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Predictive Traffic More Than Good Enough

by Roger Lanctot | Jul 27, 2011

Good enough is the enemy of the best (with apologies to Voltaire). Nowhere is this more apparent today than in the traffic data industry. Almost anywhere in the world Google's free real-time traffic data, based on Android handset probes, is perceived by a preponderance of consumers as "good enough." In fact, more than a few people – at least the ones I run into – perceive Google real-time traffic as great.

But is good enough really good enough?  If good enough is actually good enough, how was INRIX able to lure top-notch venture capital firms like Kleiner Perkins and August Capital to invest $37M in Series D round funding?  Observers have ascribed a $500M valuation to INRIX based on that investment, putting INRIX on a path to CEO Bryan Mistele’s goal of a $2B valuation in connection with the company’s plan to launch an initial public offering in 2012.

If good enough traffic data is free, how can INRIX command such a premium valuation?  As my brother is fond of telling me: “Watch the hips.”  What my brother is talking about is anticipating the direction of a soccer or basketball player.  The best guidance is to not be taken in by the head-fake, watch which direction the player’s hips are pointing.

In traffic data, the bellwether is predictive traffic data.  Real-time traffic information is the crack of traffic information.  It is easy to get excited about real-time traffic information like live traffic reports and traffic-camera feeds.  But if you are a traffic manager or even if you are just a traffic data consumer trying to navigate from one point to another, what you need is predictive traffic information.

Predictive traffic information is where INRIX shines.  It is worth noting that Google pulled its predictive traffic information last week without explanation.  It is not clear what the information was based on, but something must have gone wrong.

Why is predictive traffic information so important?  That is simple.  If a service provider doesn’t have predictive traffic information it cannot estimate accurately when someone is going to arrive at a particular destination.  If the service provider or application cannot predict travel times with any accuracy, then it cannot provide useful routing information or ETAs and, therefore, cannot deliver a reliable navigation solution.

Time and time again, survey respondents tell Strategy Analytics that traffic and navigation are the two most important applications.  If a service provider has inferior traffic information, sooner or later the user will realize that the navigation information is NOT “good enough.”  A good indication of this is navigation arrival times that are constantly changing on a smartphone app, navigation device or embedded system.

Executives at Waze, the probe-based, crowd-sourced traffic information provider were probably delighted by the INRIX funding announcement.  The money-losing, venture-backed traffic information provider was trying to make some publicity hay of its own a week ago when Los Angeles authorities shut down the 405 Freeway for two days.

Waze scored a public relations bonanza with news reports across the country and around the world along with extensive network television coverage in partnership with the ABC network.  While Waze is a clever solution, it is entirely focused on real-time traffic information, not predictive.  Unfortunately, this is a fatal flaw. 

So, even though Waze picked up thousands of new users in the Los Angeles area to contribute their probe data to the traffic information service along with their Twitter and text messages regarding real-time traffic events, Waze is not able to provide predictive traffic information services.  Without predictive traffic data, Waze is a novelty traffic information service with a niche market.


Implications

The implications for Waze and, for that matter, Nokia Navteq, are important.  Probes alone do not a traffic information service make.  INRIX has demonstrated this truism definitively.  But it may take a while to sink in with consumers.  Fleet managers and traffic management executives get it and have voted with their dollars and Euros.  OEMs like Toyota, Ford and Audi get it too.

With the latest round of funding, INRIX is now positioned to expand its range of cloud-based, travel-oriented service offerings and explore acquisitions.  The company is also teaching the industry important lessons every day about the importance of predictive traffic.  And that's more than good enough.

To compete successfully in the traffic information business requires a robust predictive traffic engine.  Consumers and traffic managers and, for that matter, fleet managers all need predictive traffic information to plan their routes around delivery times and fuel consumption.  INRIX is delivering these solutions to a growing range of public and private organizations in a growing range of geographies.

 

Additional insights:

http://bit.ly/nNTWk2 - Automotive and Portable Navigation Outlook 2010 - 2018 - John Canali - Automotive Multimedia & Communications

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