In August 2015, growing competition within the mapping and location services market was highlighted by a multi-billion dollar deal for Nokia’s HERE business. The winning bidders – a consortium consisting of BMW Group, Daimler and Audi which combined to offer €2.8bn (US$3.07bn) – marked a significant acquisition. As Daimler Chief Executive Dieter Zetsche remarked at the time, “highly precise digital maps are a crucial component for future mobility.”
Demand for mapping is clearly picking up; HERE’s sales for the second quarter of 2015 increased year-on-year by 25%. In the same month, Bosch partnered with TomTom to develop high-definition digital maps for autonomous driving. Echoing a similar sentiment to Zetsche, TomTom’s Chief Financial Officer Taco Titulaer commented in October that demand was “substantially higher” than in previous years. In addition, Lexus and Volvo have both sparked up a relationship with INRIX to utilise its in-vehicle location services.
European companies are clearly upping the ante, but it is worth noting the future importance of emerging markets. Credit ratings service Moody’s expects China to account for 27.8% of global automotive sales in 2016, and according to Deloitte, India will become the third largest global automotive market by 2020.
Megatrends spoke to Peter Bolesza, Vice President of Emerging Markets at NNG, who made the move to India in 2010 to oversee growing business in Russia, the Middle East and India among others. Since his time in New Delhi, he has observed that rolling out mapping services in an emerging market presents new challenges. “Four or five years ago, map quality was extremely low in India,” he said. “This is changing now – quality is improving year after year and even some high-end features are coming in.” While the automotive industry as a whole is leaning heavily toward connectivity, “we are struggling a little bit in India,” he added, “so we cannot introduce the newest technologies just yet.”
Emerging markets, emerging cities
Some argue that the availability of mapping and location services is potentially more essential for emerging markets, yet possibly more challenging than in developed markets. However, Bolesza was quick to affirm that in fact, “Mapping data and traffic information is equally essential in every market.” The key difference is that in the majority of emerging markets, mapping providers have a harder time keeping up with the pace of change in technology and infrastructure. “In emerging markets, they are building cities out of nowhere. The mapping companies don’t face these issues – at this level – in major markets,” he said.
There are certain regional nuances, though. Navigation and mapping services will need to provide real-time traffic information in order for autonomous vehicles to function safely, continuously harvesting and analysing data from surrounding traffic. India is renowned for its level of traffic collisions, and according to the World Bank, accounts for 15% of global traffic deaths each year. Does this present a particular challenge for NNG? “Absolutely,” said Bolesza, “So we are struggling on two sides.”
One of the most significant step changes allowing emerging markets to, well, emerge, and tackle this problem will be the introduction of 5G. Following on from 4G and Long Term Evolution (LTE), this will allow for faster data transfer and more reliable cross-country connections – core principles for future mobility. If emerging markets are to meet standards of developed markets, this will need to be a hurdle, not a blockade.
Bolesza believes the widespread rollout of 5G would be a significant step forward, but questions the high number of used vehicles on the road that will be unable to leverage the technology. “In addition, I’m pretty sure that – just like in any other country – network providers will start with big Tier 1 or Tier 2 cities. Connectivity will not be an issue there, but in rural regions or smaller cities it will be. This is pretty much the same everywhere around the world, even in the US or Europe. You have excellent connectivity in larger cities, but once you step outside, the quality drops.”
Just a pipedream?
Many anticipate cars with some form of autonomous drive technology first hitting public roads around the year 2020. Given current shortfalls, can the same timeline be applied to markets outside of the US and Europe, which have been pioneering for the technology?
“In markets such as India, I can’t see it happening by 2020,” Bolesza admitted. In what he describes as “closed environments” where traffic is less dense, this may be a different story. “In India, the traffic is chaotic, so I don’t see how a self-driving car would manage to navigate between all those rickshaws, bicycles and motorcycles.”
In June 2015, around 20,000 ‘autorickshaws’ – three-wheeler taxis powered by small gasoline motors – were removed from the streets of South Mumbai. “In areas like this, I can imagine self-driving cars appearing,” said Bolesza, “but generally speaking I cannot imagine how a self-driving car would manage otherwise.”
Highlighted by the earlier buyout of HERE in Europe, Bosch’s longstanding relationship with TomTom, and INRIX’s recent partnership with Lexus and Volvo, the need to collaborate to succeed is evident. Is collaboration between mapping and location specialists the next step to spur autonomous driving developments in markets such as India? “Not in the near future, but later on – of course,” said Bolesza, concluding: “India is going to pretty much mirror the European and US market, but not any time soon…We are really far behind.”
