Seeking to build on its telematics capabilities, IBM Corp. has tapped Celestica Inc. to help design and manufacture electronic monitoring devices for the automotive aftermarket.
IBM hopes that automotive insurance companies, car rental agencies, and commercial fleets will install its customized eDevices "black boxes," which use the Armonk, N.Y., company's Automotive Client Architecture to wirelessly link vehicle information systems with open-standard applications like Java and OSGi, said Jim Ruthven, director of IBM's Global Automotive and Telematics Solutions business unit, Detroit.
So far, IBM has snared a contract with Norwich Union, Great Britain's largest auto insurer. Norwich uses e-Devices to track mileage for its "Pay-As-You-Drive" pilot insurance program. By the end of the year, IBM plans to equip several hundred New York City yellow taxi cabs associated with the American Transit Insurance Co. with eDevices technology to reduce fraudulent insurance claims and increase driver and passenger safety, said Ralph Bisceglia, director of information technology at American Transit.
"Using eDevices' black box and database, we'll be able to know when there has been a true accident by examining G force vectors in the cabs to determine the speed at which the cab was traveling before impact," Bisceglia said.
eDevices is designed to significantly lower cost and increase programming flexibility for vehicle mileage monitors, navigation systems, and seat belt sensors. Instead of spending thousands to outfit an auto with state-of-the-art software, owners of small vehicle fleets can spend a few hundred to track vital electronic data using eDevices technology, according to IBM.
eDevices capitalizes on the trend for autos to be equipped with a larger percentage of electronic components and the desire of automakers and suppliers to reduce cost through outsourcing.
"eDevices changes the paradigm of costs as it relates to telematics, which has been a real inhibitor to growth, especially in the commercial vehicle and aftermarket space," Ruthven said. "You are better able to match the architecture of the device to what the user requires. It matches the cost with the benefits."
The eDevices contract deepens Celestica's relationship with IBM. The Toronto-based EMS provider, formerly IBM Canada's manufacturing division, was spun off in 1996.
Celestica, like many major EMS providers, has broadened its customer portfolio in recent years to embrace more automotive-related projects.
The automotive telematics market, which includes both hardware and services, is projected to grow to $27 billion in 2005 from $3.6 billion in 2000, representing a 50% compound annual growth rate, according to Dataquest Inc., San Jose.
That growth coincides with the rise of automotive electronics outsourcing, which is expected to become a $61 billion market by 2005, compared with $47 billion in 2001, according to Merrill Lynch & Co. Inc., New York.
"As our relationship progresses with Celestica, we will hopefully offer more chip and board designs to reduce costs even further," IBM's Ruthven said.