Sam of Arabia

Steve Hamm

It seems like telematics is about to really take off. First came GM's January January announcement that it will include OnStar as standard equipment in most North American vehicles by 2007. Now there's news from a most unlikely place: The tiny United Arab Emirates. IBM announced on Apr. 15 a $125 million deal to provide the country with technology to help fix its traffic mess. So the UAE could become a test lab for telematics use worldwide--with Sam Palmisano's IBM as the scientist.

When it comes to traffic problems, the UAE needs all the help it can get. The tiny desert kingdom is quite the dangerous place. It averages 38 accident-related deaths per year for every 100,000 residents - compared to 15 for the United States and just 6 for Sweden. This has something to do with wide-open spaces and dust storms. The country plans on using the technology to control speeding, warn of hazards, and help guide people around traffic jams. "Telematics will help reduce the number of accidents and fatalities," says Tayeb Kamali, chief executive of the Centre of Excellence for Applied Research and Training, the government-related outfit that cut the deal with IBM.

The technology is fascinating. Think of it as something comparable to the so-called "black box" in commercial aircraft. But in this case, the electronics not only monitor what happens en route but can become a mobile information hub. IBM is building what it calls a "platform" that can be used for all sorts of things - cell phone calls, tapping in to Web sites for information, tracking vehicles that are stolen, reporting breakdowns, or even getting maintenance information when something goes wrong. The package includes GPS, a small screen, wireless access, and voice recognition software. There's a picture of one of the test cars in this blog.

Analysts call the UAE deal a significant move. "It's a big deal," says analyst Paul Magney of Telematics Research Group. "People are beginning to realize that telematics needs to be deployed in cars. It starts with safety and security, and there are a lot of applications that go beyond that."

It's a big step up for IBM. The company has long been a player in telematics - doing deals in the past with shipping companies and with the United Kingdom's Norwich Union, an insurance company that just began offering a new kind of risk-based auto policy. NU uses telematics to track actual use of vehicles and charge variable monthly fees based on the real risks. The UAE deal is much more open-ended. "This is huge. You look at where people spend their time, and you want to give them services where they are. People spend more and more time in cars," says Mike Nelson, director of On Demand Business for IBM's Systems & Technology Group.

Sounds swell, but I have one concern: the Big Brother factor. What if cops in the UAE start using these gizmos to track the movements of private citizens? Kamali assures me that there are laws on the books protecting people from this kind of intrusion, but he also says it's possible that the government will decide to use the devices to monitor vehicles and fine speeders. Seems like a slippery slope.

Before it's here, it's on the Bloomberg Terminal.