451 Research: ERM Advanced Telematics betting on IoT opportunity beyond traditional telematics

InsightaaS perspective: One of the more intriguing aspects of IoT is the concept’s service as a springboard for conjuring new technology use cases. In a recent report, 451 Researchers Brian Partridge, David Immerman and Christian Renaud have considered the opportunities this kind of visioning offers to existing tech firms – in this case, to ERM Advanced Telematics, an Israeli-based provider of vehicle security and GPS tracking solutions that is moving into IoT.

In the report, “ERM Advanced Telematics betting on IoT opportunity beyond traditional telematics,” the researchers apply SWOT Analysis to ERM’s potential to expand beyond vehicular telematics to adjacent markets with solutions such as car sharing, people tracking and advanced V2x technologies. The analysis features qualities 451 is known for: adding a broad contextual view, the researchers point to increasing competition in the telematics industry from traditional players and IoT startups, and to the importance of connected vehicle in an evolving IoT landscape. In their choice of subject, the researchers also focus on an area in IoT that typically attracts less attention – the sensor device – and vendor need to offer a unified hardware/software platform to support it, and in their conclusions, on the best prospects for success in IoT, access to an extensive distribution channel and construction of strong partner ecosystems.(ed.)

 

While staying focused on its fleet telematics roots, ERM Advanced Telematics is also applying its technology to emerging use cases requiring monitoring of moving objects, such as the location of students and worker attendance. It is also reporting demand for advanced telematics use cases, such as car-sharing services in countries with dense populations and improved security in countries with high crime rates, where the need for stolen-vehicle-recovery technology is critical. ERM will use its vast portfolio of hardware-tracking devices, accessories and software with an evolving partner ecosystem to tap into these new markets and opportunities.

The 451 Take

Christian Renaud, research director, Internet of Things, 451 Research
Christian Renaud, research director, Internet of Things, 451 Research

ERM has a long background in telematics and vehicle security that it is leveraging to capture opportunities related to the Internet of Things. We expect new use cases, such as car sharing and other advanced vehicle-to-vehicle and vehicle-to-infrastructure (V2x) technologies, will grow slowly, requiring the company to maintain (or, preferably, grow) its current telematics business as IoT applications and corresponding ROI propositions mature. The company’s technology roadmap opens new opportunities for ERM, provided it is able execute well on go-to-market activities. These new initiatives will expand the range of competitors that ERM will face from existing telematics vendors to include the new array of over-the-top startups entering the IoT connected-service markets.

Context

Founded in 1985, ERM Electronic Systems was initially focused on the design and manufacturing of vehicle security and GPS-based tracking products. ERM was acquired by the Ituran Group in 2007, and changed its name to ERM Advanced Telematics in 2013. ERM is headquartered in Rishon LeZion, Israel; has an office in Bangalore, India; and has an employee count of about 100. Our top-line revenue estimate based on CY 2015 for ERM Advanced Telematics is greater than $15m. With the help of its service provider, reseller and OEM partners, ERM claims to have more than 750,000 customers worldwide using its devices, and to have sold more than 1.3 million devices to date.

The Ituran Group was a longtime strategic partner and customer of ERM prior to the acquisition. The parent/subsidiary relationship between Ituran Group and ERM is particularly important because ERM generates most of its business from Ituran’s distribution channel and typically is integrated with Ituran’s software platforms. ERM’s channel strategy also includes partnerships with telematics providers such as Sherloc Technology Solutions and Comsatel for South American markets, and 3S-Telematica for Eastern Europe. Historically, most of ERM’s business has come from fleet telematics, particularly the commercial trucking industry. Increasing competition and pricing pressure in the telematics industry have driven ERM to expand its market focus to adjacent sectors where it can apply its new eCom technology to a variety of use cases, such as the monitoring of moving objects, including children, students and workers. ERM counts car-rental companies such as Hertz and automotive OEMs such as BMW, Ford Motor and Suzuki Motor as customers.

Products

David Immerman, research associate, 451 Research
David Immerman, research associate, 451 Research

The Starlink product suite is ERM’s proprietary hardware offering for stolen vehicle recovery, fleet management and GPS vehicle tracking. ERM offers two core devices that typically integrate with additional ERM accessories: the StarLink SVR (Stolen Vehicle Recovery) and StarLink Tracker. StarLink SVR is an entry-level device designed for easy and quick installation, while the StarLink Tracker is an advanced GSM/GPS product with high-end tracking and telematics capabilities. The StarLink SVR is designed for massive fleets that need some entry-level tracking but do not necessarily need the advanced functionality of a high-end GPS device. The StarLink ID works with StarLink Tracker to identify the driver regardless of the vehicle assignment through ERM’s tCoin RF remote drive ID module, or by using the KeyPad or iButtom modules. Another add-on accessory to StarLink devices is eSafe, which is used to monitor driver behavior. The eSafe device is a black box equipped with a profile of vehicle types and specific predefined driving maneuvers.

ERM reports that auto thieves are now using jamming devices designed to interfere with transmitted signals to GPS/GSM devices. Using a patented mitigation technique, ERM’s StarLink eConnect device triggers alerts when such interference is detected. These alerts are retransmitted over a dedicated private network through other vehicles and public infrastructure – such as buildings or traffic lights – also equipped with StarLink Connect devices.

ERM has specialized versions for certain vehicles, like the StarLink eBike and Road-Buddy for motorcycles. The StarLink Asset has been ruggedized for use in harsh outdoor environments, and includes an accelerometer and shock sensors to detect unauthorized movement. The StarLink suite includes an array of accessories that solve specific problems, including the eData and eCAN for vehicle diagnostics monitoring – driven from a programmable rule-based engine for OBDII, FMS and CANBUS interfaces. Another example is eFuel, which can detect if fuel levels drop when a vehicle is turned off in order to prevent fuel theft by the driver of the truck. ERM is also actively developing its own fleet management software, branded KARMA; however, the commercial availability date has not been publicly released at this time.

After a year of development, the ERM team is now positioning its new eCom technology into areas that share common requirements with telematics and stolen-vehicle-recovery use cases. One such product is the tCoin, a nickel-sized tag that features an RF proximity remote control (attachable to the end of a keychain). Currently, 3,000 Indian grade-school students are using the tags in coordination with their school buses’ StarLink hardware and eCom receiver. With the combination of ERM devices and a local services partner, Indian parents can see whether a child got on and off the correct bus – or any bus at all. The use of telematics in a school system transportation scenario is germane to student safety, but it also provides a level of logistical control that is difficult to achieve in manually monitored environments. This technology stack is similarly used in a waste-management use case where the tags were put on 1,000 trash bins across Singapore to monitor the interaction from the garbage truck to the bin.

Competition

Brian Partridge, VP, research & consulting, 451 Research
Brian Partridge, VP, research & consulting, 451 Research

ERM reports that competition comes from IoT device manufacturers and service providers, which can be different depending on geographic market. In North America and Western Europe, its hardware products compete with CalAmp and Enfora (Novatel Wireless). CalAmp has been aggressively adding to its capabilities, having recently acquired insurance telematics application company Crashboxx in April 2015. CalAmp is more advanced in developing its reach beyond hardware – it already has a commercial telematics software application, FleetOutlook. Texas-based Enfora is another competitor pursuing a combined hardware and software solution. The company was acquired in 2010 by Novatel Wireless, which also added Freeny Wireless and DigiCore in 2015. Ctrack (DigiCore) is the software component of Novatel Wireless’ telematics offering. Enfora is the hardware side, and Freeny Wireless pertains to a few unique IoT use cases, such as fish monitoring and license plate recognition.

There are several other vendors in these regions that ERM faces, including Sierra Wireless, Zonar System, Xirgo Technologies, FleetMatics, Freewave Technologies, GenX Mobile, Geotab, Telogis, Spireon and Danlaw. Executing its go-to-market strategy in underdeveloped regions of the world is important for ERM because of the prevalence of vehicle thefts. In Eastern Europe, ERM faces regional competitors Teltonika and Ruptela, which both offer a combination of telematics devices and software, and Queclink, which is based in China. Specialists that combine managed network connectivity with specialized devices and software platforms, such as Numerex, form another front of competition.

SWOT Analysis

Strengths

ERM has a strong base of experience and execution in the vehicle-telematics space, and corporate backing from Ituran, which includes access to its massive customer base, software expertise and ecosystem.

Weaknesses

With a software platform under development and not yet released, ERM is disadvantaged in the short term against competitors with commercialized software offerings.

Opportunities

Emerging use cases for advanced telematics, including V2x, are a natural fit for ERM.

Threats

Strong competition exists, and will emerge in the segments that ERM is targeting. Newer IoT use cases are still nascent, and face typical headwinds around ROI, security, data privacy and the cultural shifts required to adopt IoT-enabled business processes.

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