Tracking the Success of GPS

Just a few short years ago, analysts were anticipating that telematics (the combination of global positioning systems [GPS] with two-way wireless communication for routing, tracking and navigation services) would be the next big thing. General Motors, Ford, Qualcomm and the American Automobile Association (AAA) invested heavily in programs such as OnStar and Wingcast, which provided concierge/411-type services to the general public.

Some security dealers/integrators and contract monitoring centers followed suit, hoping to generate additional recurring monthly revenue (RMR) from existing and new customers. Even ADT toyed with the idea of getting involved.

But then came the dot-com implosion, the events of Sept. 11, 2001, this year’s accounting scandals and the current economic recession. Suddenly, technology-based investments didn’t seem as attractive as they did in the late 1990s, and consumers weren’t clamoring for telematics. GPS wasn’t going to be an overnight success after all. Instead, like most other emerging markets, telematics would experience its own set of growing pains.

Overall, the demand for telematics has not developed at the pace originally anticipated. While the outlook for commercial GPS systems appears promising, the consumer side is less positive. As a result, many providers have had to adjust their long-term plans. Still, they anticipate that telematics as a whole will play an important role in the security industry in the very near future.

Some Consumer GPS Programs Scaled Back or Cut

Earlier this year, Wingcast and AAA abandoned their consumer GPS programs. GM’s OnStar program is also still considered by many to be an unproven or even suspect business model, and market players are anxious as a result.

On the security side, some dealers who had invested in GPS technology have also been forced to scale back or discontinue their efforts altogether due to lack of funding. Other programs, such as those by Security Associates Int’l Inc. (SAI) of Arlington Heights, Ill., although still growing, are not performing as well as had been expected.

On the commercial side of the GPS market, some companies are experiencing success, including SecureFleet Inc. (formerly Notifier Fleet Management Systems) of Long Island, N.Y., and TrackStar Int’l. Inc. of New Hartford, N.Y. Still, players such as Minneapolis-based Criticom Int’l Corp., which have plans to unveil a telematics/GPS program for dealers, have pushed back their launch dates.

GPS Market Growing Slower Than Expected

Most of the proponents of telematics who may have been swept up by dot-com optimism a few years back have now grounded themselves. The latest growth projections are more realistic, yet most experts in the GPS field are still saying the technology will become a viable ancillary market for the security industry in the next year or so.

Indeed, most of those interviewed for this article believe that GPS technology will prove to be an important and natural adjunct to the core business of dealers and integrators in the near future.

Of course, not everyone has doubts about the stability of current GPS hardware. David DiMattina, vice president of national sales for SecureFleet, which has been in business for six years, says, “Our primary unit was developed by us in-house and everybody involved in this project has come from the security industry. Most of our service issues are usually from vandalism, not equipment breakdown.” DiMattina believes that the telematics market is already viable and that forward-thinking dealers would be wise to enter it now, before the rest of the industry jumps on the bandwagon.

Some Solutions Are Already Available, Offer RMR Boost

If a dealer wants to become involved with telematics immediately, there are options presently available. SAI, for example, has two consumer solutions that are currently being used by approximately 500 of its customers. A dealer charges clients a monthly fee ranging between $14.95 and $34.95. Of the fees charged, a dealer collects from $6 to $24 RMR.

Another solution offered by SAI is a one-button Magnavox phone with two-way voice capabilities that communicates directly to the company’s central station. According to Rubin, this product is preferred by the elderly, who may not be comfortable using cell phones.

The device is primarily used by consumers for life-safety emergencies and, according to SAI, is already credited with a rescue.

Child Protection Products May Become Popular

Rubin suggests that GPS services might also be ideal for children, especially in light of the recent spate of highly publicized abductions. Rudy Alva, president of GPS Security in South San Francisco, agrees. Approximately three years ago, Alva’s company had a child protection product under development that would have been the size of a pager. Unfortunately for Alva, his company partnered with a manufacturer that couldn’t get additional funding for completion of the project, so the product never made it to market.

On the commercial side, however, there appears to be even greater potential for dealer/integrator involvement, particularly in the area of fleet management and asset tracking.

SecureFleet presently offers GPS tracking and voiceless communications using data terminals in vehicles, card readers, bar-code scanners and other data devices. With SecureFleet’s system, customers usually do their own monitoring, but a dealer still makes $10 to $15 per month per vehicle of RMR, depending on the client’s air-time usage. Also, the equipment mark-up is $400 to $500 per vehicle.

TrackStar is another company that currently offers executive protection, hazardous material tracking and fleet management for the transportation industry. Executive protection is how the company gets its proverbial foot in the door for many of its larger jobs.

Ferro believes that alarm dealers and integrators can make the leap from alarm, CCTV and access control installations to GPS installations. Additionally, in many cases, GPS may be easier to learn than traditional electronic security.

To Be Successful, Dealers Must Obtain Training

Of course, GPS installations vary in complexity and size. Criticom was recently chosen to provide GPS tracking for the massive clean-up of the World Trade Center site in New York. Menard points out that, currently, most dealers aren’t equipped or knowledgeable enough about telematics to handle a project such as this. He does believe, however, that when dealers become more involved with GPS, they too will be able to secure this type of work.

Getting dealers and integrators familiarized with GPS is one of the challenges facing providers. Menard urges a hands-on approach to learning the technology.

The security industry can expect to see launches of GPS programs for dealers during the next two to three quarters from Criticom and Centra-Alarm. Criticom is currently working to perfect its business model.

PDAs, Cell Phones Compete With Concierge Services

Those applications, for the most part, will not include the concierge/411-type services presently offered by providers such as OnStar. According to Menard, “This is not a direction that we would prefer to take our dealers. We think that there is substantial competition from wireless carriers in the market.” He adds, “We don’t see the point of competing in that market space.”

Another challenge facing the security industry is OnStar’s and LoJack’s (despite it being a localized service) effective branding strategies, which have caused the general public to associate telematics with the automotive industry. One positive aspect of these marketing campaigns, however, is increased consumer awareness of the technology. Still, the association between security and telematics needs to be developed, and providers will soon be preparing their public aware

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