Editor's Note: Will telematics ever be the "next big thing"?

A new report from Frost & Sullivan says that the high price of telematics has led to low adoption and renewal rates, contrary to earlier expectations. It goes on to say that manufacturers and service providers must reduce costs for this market to achieve desired growth.

The report, titled "North American Passenger Vehicle Telematics and Remote Vehicle Diagnostics Market," notes that the most daunting obstacle is service costs. While hardware costs should continue to decrease, it's much more difficult to cut the cost of response center operations. The industry may be able to reverse the trend of increasing subscription fees by using speech-recognition and text-to-speech technologies, but the report doesn't expect these to come online until 2006. The report also notes that manufacturers should do more to make dealers and salespersons more aware of telematics systems.

To be honest, I'm skeptical that any of this is going to dramatically increase telematics sales. Services like OnStar are very useful when you need them, but how many times do you actually lock your keys in your car? Is the little bit of added convenience worth $10 or $20 a month? My guess is the most consumers won't think so.

You can get an overview of the report by sending an e-mail to Danielle White at dwhite@frost.com. Include your full name, company name, title, telephone number, fax number, and e-mail address in your message.

Contact Dan Romanchik at editor@aatr.net .