News Column

Vodaphone targets 'connected cars'

June 17, 2014

Vodafone is buying an Italian car electronics maker for $197 million (about R2.1 billion), seeking to get ahead in the race to connect more products to the internet and offset slowing growth in its core cellphone business.

Telecoms and technology firms are looking to tap an expected surge in demand for so-called machine-to-machine (M2M) communications - or using the internet to get products from cars and washing machines, to turbines and medical equipment to carry out more tasks more efficiently.

Cars are at the forefront of the new industry, as manufacturers strive to add new features such as streaming music, playing audio books, navigation aids and security improvements to their vehicles. Only about 10 percent of vehicles have built-in connectivity to the internet, but that number is expected to rise to more than 90 percent by 2020, according to British consulting firm Machina Research.

Vodafone said yesterday that it had agreed to buy Cobra Automotive Technologies, which provides products aimed at improving car security, telecommunications and vehicle tracking for the automotive and insurance industries.

"The combination of Vodafone and Cobra will create a new global provider of connected car services," said Erik Brenneis, the director of M2M at |Vodafone. "We plan to invest in the business to offer our automotive and insurance customers a full range of telematics services."

Other mobile operators are also investing in the M2M industry - also known as "the internet of things" - looking for new sources of income as stiff competition and regulation slow growth in their core market.

For example, Verizon Communications, the largest US wireless carrier, spent $612m in cash in 2012 to buy Hughes Telematics, which sells products including GPS tracking, communications and safety features in cars. Technology companies are also deeply involved.

Earlier this year, Apple unveiled its CarPlay technology, which integrates its iPhone with a car and allows drivers to use certain apps on the dashboard with Siri, the voice-enabled assistant, to view maps, make calls, listen to music, and send and receive text messages.

In other industries, examples of M2M technology already in use include smart meters that monitor |energy usage at homes, or devices in offices that tell an owner when a coffee machine needs re-stocking.

Enders analyst James Barford said mobile operators were still undecided whether they wanted to provide just the network capabilities for M2M communications, or actually manage the services themselves.

The GSMA, the trade body for mobile operators, estimates there were 195 million M2M connections last year, with the highest usage in the car and consumer electronics industries.

Vodafone said it would offer e1.49 (R22) a share to buyout shareholders in theItalian group, about 50 percent higher than its previous closing price. - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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