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Compute your way through traffic

October 17, 2008 09:52 IST

The Hairy Man Festival, the Austin Batfest and the U.S. Congress have two things in common: Any of them could leave you stuck in traffic, and they're all in the database at Inrix, a company that predicts traffic jams and routes drivers around them.

Inrix's service is becoming a selling point for navigation device makers looking to stand out in an increasingly commoditized market. As more drivers get directions from GPS-enabled cellphones rather than specialized devices, services and data will take on new importance.

Standalone GPS units can also receive Inrix data provided they have some kind of cellular or radio link. A variety of TomTom, Garmin and other GPS devices use Inrix data that's either been preloaded with maps or that is received via an add-on antenna or subscription via Bluetooth connection to a cellphone. Inrix's customers are other businesses rather than consumers directly.

Inrix sells its data to more than 65 companies including MapQuest, TeleNav and Clear Channel Communications, which both uses it for its radio stations' traffic reports and repackages it for GPS subscribers.

(There's even a hedge fund that uses Inrix's traffic levels to measure economic activity.) In all, about 3 million users subscribe to Inrix traffic data through their navigation systems and mobile phones, and tens of millions more use Inrix traffic through providers like MapQuest.

Inrix follows traffic activity on 800,000 miles of road in the U.S. Traditional methods can only cover 5,000 miles. The difference is that Inrix has nearly a million sources of information, including every taxi cab in New York City as well as trucks and commercial vehicles across the country.

Computers in these vehicles send speedometer readings and location information wirelessly to Inrix, which collects as many as a million data points every minute. Says Inrix product management director Ken Kranseller, "Some people talk about getting a second opinion. Inrix says, 'let's get a hundredth opinion, a two-hundredth opinion. . . ' "

After it receives the data, Inrix starts crunching. Inrix detects slowdowns by comparing the speeds it receives from traffic to the speed limits on file in its database, seeking out anomalies by comparing current speeds to typical speeds. Its servers remove readings from vehicles whose ignitions are turned off so that a broken-down truck won't create the appearance of a traffic jam.

The company's reach is so extensive that it often knows about road problems before the relevant state agencies--as it did last winter when it was the first to detect an avalanche in Montana. Eventually, Inrix will also be able to see whether a vehicle's windshield wipers are running, letting it know when weather is slowing down the traffic.

The next step is predicting traffic levels hour-by-hour. In 54 large metro areas, Inrix compares the traffic data it receives to schedules it keeps for schools, concerts, political protests, ball games, legislative sessions and other events, as well as weather records.

It measures the effects that each of these factors has on every mile of road in these areas. It can find, for instance, that traffic on the avenue two blocks away from a high school slows down by five miles per hour when that school is in session. Then, using a subset of statistics called Bayesian analysis, Inrix can predict traffic for any hour on any day on any road in the area.

What Inrix promises for drivers is non-obvious routes that will help them get to their destinations more swiftly. Ask an Inrix-powered device for directions from New York to Washington, D.C., and Inrix's servers send your navigation device a route that will avoid traffic along the drive--one hour out in Philadelphia, two hours ahead in Maryland and three hours forward in Washington.

Inrix also has deals with other information providers to deliver the prices at nearby gas stations along with news, sports scores and stock prices.

Inrix's core technology emerged under Microsoft in the early 2000s after eight years of research and $15 million in development costs. Microsoft chairman Bill Gates took a personal interest: In high school, he had founded a venture called Traf-O-Data, which developed software that could analyze traffic patterns.

In 2004, Gates OKed the spinoff of Inrix from Microsoft, when the project managers Bryan Mistele and Craig Chapman bought out the technology from Microsoft. Bain Capital, Venrock and August Capital provided additional funding. Gates continues to refer customers to Inrix--most recently, the prime minister of Thailand. In 2005, Inrix took on its first customers, and it rolled out predictive routing earlier this year.

Chris Jones, of research firm Canalys, says that sales of handheld navigation devices are likely to fall by 70% in 2008, while sales of mobile phones with built-in GPS will nearly double.

That means that value in the navigation industry is moving to software and data. As mobile phone hardware becomes more capable of doing the sorts of things that dedicated navigation devices do now, competition will heat up and services like Inrix's could become the next big differentiators.

That differentiation is lucrative. Inrix Vice President Scott Sedlik declined to provide specific figures, but says the company's sales are "north of $10 million," and have increased by 260% over last year's revenue. New contracts for 2009 are expected to lead to even higher sales growth next year. Sedlik says the company enjoys a gross margin of 70%.

There's much more to predict, too; Inrix technology could eventually be adapted to forecast air traffic delays and wait times at the Canadian and Mexican borders.

With navigation capability everywhere and consumers looking to tune in, Inrix chief Mistele says that his service can spread the adoption of connected GPS devices even more widely. "We can do for them what YouTube did for video."

Jon Bruner, Forbes.com
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