The asset tracking market will soon see a new market competitor coming to the industry with a different game plan to attract new customers, one that takes a page from the playbook of the wireless phone providers in the United States.

The company in question is Homeland Security Network Inc. (HSN, formerly AutoCorp Equities Inc.) and the strategy is one that is tried and true on consumer wireless market: sell the hardware for as little as possible and focus on airtime as the revenue generator.

“We started looking at the [GPS-based asset tracking] industry about a year ago,” company CEO Charles Norman told Satellite News. “One of the things about the technology is there are a lot of different companies out there, but they all offer service at a high price.”

So to address the pricing issue, the company, along with its co-manufacturing partner, Belgium-based Advantra, built two GPS receiver boxes, one for the consumer market and one for the commercial market, that can perform a variety of functions, though users of the box don’t necessarily have to use all the functions that are available on them. The single box allows HSN to control costs, while giving it the flexibility to offer a variety of value added service to customize the information it delivers to subscribers to the service.

The consumer box, Norman explained, will perform certain tasks such as geofencing, remote starting and remote door unlocking services in addition to sending to a user’s PC or cell phone the GPS location data. He said the consumer service will cost a user between $9.95 and $14.95 per month for unlimited airtime.

Pricing for the commercial box will be higher and more tiered depending on what the user wants in terms of applications. Norman said it will be able to do the things that are standard in this space, including tracking information such as when trailers are opened, what the temperature in the trailer is, when a trailer is moved, in addition to the GPS- based location.

Norman noted the company will be going after the trailer side of the commercial trucking market. “Qualcomm has attacked the industry heavily on the cab side,” he said, adding that he views them as a main competitor. Qualcomm is best known for offering asset tracking services through its SnapTrack Inc. subsidiary.

Of the box HSN plans to sell, Norman said it will “allow us to put it on a trailer with a battery life of about sixty days. The battery is recharged once the trailer is hooked up to a cab.” He added that the company is looking for alternative power sources that will improve upon the 60-day battery life.

The commercial product and the consumer product both communicate to the user through terrestrial wireless connections via Motorola’s ReFLEX technology or through the GSM networks. Norman said that right now, the company had avoided using satellite services to link the asset to the user, but expects that to change down the line to meet the demand of full ubiquitous coverage across the United States and Canada.

“We are talking with people right now because sooner or later we are going to have [to offer satellite coverage] just because of the vastness of the trucking industry,” Norman said. He added that trucking companies that HSN talked to and have conducted trials with expressed an interest in having that kind of coverage. He noted that the consumer-targeted product likely will not have a satellite component offered because it would make it too cost prohibitive for the average consumer.

An Aggressive Target

Norman is confident that his low cost hardware approach will drive the business. The company stated in a Feb. 24 press release that “based on our country’s commitment to security and industry revenue estimates, [HSN] can generate sales of more than 50,000 units and $17 million in gross revenues this year and grow to more than 150,000 units and revenues exceeding $100 million by 2006.”

Frank Viquez, director of automotive research with market research firm ABI Research, told Satellite News, “50,000 units is a rather aggressive goal, especially for a newcomer to the arena. Either they actually have a customer lined up with some kind of informal agreement in place, or they are just doing this to get the PR buzz going. For a newcomer to come into a market that already is very heavily populated, where there is a lot of fragmentation going on and a lot of niche market specialization, they are going to need to have a very unique solution or a very low price.”

Viquez noted that only “very few players” in this space have been able to ship 50,000 units so far, Qualcomm being one the example he specifically cited. “Qualcomm is the huge monolith in the industry.” He said Qualcomm is shipping 50,000 units of trailer tracking hardware to just one of its customers.

Viquez added that HSN has “to pick a specialized market and their own niche that they want to carve out for themselves” if they are hoping to succeed.

But that is not the goal of HSN.

“In the GPS market, there are many competitors out there, but what most of them have done is stayed in very select markets,” Norman said. “They are not chasing the broad spectrum.”

(Frank Viquez, ABI, 516/624-2500; Terri Ashley, HSN, 214/618-6400)