itself as the telematics provider for high-end vehicles, since Cobra currently is partnered with performance specialists like Lamborghini and Audi. It also has other relationships with companies like Bentley, VW and Nissan, so there’s potential for much expansion too.
Also, with Google’s push for fully automated vehicles, inter-connectivity with cars could be the hottest market in consumer vehicles over the next few decades. While it’ll be some time before we see the push-go cars out on our roads in significant numbers, before long, drivers will be a thing of the past. We won’t need to have our driving tracked any more, but the cars themselves will need to be, which is where companies like Vodafone will no doubt be ready for our business.