The buzz in the telematics industry lately is centered around why it's not living up to expectations. Ford and Qualcomm recently ended their multi-million dollar telematics joint venture called Wingcast, which was one of the major players in the industry. Two years ago, projections for the telematics market in 2010 were in the $40 billion range; newer studies now put that amount closer to $20 billion. Telematics suppliers are cutting staff, and automotive manufacturers are scaling back telematics initiatives. So what's the problem?

Experts offer a range of explanations: Auto manufacturers and suppliers got caught up in the Internet boom—business plans for new in-car technologies didn't include any actual business, just ways to gain "eardrops" (as consumers were sometimes called). A lack of consumer awareness of telematics products and services has hindered market acceptance. Incompatible development processes—technology products operate in 6-month cycles, while automotive manufacturers tend work in 3- to 4-year cycles—make it difficult to plan production effectively. Currently available technologies do not provide the requisite functionality, and they rarely work well together due to insufficient data communication and hardware standards.

While all of these factors have undoubtedly contributed to the lackluster state of the telematics market, another important element has been curiously overlooked: Much of the confusion about how to make telematics products and services profitable is a result of thinking a single promising technology—voice recognition, WAP, Bluetooth, whatever—is the all-encompassing solution to everyone's problems. But, in fact, it is this kind of thinking that has caused so many telematics products to fail, or simply fail to even get noticed.

Technology-centered thinking is problematic for a number of reasons:

Technology is not a differentiator for consumers

When it comes to driving—or riding in—a car, most people are concerned with getting where they want to go safely, comfortably, and with a minimum of hassle. This (along with style and price, of course) is what people think about when shopping for a vehicle. Aside from perusing the feature list at the dealer, they generally only think about technology when it doesn't work. So, if your telematics offering is driven (pardon the pun) primarily by a technology, it already has a mark against it, because consumers will not be able to see how it is valuable to them. You can offer the most advanced technology in the world in your car, but if it doesn't address the customers' primary goals, they'll look elsewhere for transportation.

Focusing on a technology can be self-limiting

Investing heavily in a particular telematics technology, with the hopes that it will take off by the time the product hits the market—3 to 4 years from when you start development—locks you into supporting that technology come hell or high water. Say you begin development on an in-car broadband entertainment system that works with a single wireless connectivity model. When a newer, cheaper, and more powerful connectivity option comes around, you're stuck. Letting a single technology solution define and control the design of your product prohibits you from being flexible enough to accommodate changes in the market or technology landscape.

A technology-centered approach can take you out of your comfort zone

Telematics products and services involve numerous support infrastructures and components such as wireless connectivity service, complex integrated hardware, software systems, and consumer electronics. Many automotive manufacturers are tempted to break out of their familiar market into these other associated industries so that they can "own" every element of their telematics offerings. But this route is fraught with danger. Such an endeavor demands enormous resources. To "own" the wireless component of your product, for example, you would have to "own" a reliable, nationwide communications network, provide service and support staff and equipment, work within (or lobby to reform) strict government regulations, manage partnerships with competing services, and on and on. If the particular technology you invest in tanks, you'll be out a substantial amount of money, if not out of business altogether.

Equally problematic is the effect extending your brand into unfamiliar realms will have on how your customers perceive you. Like it or not, if you are a car company, people will think of you as a company that makes cars. If you offer a wireless phone service or streaming Internet music under your brand name, you'll naturally make buyers suspicious: "I know I can trust the phone company to connect all my calls; but can I trust a car company for that?" Even if you persuade somebody to buy your phone service plan, chances are you'll still be treading on thin ice—a few dropped calls and that customer will probably cancel her subscription muttering, "I knew it!" Breaking your corporate character just for the sake of attempting to capitalize on a vertical telematics market risks confusing your loyal customers and making potential customers wonder, "What does this company really do?"

Focusing on one technology may mean overlooking other, better options

Centering your development around a single technology may also cause you to overlook other issues and problems that can only be solved using different technologies. No one technology can provide the breadth of interaction mechanisms required to enable a driver or passenger to use a product effectively—and safely—in all situations and contexts.

For example, one technology that is often seen as the key to successful telematics products is voice recognition. Voice-based systems certainly can be advantageous for some tasks, such as hands-free phone dialing, or making a selection from a short list of options. But voice systems also require users to memorize specific commands and options, and by definition have no visual output, which is crucial to successful navigation and manipulating large bodies of information. So, clearly, voice interaction is not appropriate for some tasks, and trying to adapt an inadequate technology to all situations generally ends up making it work well in none of them.

Another similar approach is to consolidate access to features into as few controls as possible. The single-knob control of the iDrive system in the new BMW 745i sedan is one example. The problem with single-knob systems is that the more features the knob controls, the more the user has to concentrate on using the knob to get the result he wants. And when the driver is concentrating on the knob on his dashboard, he's not concentrating on the road. It important to note that, while the iDrive system controls over 700 features, BMW wisely chose to give the most common ones—volume and temperature adjustment—their own dedicated controls on the center console.

Breaking out of the technology-driven development box

Although it is the generally accepted standard, focusing product development on technology can confuse your brand, over-extend your development resources, and, most damaging, produce unsatisfying or unsafe products. Here are a few ways to break away from a technology-centered approach to provide better products and services to your customers.

Design for people, not technologies

The best way to avoid the traps of investing your development efforts too heavily in technology is to start with the people who will use your telematics product: What types of drivers and passengers do you want to serve? What problems do they currently deal with when they are driving? What are their goals? What is the best way you can provide them with the tools and information they need to accomplish those goals? Use the answers to these questions to develop personas, or fictional characters, who represent the needs of the various members of your target market. These personas will help you make intelligent, well-reasoned decisions when it comes to defining and developing your telematics product.

With a solid understanding of the needs and goals of your personas, you can analyze the appropriateness of any potential telematics offering you may be considering before you invest millions in the technology to make it a reality. If your research determines that a product will not fit into your personas' lives—i.e., if it will not make their driving experience safer, more comfortable, cheaper, or more hassle-free—don't built it. The implications of backing out of an expensive telematics initiative before development begins are much less severe than those you'll face later on. A product based upon the goals of real people also eases your sales and marketing efforts when the product is ready for release: you don't have to figure out how to sell a complicated technology to an unreceptive public; instead, you have the luxury of figuring out how to sell a product that people actually want, which is much easier.

Once you've decided to go ahead with your goal-directed telematics product, you can start looking at the technologies available to build it. Personas are useful at this stage too: they can help you validate your technology decisions. If you're not locked into a particular technology, you have the freedom to choose the solution that best fits the goals of the product. As you explore your options, build low-fidelity prototypes or mock-ups of the design as it would function using each technology. Then run through scenarios with your personas (making sure to include passengers as well as drivers) to see which solution fits their context and goals best.

Finally, keep in mind that, while technology changes at a rapid pace, the goals of drivers and passengers rarely do. Again, most people are concerned with getting where they want to go safely, comfortably, and with a minimum of hassle. These goals will be the same in five years as in ten. If you focus on satisfying these goals, rather than pushing your pet technology, you can more nimbly incorporate new technological options as they become available.

Focus on what you're good at

Consumers look to automotive manufacturers to provide safe, reliable, powerful, stylish cars. They look to electronics companies for the latest communication, entertainment, and information products. Be conscious of this distinction, and play to your strengths.

Though it can be tempting to reach for a piece of the huge, lucrative consumer electronics market, avoid stepping too far out of your recognized expertise. Consider starting with telematics offerings that closely tie in with the products and functions you already do well. If, for example, you are a car manufacturer whose vehicles are renowned for their reliability, your customers will be more responsive to a world-class, intelligent diagnostic notification system than to a technologically current, but only marginally useful, in-car Internet browser. This approach may not always be sexy, but if you build a foundation of telematics products that your customers find useful and enjoyable, they will be much more receptive to the more boundary-pushing products you offer down the line.

Also, remember that you don't have to do this alone. There are literally hundreds of corporations out there looking to tap into the telematics market. Find the ones that offer services, products, or technologies that complement your strengths and form partnerships with them to provide your customers with exactly what they need to accomplish their goals.

Compete on design, not technology

Technology is not a differentiator for most consumers, so don't think of it as your competitive edge. Instead, consider technology as the thing that enables you to put well-designed products in the hands of your customers, and let the design of your products set you apart from the competition.

When you describe your telematics product or service to your customers and partners, don't make a list of the technology features it includes, describe how it solves the problems drivers and passengers face in their vehicles. Your customers will see that you've thought about their needs and care enough to provide them with a solution that works. Your partners will see this approach as a signal of your expertise on the matter, and will be less likely to second-guess your decisions or make their own technology-or marketing-centric demands on the product. While it's difficult to tell a compelling, believable story with only features and technologies, it's easy to do it with good design.