Chinese operators are seeking to increase the scale of IoT connections and, more importantly, the value of those connections. In this respect, the experience of overseas operators is worth learning from. Shuizhu Communications has noticed that Vodafone has been making frequent moves in the IoT field recently, especially in the car sector: besides signing a deal with China's Niu electric vehicle company to provide connected services globally, it has also won important customers in the connected-car insurance market.
Public information shows that Vodafone has signed a cooperation agreement with Admiral Insurance, the UK's largest motor insurer. Under the agreement, Vodafone will provide Admiral with a package of connected-car services, including devices, connectivity, data management, accident analysis and safety-related services. Vodafone will supply Admiral with detailed driving data and detailed accident information, helping the insurer understand the entire claims process, and will provide car owners with value-added services such as vehicle anti-theft.
The main purpose for UK insurers doing this is to use telematics to reduce claims costs, control the claims reporting process and provide value-added services to customers.
The connected-car insurance market has extremely high growth potential. According to a report by IoT analytics firm Berg Insight, Europe had 6.8 million connected-car insurance users in the fourth quarter of 2016, and the market is expected to grow at a compound annual rate of 38.4% to reach 30 million by 2021. The North American market, from 6.9 million in the fourth quarter of 2016 at a compound annual growth rate of 38.2%, will reach 35.2 million by 2021.
However, one trend in the US is that several major US insurers are beginning to shift to smartphone-based solutions, and Berg Insight expects smartphone-based solutions to grow rapidly in the coming years.
Operators are not the only ones eyeing the connected-car insurance market. Connected-car insurance service provider Octo Telematics had more than 5.3 million activated devices as of the fourth quarter of 2017. The market has many other heavyweight players.
But the connected-car insurance industry is relatively complex, with an industry chain spanning multiple sectors, and the roles of insurers, telematics insurers, operators and carmakers are crucial. The degree of carmaker participation in particular matters greatly: if connected-car systems can be pre-installed and connected with insurers, the connected-car insurance market will be able to break through the barriers to its development.
Another potential market of scale is construction machinery and equipment.
A report published by Berg Insight last November predicted that the number of connected devices in the construction machinery market will grow to 4.6 million units worldwide by 2021. According to Berg Insight's research estimate, 1.8 million units of telematics-equipped construction machinery had been deployed globally by the end of 2016. The market's compound annual growth rate (CAGR) is forecast at 21.3%.
According to data from the Excavating Machinery Branch of the China Construction Machinery Industry Association, from January to November 2017, 25 major manufacturers sold a total of 126,298 excavating machinery products (including exports), up 99.2% from the same period a year earlier.
These data show that the construction machinery market is a potential connectivity market, but in providing connectivity services, China still lacks a telematics-focused company comparable to Cubic on a global scale.
Take electric vehicles: China is the world's largest manufacturer and exporter of electric vehicles, yet operators have rarely explored this area. Niu electric scooters, for example, cooperate with Vodafone, pre-installing Vodafone IoT SIM cards and one-year prepaid data plans so users can keep track of their scooter's battery level and travel location and receive safety alerts. None of this technology is difficult and there is no problem with the service, so why did Niu choose Vodafone to provide global services?
Something else is very interesting: Zurich Insurance Group acquired Bright Box, a telematics provider and OEM founded in 2012 that provides connected-car services for drivers, offering full-stack telematics technology including cloud platforms, mobile and web applications, telematics hardware and connectivity services. An insurer acquiring a telematics technology company also proves the potential value of connected-car insurance.
Source: China Business Net, Chen Zhigang column 2018-01-08