Microsoft Moves Into Telematics Fast Lane

Microsoft Corp. late last week tried to re-establish its presence in the nascent automotive telematics field by partnering with Accenture in a broad initiative aimed at providing end-to-end telematics services.

Microsoft Corp. late last week tried to re-establish its presence in the nascent automotive telematics field by partnering with Accenture in a broad initiative aimed at providing end-to-end telematics services.

The initiative calls for Accenture to provide the integration services for a variety of telematics applications based on various Microsoft "building block" technologies, such as Windows CE for Automotive as well as applicable .Net products and services, according to Gonzalo Bustillos, business development and marketing director for Microsofts automotive business unit in Redmond, Wash.

Accentures services will be provided out of its Accenture Services Bureau for Automotive Telematics, formed about a year ago.

The idea behind the alliance is to put together a series of services, along with a network of various partners, to move the industry beyond the initial OnStar types of telematics services for drivers, according to Bustillos. Microsoft and Accenture envision a variety of mobile services to help create a "connected lifestyle" for drivers.

The Accenture alliance isnt the first Microsoft partnership in the automotive telematics space however, said Thilo Koslowski, lead analyst and director for automotive research at Gartner G2 in San Jose, Calif. "Microsoft had a disappointing initiative with Clarion that never really took off. It is very important for Microsoft to get into this market. They want to communicate and stay in touch with customers anytime, anyplace. The vehicle is the last environment they havent been able to penetrate [with their various products and services such as MSN]," he said.

But Accenture isnt exactly a "household name" in the telematics industry, according to Phil Magney, principal analyst at Telematics Research Group Inc. in Minnetonka, Minn. "This is the first time that name came out as a telematics player," he said.

At the same time, the alliance comes late in the game, said Koslowski. "This partnership is something I would have expected one or two years ago. Telematics service providers have already started to develop and execute on their strategies."

However, Umar Riaz, global managing partner for telematics with Accentures automotive industry group in New York, claims the professional services firm has been in the telematics space for about four or five years. "Accenture is working with several automakers to help define and implement [their] telematics strategy," he said. Riaz declined to name those clients.

To execute on the alliances goal of providing end-to-end telematics services, the two will tap into a network of businesses to provide a range of applications and services. Outside of MSN, the two would not disclose who the other members of the network are.

To provide all of the elements necessary, other third-party service providers, application developers, hardware providers and wireless carriers must participate. "We will announce other members over the next several months," said Bustillos.

Growth in the market for telematics services is expected to increase at an annual compound growth rate of about 73 percent, according to The Telematics Research Group, which predicts that by 2006 some 33 percent of new autos in the United States will include a telematics system.

But with their late entry, Gartner G2s Koslowski doesnt see Microsoft and Accenture making much of an impact on the market in the short term. "Consumers are interested in very basic telematics applications – i.e., to be able to integrate the cell phone in the vehicle to operate in a hands-free manner, followed by navigation and traffic data," he said. "Consumers are not willing to pay money for e-mail access, Internet access, concierge services and so on. Long-term, Microsoft could be successful by leveraging its other initiatives, like MSN or PocketPC, to create something comprehensive for consumers, such as using telematics to collect vehicle performance data. For the short- and mid-term, this announcement is just a way for them to re-establish credibility in the market after some disappointing initiatives. For Accenture its a way to generate additional revenues and establish a larger footprint in the telematics market."