NOVI, MI – Automotive telematics, an industry still in its infancy, has many questions facing its future, including how auto makers can monetize the cutting-edge technology and who will seize control of the emerging field.

How to turn a profit with telematics technology such as in-vehicle infotainment systems was a key topic of discussion during the recent Telematics Detroit 2013 conference here. Auto makers currently charge customers an upfront fee for the technology, but there is potential to turn infotainment systems into an ongoing revenue stream.

Experts warn monetization is a slippery slope, as many of the strategies being considered potentially could fray relationships between auto makers and customers.

David Miller, chief security officer-Covisint, says auto makers, telecommunication firms and other companies looking to cash in on telematics are considering selling consumer data collected by the vehicle systems to third-party entities.

With the technology gleaned from in-vehicle telematics systems, auto makers know consumer driving patterns and could use that information to offer targeted applications from local businesses, Miller says.

“They know what restaurants you like because you drive your car there, so they can recommend restaurants as you’re driving and the restaurants will pay (the auto makers),” he says of the potential revenue strategy.

Such a strategy likely would require customer approval to access their personal data. Doing so without permission would violate the trust established between auto makers and their consumers, he says.

Despite the revenue potential, other experts believe auto makers might not implement the strategy outlined by Miller.

Mark Concannon, president-Concannon Business Consulting, says auto makers are reluctant to essentially put coupons in a car.

“It just feels inappropriate for the brand they’re trying to create,” he tells WardsAuto. “But that doesn’t mean it’s not coming.”

Another revenue-generating possibility would be to sell vehicle diagnostic data to dealerships that could use it to target consumers with maintenance and other offers.

“The valuable commodity is the data,” says Rohit Puri, senior manager of advisory services-Ernst and Young. “The question is who derives the value from that data, and will they pay for it. The key question is are car makers, or anybody, targeting the right group of people to monetize?”

Miller says it could go a step further, with auto makers themselves harvesting the information to engineer and produce better vehicles. “They could monitor the error codes that come off the vehicle to be able to make better engineering decisions,” he says. “That makes vehicles with a better quality experience, which saves them money.”

In addition to monetization, the telematics industry remains fractured, with auto makers, tech firms and telecommunication and insurance companies all vying for position. Experts say the number of players likely will thin out within a matter of years.

Most agree auto makers ultimately will dictate the direction of automotive telematics, but telecommunication companies such as AT&T and Verizon are making a big push.

“Telecom players ultimately will move up the value chain and become Tier 1 suppliers,” Jean-Francois Tremblay, advanced mobility group leader for the Global Automotive Center-Ernst & Young,” tells WardsAuto.

Tremblay says telecom companies are well-positioned to manage customer satisfaction, call-center needs and the back office, and know how to interact directly with customers, while auto makers lack that capability. “I think car makers are very nervous about that.”

Another possibility is the continued involvement in the telematics industry of a wide variety of companies, all providing a particular service or role.

Covisint’s Miller says like the telecommunications industry today, telematics will continue having many players that will have to learn to work together. The remaining entities will be “pushed to have more standard interfaces, which will create more competition.”

Forging relationships in the telematics industry is tricky due to its fast-moving nature. While a partnership may seem beneficial at the time, several years down the road it could be detrimental, and breaking up collaborations can be difficult due to the technological complexity of the industry.

Tremblay says getting “divorced in an elegant” way has yet to be accomplished, and a partnership gone wrong could lead to brand damage.

“I think there are players ready to get divorced and don’t know how to because they are too embedded,” he says. “Can they cut the house in two? Not really, so who takes what?”

Tremblay says how partnerships are formed and how companies move on with other partners when the relationship fails will be a critical issue.

Auto makers likely will continue to forge their own telematics identity, partnering with suppliers who can provide critical expertise.

Forging a brand identity is key, and having a strong telematics system that reflects the auto maker’s value could become a major selling point with consumers, Concannon says.

Rather than focus on replicating the features of a smartphone, for example, auto makers should concentrate on building their own consumer experience, he says. “When you to get in your Audi it should be your Audi experience, vs. your Samsung and your Audi.”

While auto makers will control the look and feel of their telematics systems, they likely will apply much of the same technology to deliver features to consumers.

Miller says cloud-based data services will become the norm in telematics, with auto makers sharing much of the same data to stream into their vehicles. “There will be a convergence of capabilities, but each (auto maker) will probably have something unique,” he says.

Selecting what applications to offer consumers also will be left to auto makers, who should be careful to only offer apps that matter to consumers, experts agree. While companies such as Apple and Google offer millions of apps to their smartphone customers, only a thousand or so actually are considered useful.

Developing a successful app strategy will be important going forward, but experts don’t see eye to eye on the best way to address the challenge.

Miller agrees only a few of the millions of smartphone apps are helpful, but says it’s because so many were developed that the valuable ones emerged.

“Nobody is smart enough to say ‘Why didn’t you just write the thousand that were good?’” he says. “I think there will be a plethora of apps that run in your car, and 10 of them will be valuable and consumers will figure out which 10 are.”

Concannon suggests a different approach to app offerings, arguing auto makers should be selective in what they put into a vehicle.

Some auto makers already have strayed from this path, resulting in poor-quality apps that frustrate consumers. Others, such as Toyota, have been more selective and have stressed creating quality apps that benefit consumers.

“We’re going to see each OEM make a decision (on apps) based on their brand, priority and marketing experience,” he says. “Automotive-grade is a real standard at some level and what consumers expect.”

While nobody can predict exactly what a mature telematics industry will look like, experts agree an ideal solution would be an in-car system that blends seamlessly with a consumer’s life.

For example, subscription-based services such as satellite radio would recognize you no matter what vehicle you were in, be it your own, your spouse’s or a rental car. And with the ongoing development of in-home telematics, your refrigerator could tell you when you’re out of a particular item and transit the information to your vehicle, which in turn would automatically provide you with a route to the nearest grocery store.

“The car becomes just one more piece of the ecosystem of an individual,” Concannon says. “It knows me and helps my experience in driving and becomes a seamless experience.”