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Connected cars in offing for SA

Johannesburg, 19 Jun 2014
Unlike in the past, local operators are increasingly trying to keep up to date with international trends, and the movement to connected cars is one of this year's big ones.
Unlike in the past, local operators are increasingly trying to keep up to date with international trends, and the movement to connected cars is one of this year's big ones.

Recent international developments towards connecting more objects to the Internet - notably cars - are a sign of the type of activity SA can expect to see in the near future, with network operators playing a pivotal part, say analysts.

This comes on the back of news this week that Vodacom's parent company, Vodafone, is buying Italian car electronics maker Cobra for EUR145 million (about R2.1 billion) as it tries to get ahead in the "Internet of things" race.

The growing adoption of machine-to-machine (M2M) technologies is a major driver towards a "connected everything" vision of the future, says Tendai Madzikanda, ICT research associate at Frost & Sullivan. "Contrary to the past, operators in SA are increasingly trying to keep up to date with international trends. This increase in adoption has been spurred by improved IT infrastructure in SA, as well as increases in consumer and business demands."

Local drive

Tony Smallwood, executive head of M2M at Vodacom, says the company is greatly behind the ambition to connect every device, and has partnered with many providers to this end, in terms of providing managed connectivity.

In the automotive space, says Smallwood, Vodacom has made a strong play in the aftermarket level, where its parent company has a solid presence at manufacturing level, for example, through BMW, Jaguar, Fiat, Audi and Volkswagen.

Smallwood says this year is the year connected car incubation becomes a reality. He cites figures from Analysys Mason, which estimates cars with embedded connectivity at 30 million in 2014 - and an estimated 654 million in 2024.

Vodacom's connected car play at this stage includes providing communications for stolen vehicle recovery, vehicle tracking and mapping and route management. The current wave, he says, is usage-based insurance. "Next will be the entertainment wave, which will include things like smartphones connecting to radio systems, or radio systems with an embedded SIM that will allow users to download entertainment."

Kanagaratnam Lambotharan, chief enterprise business officer at MTN, says the company has been heavily involved in the automotive space through the provision of connectivity to the vehicle tracking and fleet management market for some time now. MTN is involved in this space in SA, Nigeria and other African markets.

"We are currently working with our partners and customers, which include vehicle tracking and fleet management, insurance and automotive companies to significantly enhance value for consumers." Lambotharan says the company plans to leverage its M2M technology and African footprint to offer better visibility, control and security for connected vehicles.

Slow but sure

MD of World Wide Worx Arthur Goldstuck says there is no doubt M2M is a major growth area with SA's operators. "It has been happening quietly on a practical level for some time, rather than [operators] coming up with a new vision."

He says, however, SA's operators have woken up to the importance of connected cars and have started to provide more significant offerings in this regard.

Latest moves

Last week, BMW SA announced plans to extend its online-based in-car services by enhancing its ConnectedDrive services. From next month, new BMW models will be fitted with Vodacom SIM cards providing bundled services.
Further afield, Japanese automotive manufacturer Toyota announced this week it has struck a deal with electronics firm Panasonic to develop a cloud-based in-car system to monitor and operate home appliances. It uses Toyota's Smart Centre - a solution linking people to their cars and homes - and the Panasonic home appliance control application.

As it stands, says Goldstuck, SIMs used in the tracking industry are a major source of accounts and subscribers for operators. "The fact that SA has a cellphone penetration of 138% is largely down to the heavy M2M customer base, driven by the tracking industry. But this is not a case of high average revenue per user (ARPU)."

However, this might change and revenue from connected cars may swell if analysts' predictions are realised. Goldstuck notes SA is seeing the integration of devices in cars at a rapid pace. "Cars sold without that integration are starting to be seen as behind the curve."

Because local manufacturers have been slow to adopt integration (except for in high-end cars) - even a with a basic feature like Bluetooth - Goldstuck says 2014 may not be the year embedded connectivity comes to the mass market in SA, but it will be the year consumers start demanding there be more connectivity built into cars.

SA is likely to catch up with international trends in the next three or so years, he predicts.