Will in-car AI systems like Amazon's Alexa revolutionize motoring?
Will in-car AI systems like Amazon's Alexa revolutionize motoring?

While media attention has been focused on Verizon’s recent purchase of the Internet giant consumer portal Yahoo!, on another interesting front the company has quietly been transforming from a last-generation wired and wireless telephone company into a next generation IoT/cloud provider with a growing commercial telematics business.

On Monday, Verizon announced a $2.4 billion acquisition of publicly traded Fleetmatics (NYSE: FLTX), a Dublin, Ireland based company, that provides web-based logistics software and solutions to help commercial truck and fleet operators manage their fleets efficiently via an automated system that tracks vehicle location, speed, mileage, fuel usage, etc..

While, on the surface, Verizon’s purchase of Fleetmatics might seem puzzling, it follows the company’s acquisition in June of Telogis, a California company, that offers a software and sensor platform that allows companies to manage their transportation fleets including tracking location and status in one dashboard, optimizing routes, and instantly providing reroutes.

Commercial demand is growing for robust telematics solutions to manage commercial fleets to maximize logistical efficiencies. Telematics is defined by Gartner as “the use of wireless devices and “black box” technologies to transmit data in real time back to an organization.” It’s the vehicle/transportation IoT, and as Verizon’s traditional telephone business declines, they’re focused on building a telematics IoT business atop their wireless infrastructure.

“The combined subscriber base of Verizon+Telogis+Fleetmatics creates the largest fleet telematics service provider, with an estimated > 1.4M global subscribers. There are synergies across these businesses and they create a broad portfolio of solutions that address the span of customers from small and medium businesses to large enterprise,” said Susan Beardslee, Senior Analyst, B2B/Automotive, at ABI Research.

Market research firm, MarketsandMarkets, has forecasted the global commercial telematics market will grow to USD 47.58 billion by 2020 from USD 20.02 billion in 2015.

With the growth of IoT sensors and software and more and more commercial fleets embracing telematics, the commercial telematics market is poised for strong growth. Market research firm MarketsandMarkets has forecasted the global commercial telematics market will grow to USD 47.58 billion by 2020 from USD 20.02 billion in 2015.

Faced with a decline in its traditional telephone business, Verizon is positioning itself to capitalize on the growth of commercial telematics.

“The powerful combination of products and services, software platforms, robust customer bases, domain expertise and experience, and talented and passionate teams among Fleetmatics, the recently-acquired Telogis, and Verizon Telematics will position the combined companies to become a leading provider of fleet and mobile workforce management solutions globally,” Andrés Irlando, CEO of Verizon Telematics, said in a statement announcing the deal.

“This might not be the end of Verizon’s transport-focused acquisitions,” Beardslee said. “Potential areas with synergies could include car sharing/mobility as a service opportunities, linking to Verizon Auto Share. Additionally, vehicle cyber-security and automotive software management solutions (SMS) can support and enable Over the Air (OTA) updates and are potential candidates.”