×

Prospects of the Russian M2M/IoT market in the transportation sector until 2020

December 2015

Analytical Report (full version)

Request cost of the full version of the study: news@json.tv

Analytical Report (full version)

Prospects of the Russian M2M/IoT market in the transportation sector until 2020
Prospects of the Russian M2M/IoT market  in the transportation sector until 2020
December 2015

Prospects of the Russian M2M/IoT market in the transportation sector until 2020

December 2015

To register or Log in, to download the file

Download file

+7 926 561 09 80; news@json.tv

Write, call, if you have questions

 

J'son & Partners Consulting presents brief results of the research on the Russian market of inter-machine communications and the Internet of things in transportation. It is currently the most capacious M2M/IoT segment, which is especially important for wireless network operators, as all connections of vehicles are made by radio.

 

 

Key issues of the study

  • Analysis of the main trends, drivers and barriers of the Russian M2M/IoT market in transportation;
  • definition of the ecosystem, the structure of the market and its volume;
  • forecasts of the market development in Russia and in the world.

 

Practical value of the study

  • The research contents numerical estimates and development forecasts for the Russian M2M /IoT transportation market until 2020, by main segments;
  • the authors identified main drivers and constraints to the development of the Russian M2M / IoT transportation market;
  • the readers will find information about the market ecosystem, the main market participants and their interrelations;

 

Target audience

The study is intended for wireless network operators, developers and manufacturers of the equipment, system integrators and distributors, car manufacturers, investment funds and research agencies.

 

 

Summary of the study

 

The global market

  • Despite regional differences, the transport industry is leading in the number of M2M connections in the world. According to Beecham Research, it accounts for more than 40% of the European market in quantitative expression.
  • According to Berg Insight, the number of actively used Fleet Management systems in Europe in 2014-2019 will grow with a CAGR of 15.1%, from 4.4 million at the end of 2014 to 8.9 million by the end of 2019. Their penetration rate is expected to increase over this period from 14.8 % to 28.4%.
  • According to IHS forecasts, the number of connected cars in the world will increase more than three times compared with 2015 (26.5 million) and reach 82.5 million. The share of connected cars in the overall sales structure of new cars, will increase from 30% in 2015 to 78% in 2022. The top three car manufacturers leading in innovations in the field of driver assistance systems, according to Statista, is VW / Audi, Mercedes and BMW (Figure 1).

 

Source: IHS, Statista

 

  • According to ABI Research, delivery of cars with connected automobile infotainment systems (or simply Infotainment), including navigation services and Wi-Fi hotspot, will grow with a CAGR of 33.8% over the next 5 years (2015—2020). During this period, about 342 million Infotainment systems will be sold. The main growth will come from relatively inexpensive solutions, using a smartphone as an access point to the network. But such integration will also be provided in more expensive models with built-in communication modules. Nevertheless, it is unlikely that such systems as Android Auto, Apple CarPlay and MirrorLink, will become the only Infotainment systems in the car. Most likely that they will complement proprietary systems, as, for example, in the new model Volvo XC90.

 

 

Vehicle monitoring and automobile safety in Russia

 

The initial stage of the M2M transportation market development was the emergence of first connected devices for navigation and route optimization — car navigators able to connect via cellular communication channels, as well as satellite trackers for fleet management (FM) and so on.

 

Later, the market was changing. For example, rapidly growing sales of smartphones and tablet PCs with downloaded navigation applications significantly encouraged the demand for personal navigation devices (PNDs), including those with SIM cards. Now we can see a fast growth of the share of GSM-car alarms with remote car monitoring and control via mobile communication channels through mobile applications on smartphones / tablets (tracking the location, starting and blocking the engine, diagnosing the basic systems, etc.).

 

An important trend was the emergence and development of cloud services for monitoring transport and mobile objects under the SaaS scheme (Software as a Service). The service allows users to monitor vehicles and other movable objects from any point in the world and through any device that has access to the Internet. SaaS has all the capabilities of modern transport monitoring systems and does not require installation on your PC.

 

According to J'son & Partners Consulting, the main segments of the Russian M2M / IoT transportation market in the short term will be:

     – Systems of automatic emergency response in case of accident ("ERA-GLONASS");

     – Automated systems for charging cars;

     – Connected infotainment systems;

     – Connected security, search, and video surveillance systems;

     – Smart insurance.

 

 

Project "ERA-GLONASS"

 

The system was put into commercial operation on January 1, 2015 — from that moment, all vehicles that undergo the technical examination for the first time must be equipped with ERA-GLONASS. However, in fact, most of new models can be registered the old way — car manufacturers sometimes successfully justify the authorities that it is just a new modification, not a new type of vehicle. The first and still the only one serial passenger car equipped with the ERA-GLONASS terminal is the Lada Vesta model (the sales volume is projected at up to 100,000 cars per year), the sales began on November 25, 2015.

 

In the segment of commercial vehicles, it is expected that ERA-GLONASS will be supported by the Ford Transit models, which manufacturing will begin in January 2016. In total, by October 2015, 11 other car brands have also been certified.

 

From January 1, 2016, the following types of vehicles should be equipped with ERA-GLONASS: vehicles used for commercial passenger transportation, vehicles specially designed for transportation of children aged from 6 to 16 years and transportation of dangerous goods, solid domestic waste and garbage (garbage trucks), as well as tractors used for towing trailers carrying dangerous goods produced in the EACU. And from January 1, 2017 — all vehicles produced in the territory of EACU.

 

In the state segment, the ERA-GLONASS devices are introduced in school buses, municipal transport, ambulance cars, etc

 

The development of the automatic response systems for emergency services in case of accidents ERA-GLONASS and its additional services is one of the main drivers for the development of the Russian M2M / IoT transportation market in the next few years. Due to this project, the market potential in the medium term actually increases by 1.5-2 million connected vehicles per year.

 

In an exclusive interview with JSON.TV, Alexander Gurko, President of NP "GLONASS", shared his forecasts for the development of the "ERA GLONASS" system in the near future (http://json.tv/ict_video_watch/otkrytye_innovatsii-aleksandr_gurko-era_glonass-20151102071034).

 

 

Automated charging system for heavy-duty vehicles "Platon"

 

Since November 15, 2015, the "Platon" system began to operate in Russia to collect fees from trucks weighing 12 or more tons to compensate for damage to the federal highways. Despite its unsuccessful launch, the project with a high probability will be implemented. In this case, the volume of the Russian M2M / IoT market will expand in the next 1.5-2 years by approximately 2 million SIM-cards for on-board devices, which will be installed in freight vehicles and are one of the ways to pay for heavy vehicles.

 

 

Embedded Infotainment Systems

 

One of the driving factors in the development of the connected car market may be the emergence of Internet-connected Infotainment systems — modules for providing information and entertainment services (multimedia services, navigation, etc.). Automobile manufacturers have begun to connect such systems recently and, as a rule, in the premium segment. For example, the modular Infotainment Information System (MIB) with GSM / UMTS was first introduced in the Audi A3 '13. Internet access in Infotainment systems is achieved with use of a SIM card in various ways, for example, via the SIM card reader in the Infotainment device itself or through its connection to the smartphone via the Bluetooth SAPprofile.

 

Source: automotive.com

 

The share of car integrated Infotainment systems (excepting those using external terminalssmartphones, Wi-Fi routers, etc.) in the total car fleet in Russia, according to J'son & Partners Consulting, at the end of 2015, is quite smallnot more than 1%. However, in the near future, the share of such systems will grow rapidly and by 2020 will reach 3%.

 

 

Forecasts

 

The top 3 fastest growing segments of the Russian M2M / IoT transportation market in the next five years (2015-2020) will be:

  • smart car insurance;
  • control of heavy vehicles;
  • satellite navigation and vehicle monitoring.

 

According to J'son & Partners Consulting, the Russian M2M / IoT transportation market continues to grow faster than the M2M / IoT market in total, as a result, the share of this segment tends to increase and will approach 50% in 2015. In the next 5 years the number of connected transport devices will grow fourfold.

 

In the future, the Connected Car concept will be considered in the context of interaction between "connected" cars and "connected" road infrastructure within the concept of a smart city. This interaction, in particular, suggests:

  • control of traffic lights to reduce congestion, fuel costs and pollution;
  • management of smart parking lots and toll roads;
  • active use of road video surveillance cameras.

 

A number of projects in this area is already being actively developed, for example, increasing the number of stationary and mobile complexes for photo and video recording of traffic violations, use of smart traffic lights with centralized control, video surveillance cameras and traffic intensity sensors, etc.

 

 

Views of the industry representatives

 

Alexander Gurko, President of NP "GLONASS"

 

What are your assessments of the Russian satellite navigation and monitoring market in comparison with foreign markets?

 

The Russian market is quite limited in volume, due to the ERA-GLONASS program we canfill this market with 2-3 million devices per year. In fact it is not bad figures, but, for example, an average size company u-blox (Switzerland) produces about 100 million devices a year and sell them all around the world.

 

What efforts must be made to expand this market segment in Russia?

 

State support. That is what is really required, in some cases even direct grants to design centers. It is important to have developed design centers and intellectual property, which is getting formed when you develop such products. We also need support in scaling the market and, what is very important, in expansion on other markets. If not to care now about the GLONASS technology distribution, then there is a serious risk of losing the civilian market. Today we have to use foreign navigation receivers which cost 3-5 dollars. In this sense, we do not control the market for the use of GLONASS. Therefore, an absurd situation appears: we have billions of dollars spent on the development and maintenance of our satellite system, but there is no money to create a receiver for use of this signal. This should be done at the state level very consistently, necessary specialists should be prepared for that. Every year we get even further behind in this area, because the receivers I have mentioned, have now a completely different architecture. These are multi-functional receivers that support communication, multimedia, navigation - all in one. And there are not enough such competencies in Russia.

 

Andrey Maslyukov, General Director  “EuroMobile”

 

How do you estimate the current state and prospects of the Russian market of transport monitoring (freight, passenger transport) main trends, the market volume and dynamics, forecasts for the coming years?

 

The market is in stagnation. Most of passenger and freight vehicles are equipped with monitoring systems. Only re-equipment of the vehicle fleet (they must be re-equipped every 5 years) keeps the market (about 400 thousand units) from falling, as well as some new features of the equipment of the corporate passenger fleets: driving quality control, reading of CAN-bus and etc.

 

In my opinion, this trend will remain the same in the coming years. Some corrections are likely to be made by the ERA-GLONASS project, in frames of which we expect to completely re-equip the existing passenger transport and install the system on new cars. Possible admission of third-party devices to the “Platon” system can also be a correcting factor.

 

How would you describe the competitive environment and your company’s position in this market segment?

 

The competition in this segment is quite high. We hold the leading position due to several factors:

  • a wide range of equipment (foreign manufacturers, leading domestic brands, own works), ranging from the cheapest solutions to complex systems using satellite data channels (Iridium, Inmarsat);
  • high quality expertise and independence from a particular manufacturer;
  • expansion of the sphere of activities in this segment and related ones;
  • developed dealer network and, as a result, fast launch of new products on the market, like professional video surveillance systems for transport, including those that support the ability to view video streams online;
  • participation in the federal project "ERA-GLONASS", consultations forcar manufacturers on the nuances of certification and equipment features.

 

Dmitry Krotov, Group of Companies "New Technologies" Commercial Director

 

How do you estimate the current state and prospects of the Russian market of transport monitoring (freight, passenger transport) main trends, the market volume and dynamics, forecasts for the coming years?

 

According to our estimates, the Russian market for transport monitoring is about 25% complete. There are only a few companies left that have never worked withvehicle monitoring systems, but nevertheless there is still a lot of not equipped large corporate fleets in both the commercial and public sectors. Also, the customers have become more selective, and usual car tracking with use of electronic maps is not something new for them anymore.

 

Here are some basic trends in the transport monitoring market:

  • Technology merger, which opens new opportunities and services for the consumer. For example, reading of data from onboard computers (CAN-buses) or reading of basic parameters from car refrigerators by means of monitoring systems are actively used today (integration of iBox and DataCold devices with ThermoKing and Carrier refrigerators, respectively). Monitoring systems exchange data with photo / video fixation systems of traffic, as well as with systems of the driver's cab control and cargo control. You can also control the access to the car using radio tags.
  • Manufacturers are moving to the production of equipment with open data protocols, and developers are trying to "add" to their programs as much equipment as possible. For example, in the "AutoTracker" system we realized both of these possibilities. At the same time, our task is still to ensure global information security in terms of the customer's vehicle location. To reach this, we use additional security measures like encryption according to the international standard RSA, as well as creation of closed APN networks by mobile operators.
  • The desire of customers to reduce the risks of accidents and related costs. Monitoring moving towards assessing the efficiency, safety and carefulness of drivers: sudden acceleration and braking, turns, road changes, adherence to the work-rest schedule, seat belt fastening, dipped headlights, speed control and compliance with traffic regulations with taking into account road signs, etc.

 

In general, the situation on the market resembles 2008, when against the background of the financial crisis in the country, companies that had their own vehicle fleet were looking for ways to optimize their expenses and reduce the costs. And here the use of monitoring proves to be the most understandable and quickly recoverable tool.

 

How would you describe the competitive environment and the position of your company in this segment? Will you be able to keep your leadership?

 

In general, the market for vehicle monitoring in Russia, in our view, has become more transparent and competitive over the past few years. Many companies that had worked for commercialization of GLONASS in the public sector had to leave the market after a number of orders from the Ministry of Transport (№ 20, № 285). Foreign suppliers became uncompetitive in conditions of unstable exchange rate.

 

Our group of companies over the past three years has come a difficult way by means of cost optimization, reduction of inefficient costs, active struggle against unfair competition, revision of the sales model and product line, and reload of the business relationships with our key customers and partners.

 

Our system "AutoTracker" has been improved in accordance with the market trends. For example, "AutoTreker-Server" ("AT-Server") is today among the few flexible compatible, multipurpose and reliable server platforms for data collection from onboard units and sensors made by most global manufacturers on the market. And all the information from AT-Server can be retransmitted not only to its own client software (AT-Monitor, AT-Web), but to almost any integration software: 1C: UAT 8.3, SAP, Oracle, Smart Solutions, Axapta, Ortec, "Galaxy", "Antor", "Ermasoft", and others.

 

Also, at the request of some customers, we started producing the AvtoTreker side blocks with the "BB-Server" open protocol, which allows to use this equipment with any competitor's software without using the "AT-Server".

 

To date, there are 5-7 the most visible companies on the market, they actively participate in competitions and tenders, they will also enter the next stage of the transport monitoring market formation which include the ERA-GLONASS project, smart insurance and others.

 

 

Detailed results of the study are presented In the full version of the report:

 “Prospects of the Russian M2M/IoT market in the transportation sector until 2020”

 

 

Contents of the report:

 

Summary

  1.  Connected cars and automobile M2M-business

1.1.Structure of the automotive telematics market

1.1.1.   Consumer sector

1.1.1.1.      Infotainment systems in the car

1.1.1.2.      Insurance telematics

1.1.1.3.      Recovery of a stolen car

1.1.2.   Commercial telematics

1.1.2.1.      Tracking of vehicles and cargoes

1.1.2.2.      Drivers management

1.1.2.3.      Engineering services and management

1.1.3.   Vehicle-to-infrastructure systems, V2X

1.1.4.   Forecasts for the connected car market by segments

1.2.Major trends, drivers, and limitations

1.2.1.   Trends

1.2.1.1.      “Green” initiatives

1.2.1.2.      The development of mobile Internet and applications for smartphones

1.2.1.3.      Own telematic services from large car manufacturers

1.2.2.   Drivers

1.2.2.1.      Good awareness and knowledge of telematic services

1.2.2.2.      Government regulations and instructions

1.2.2.3.      New standards and advanced technologies

1.2.3.   Limitations and barriers

1.2.3.1.      Expectations of highly specialized services at low prices

1.2.3.2.      Long-term deployment

1.2.3.3.      Fragmentation of the market

1.2.3.4.      Information security

  1. Major players, business models and approaches

2.1.Market structure

2.1.1.   Value perception

2.1.1.1.      Mobile applications for cars and Big Data

2.1.1.2.      Value of tethering

2.1.2.   Approaches and strategies

2.1.2.1.      OEM and telematics of the secondary market

2.1.2.2.      Preferences in the field of telematics

2.2.Groups of influence

2.2.1.   Car manufacturers

2.2.1.1.      Audi Connect

2.2.1.2.      BMW

2.2.1.3.      Cadillac

2.2.1.4.      FordSync

2.2.1.5.      Hyundai

2.2.1.6.      Lexus

2.2.1.7.      Mercedes mbrace

2.2.1.8.      Toyota Entune

2.2.1.9.      Other manufacturers

2.2.2.   Manufacturers of microcircuits and modules

2.2.3.   Communication operators

2.3.Towards the standardization of approaches

2.3.1.   Sectoral and other initiatives that support open source software

2.3.1.1.      Tizen

2.3.1.2.      CarConnectivityConsortium

  1. The Russian M2M / IoT transport market

3.1.Volume and structure of the market

3.1.1.   Satellite navigation and monitoring

3.1.2.   Smart insurance

3.1.3.   Search and security systems

3.1.4.   Video recording and monitoring systems

3.1.5.   Infotainment

3.1.6.   Other segments

3.2.The main participants of the Russian M2M / IoT transport market

3.2.1.   Communication operators

3.2.1.1.      MTS

3.2.1.2.      Megaphone

3.2.1.3.      VimpelCom

3.2.1.4.      Other operators

3.2.2.   Equipment manufacturers

3.2.3.   System integrators and distributors

3.2.4.   Automobile manufacturers

3.2.5.   Transport companies

3.2.6.   Public companies

3.2.7.   Insurance companies

3.2.8.   Other participants

3.3.Main Projects

3.3.1.   «ERA-GLONASS»

3.3.2.   «Platon»

3.3.3.   Other projects

3.4.Basic drivers and constraints

3.5.Forecasts of the M2M / IoT transportation market, 2015-2020.

  1. CONCLUSIONS

 

 

The newsletter was prepared by J'son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of the release of the material. J'son & Partners Consulting reserves the right to revise the data after the publication of new official information by individual players.

 

 

Copyright © 2015, J'son & Partners Consulting. The media can use the text, graphics and data contained in this market review, only using a link to the source of information - J'son & Partners Consulting or with an active link to the JSON.TV portal

™ J'son & Partners [registered trademark]       

 

 

J'son & Partners Consulting presents brief results of the research on the Russian market of inter-machine communications and the Internet of things in transportation. It is currently the most capacious M2M/IoT segment, which is especially important for wireless network operators, as all connections of vehicles are made by radio.