Video Telematics the Next Big In-Vehicle Technology, Not Autonomy
Monday, November 4, 2019
Posted by: Gary Hotze
David Gearhart, CFA, First Analysis
Autonomous vehicles. Self-driving cars. For a while now, the concept of a car or truck driving you to work and later picking you up or being used to deliver packages or taxi passengers while you work has dominated the headlines in the vehicle space as the next big thing. We love the concept and believe the day will come when self-driving solutions are mainstream. That said, we continue to think this is at least a few years away because there are simply too many environmental variables to account for and control on the open road with the consequence of any error at a nominal or higher rate of speed potentially very dire: injury, death, property damage. In fact, we believe that until the world sees completely autonomous trains (both freight and consumer), which operate in a more closed environment, it is premature to expect the proliferation of self-driving cars.
Instead, we think the step change in the vehicle market near term is video monitoring or telematics. We believe the power of such solutions will become increasingly more apparent to fleet operators (of commercial organizations), regular drivers (consumers), and other stakeholders (insurance companies). Cameras or vision technology are part of the autonomous vehicle, but we are talking about something different. Video telematics solutions combine hardware such as cameras, mounting brackets, and cables with platform management software, network connectivity (cellular), and an end-user application or interface. Footage of the road, driver, and potentially other views can be captured continuously or when triggered before and after an event like a crash, excessive speeding, harsh breaking, cellphone use, etc. This footage is being used in post-incident forensics (exoneration of a driver, assigning fault), to improve safety (highlighting areas for driver training), and for data mining. The analysis of footage is particularly interesting to us, as we have seen examples of companies selling consumer dash cams and enabling automatic upload of continuous footage to the cloud for real-time or later analysis. Algorithms and machine learning are then used to study the footage across a company’s customer base to address specific use cases such as identifying areas for tree trimming near power lines, finding open parking spots, flagging construction zones, or capturing street signs for inventory control or to replace them when damaged.
Our view that video is the “hot” area in the vehicle market is based on fundamental research – market surveys, conversations with industry participants, and observation. We publish the First Analysis Fleet Telematics Survey annually that looks at capabilities demanded on a simple 1-to-10-point scale with 10 being the highest demand and 1 the lowest. Demand for video has increased in each survey we have done since 2014, and video saw the largest increase over the most recent three-year period. In addition, the annual Mobile World Congress (MWC) cellular show in Los Angeles this October featured many more video telematics solutions providers relative to past years, and in our conversations with telematics hardware and full-telematics solutions providers, most indicated a desire either to build a proprietary camera/solution or to partner and integrate with an existing vendor – all to gain exposure to the video trend. We think growing interest among all constituents is being driven – pun intended – by the unique situational intelligence that video can provide, which traditional track & trace telematics or “black box” solutions cannot – specifically, why something occurred, not just the location of the event, date/time, and individual involved. This context is translating into tangible return on investment (ROI) from deploying solutions: cost savings from insurance discounts, avoidance of litigation fees, and reduced accidents, for example, and incremental revenue from improved productivity, greater asset utilization, and monetization of data.
So, we think the timelier conversation is about video monitoring and the coming ubiquity of vehicle cameras. We leave you with a question that emphasizes the value of video: “If a picture is worth a thousand words (or in this case other data metrics), what is a video worth?”
First Analysis has a nearly 40-year record of serving emerging growth companies, established industry leaders, and institutional investors in its focused areas of domain expertise, both through its venture capital investments and through First Analysis Securities Corp. (FASC), a registered broker/dealer with FINRA and member SIPC that provides investment banking services and institutional equity research.