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Telefónica broadens its M2M fleet management portfolio with Geotab’s OBD-II solution

Michele Mackenzie Principal Analyst

Telefónica and Geotab are seeking to provide M2M fleet management services for an underserved segment – small and medium-sized enterprises (SMEs).

M2M fleet management

Telefónica has announced a partnership with Geotab, a North American aftermarket fleet management solution provider, to offer a plug-and-play M2M solution. The on-board diagnostics (OBD)-II-based solution issues notifications and alerts regarding vehicle diagnostics as well as accident detection and cause analysis. Telefónica has a number of pre-existing partnerships in this space. However, this solution will allow it to differentiate its offering for the small and medium-sized enterprise (SME) and rental markets by providing a more economical plug-and-play solution. This is an important development in Telefónica's fleet management strategy that will allow the operator to lower the barriers to entry for certain segments. Telefónica will initially roll out the service in its European markets and later in South America.

Telefónica is supporting Geotab's expansion into Europe while enhancing its own portfolio of fleet solutions

Geotab is a telematics engineering company with headquarters in Canada. It develops and manufactures its OBD-II telematics device and the supporting software applications and services. It has developed strengths in data analytics and helps its customers use the data generated from their fleets to realise efficiencies and cost savings. Geotab's channel to market is through a network of resellers (around 90 worldwide) including fleet management service providers and communications service providers (CSPs). It is adopting the same go-to-market strategy in Europe.

Geotab has deployed its solution in more than 400 000 vehicles in North America. The company is expanding into Europe and has plans to do so in Latin America. Telefónica will contribute its managed connectivity offering, its sales channels, operator billing and its customer service assets. It provides the first level of service to determine the type of problem. Geotab will deal with customer enquiries related to the device, while Telefónica will address connectivity-related issues. The new services will be co-branded with Geotab under the Movistar brand in Spain, and O2 in Germany and the UK.

This partnership enables Telefónica to address the underserved SME segment with fleet management services

Telefónica has partnered to develop or support fleet management solutions across its worldwide footprint – for example, with Sascar in Brazil, Secar in Argentina, Colombia, Mexico, Chile and Peru, and Masternaut in Europe (see Figure 1).

Figure 1: Telefónica's telematics partnerships, worldwide, September 2011 to November 2014 [Source: Analysys Mason, 2014]

Date

Partner

Details

September 2011

Secar

Partnership to provide fleet management in Chile.

 

Masternaut UK

Partnership to provide fleet management in Europe. Telefónica contributes connectivity and customer care.

April 2013

Sascar (acquired by Michelin in September 2014)

Partnership to develop a fleet management solution for light commercial vehicles in Brazil.

 

Secar

Extension of partnership to provide services in Argentina and Peru.

September 2014

Secar

Extension of partnership to provide services in Colombia and Mexico.

 

Zubie

Partnership to provide O2 Car Connection, an aftermarket OBD-II-based consumer telematics solution.

November 2014

Geotab

Partnership to provide an aftermarket OBD-II-based fleet management solution for SMEs in Europe. Plans to launch in Latin America.

Telefónica has several partners for providing fleet management solutions, but its partnership with Geotab represents the next phase of its strategy in the telematics and fleet management sector – a focus on SMEs and rental companies with large fleets to monitor. This service will complement its existing offering with Masternaut in Europe. Geotab has a track record of serving the SME customer segment and large fleet owners in North America.

M2M fleet management services have gained a lot of traction with large corporations, but SMEs continue to face a number of barriers to market entry. The main barrier is that of cost – the initial investment can be significant and the return on investment (ROI) is difficult to prove. SMEs have also been slow to adopt fleet management solutions because low-cost solutions are typically not robust enough. Geotab and Telefónica have developed their solution to address some of these challenges.

Geotab and Telefónica will price the solution and consider new business models to appeal to the SME market

Telefónica will initially charge EUR100 for the device and a recurring monthly fee, but will later explore a monthly subscription-only model as the service evolves. The device is self-install, which avoids the costs associated with professional installation. It also provides similar functionality to that found in the installed solutions. The pricing lowers the barriers for smaller fleet owners looking to deploy fleet management solutions. It will also appeal to managers of light commercial fleets for which the business case for fleet management adoption is challenging.

Telefónica and Geotab will provide a portfolio of applications including vehicle diagnostics and driver behaviour monitoring, both of which are instrumental in creating fuel efficiencies, as well as other services such accident detection. Customers can opt for the standard package based on GPS-related services, such as fleet management and routeing, or take the advanced service that includes vehicle diagnostics and accident detection.