Waze: Traffic Tragedy

Traffic is like the weather. Everyone complains about it, but no one can seem to actually do anything about it. Just as we have a widely acknowledged problem with climate change and global warming so, too, do we have an all-enveloping global traffic problem - with no answers in sight.

The saddest thing of all, though, is that every time someone tries to do something about traffic, they devalue the already diminished business model associated with traffic information creating a disincentive for any one or any other organization to give it a go. The prime case in point is Waze.

Waze has applied crowd-sourcing logic to the aggregation of traffic information from probe data derived from drivers using the Waze app. The information is highly accurate at calculating arrival times and identifying traffic jams, but the app causes as much traffic as it mitigates by supplying drivers alternative routes en masse - thereby diverting jams from freeways to secondary streets.

The greater negative impact of Waze, though, lies in its insidious devaluation of traffic information. Traffic information is the single most important connected car application. Traffic determines routing and arrival times and also impacts driving range for electric vehicles and has the potential to calm the nerves of harried drivers.

Mastering traffic information for the creation of optimized routes thereby minimizing fuel consumption and emissions and saving money on vehicle wear and tear ought to be a highly value expertise. The reality is something quite different, which has evil consequences for the business prospects of companies - like TomTom, HERE, SiriusXM and INRIX (and v-traffic and many others around the world) - participating in the space.

It also creates problems for Waze and Waze users who are routinely diverted from direct routes with only sketchy information regarding the reason for the particular detour. This issue occurs routinely when taxi, Uber or Lyft drivers rely on the Waze app and the app diverts them for no obvious reason leading to an inevitable argument with passengers (such as myself) preferring to use familiar direct routes.

The issue comes to the fore now as rumors swirl around a potential sale or change in ownership of TomTom - a navigation map maker and traffic information market leader. Being a leader in traffic information has done little to reverse the fortunes of TomTom which is rumored to have enlisted Deutsche Bank to help with the possible sale of the entire company or a majority stake. (TomTom has stated officially that this rumor is not true.) This rumor dovetails with murmurs swirling through the growing community of former INRIX executives that it, too, is evaluating similar options.

Given the roughly $1B paid for Waze four years ago, when Waze had little or no revenue, TomTom and INRIX ought to fetch boffo valuations. But Waze's crowd-sourced traffic information model has depressed the value of competing traffic information services to near zero - particularly in the minds of consumers. To make matters worse, Waze is doing its utmost under the the aegis of Alphabet, to soak up as many bits of the department of transportation and municipal traffic business as it can - a once-rich source of revenue for traffic contenders.

So we are left with the most critical connected car application - traffic data - devalued and diminished at the very moment it is in greatest demand to resolve intractable traffic challenges the world over. Waze may steer you around or into traffic from Berlin to Brazil, but you'll never quite know why and you'll never realize that all the while it is building a barrier against the participation of more sophisticated solutions from TomTom, HERE and INRIX or maybe the next red-hot startup. But that startup will expire in the crib as investors steer clear of any organization targeting traffic information.

My biggest beef, though, is the inability to understand the routing decisions made by Waze. When my Uber or Lyft driver detours from a more direct and familiar path he or she generally can't explain the diversion other than to compare the routes - dangerously while driving - between Google Maps and Waze on his or her phone. The two apps usually agree, though not always, but neither is able to explain the traffic snarl other than to point it out.

Which brings me to my favorite traffic application, which is still not widely integrated: TrafficLand. While TomTom and INRIX seek new financial paths forward, I'm still parked in the back of a Lyft somewhere arguing with a driver who has just taken a wrong turn on the advice of Waze. Once, just once, I'd like the driver to be able to access traffic camera still or video links to determine what the real-time traffic situation is without relying solely on Waze (or Google maps).

Waze may have sucked a lot of the financial oxygen out of the traffic information industry, but until Waze finds a way to crowd-source traffic camera video information, a role and a need for TrafficLand will persist. There was a time when taxi drivers dominated the business of on-demand, for-hire rides and in those days a cab driver could hook up with other drivers or his or her dispatcher to get a read on local or prevailing traffic conditions. The brave new world of Uber and Lyft (and Via, etc.) is an every-human-for-him/herself proposition. These drivers need eyes on the road ahead - and TrafficLand can deliver that. (INRIX does have a partnership with Vizzion for traffic camera video, but TrafficLand works directly with state and local DOTs.)

Do I expect a change coming any time soon. Nah. But where there is a will and enough angry drivers and passengers there ought to be a way - other than Waze.

Roger C. Lanctot is Director, Automotive Connected Mobility in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here: https://www.strategyanalytics.com/access-services/automotive#.VuGdXfkrKUk