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Tuesday, October 15, 2013

New Emerging Apps for Cloud-based Fleet Telematics

The legacy cloud-based services sector is mature. But it's still growing at a very rapid pace. ​ABI Research forecasts that the total number of Software-as-a-Service subscriber units will increase from 1.06 million at the end of 2012 to 16.8 million on a global basis by the end of 2018.

Telematics is currently a high-grow market segment. SaaS-based telematics services are defined as software-based telematics applications residing in the cloud -- in either a public or private cloud infrastructure.

It's where the intelligence or data processing essential to the functioning of the application is performed in the cloud, rather than by software and/or hardware residing locally in the commercial vehicle.

"SaaS cloud-based services offer many benefits for telematics services providers compared to the traditional platforms," said Gareth Owen, principal analyst at ABI Research.

For example, the platform is easily scalable and all IT services can be outsourced to the cloud provider which means that the telematics provider can focus on its core competence of developing telematics applications.

However, there are a number of potential issues and challenges, including data privacy and possible legal issues regarding data ownership. There are also security concerns as any over-the-air transmission of firmware updates could provide an opportunity for hackers to modify or disable customers’ operating systems or introduce malware.

"Virtually all of the major commercial fleet telematics providers have moved to some form of cloud-based system, and are offering SaaS-based services, although there are wide differences in the types of services offered by these companies," adds Owen.

As a result, a number of these companies are reporting an increase in higher-margin software revenues and a corresponding decrease in hardware revenues. However, most SaaS-based revenue lines include a hardware component in the monthly subscription fee although this is not normally broken down.

As with other cloud applications, fleet telematics systems must be designed from the outset with the cloud in mind and it is often difficult and not cost effective to port legacy systems (typically obtained through acquisition) over to the cloud.

Companies well positioned to benefit from the trend towards SaaS-based services include Fleetmatics, MiX Telematics, Telogis, and XRS.