Telematics and Connected Vehicles

Mike Peterson (LFM 94)

Strategy Planning Manager
OnStar
michael.l.peterson@onstar.com

Telematics and Connected Vehicles

Definition of Telematics
Drivers
Infrastructure
Current & Future Offerings
Challenges & Opportunities

Definition of Telematics and Connected Vehicle

A two-way connection to and from a vehicle for

data and information transfer
Telematics is typically not:
Onboard autonomous navigation systems
AM/FM radio

A telematics system consists of:

Vehicle (cell phone, GPS, vehicle data)
Wireless interface
Back-office systems
3

Potential Components of a Telematics System

WIRELESS
INTERFACE

Satellite /
Microwave

Point to Multi-Point
CELLULAR WIRELESS
CONNECTIVITY

Fiber / Cable

ENABLED VEHICLE

CELL TOWERS

Application
Management

Call
Center

BACK-OFFICE
Content
Providers
Source: Erik Bue

SYSTEMS

Markets for Telematics

Vehicle types
Personal vehicles: cars, trucks
Boats, motorcycles
Work vehicles: mail trucks, semis, Border Patrol, Coast
Guard, ambulances

Vehicle owners
Personal
Fleets
Military

Value Propositions for Telematics

To consumers
Safety & security
Time savings (navigation)
Increased productivity (in vehicle)

To fleet provider
Optimization of assets (asset tracking, performance
monitoring)

To business
Additional data from vehicles (warranty, usage)
Increased vehicle sales (or price of survival)

To government
Improved infrastructure management (traffic, tolls)
6

There is a significant market opportunity for

telematics, if done right.
Wireless use is growing
US wireless industry is $80B (WSJ 7/28/03)
30 M US households will employ data networks by end of 2007 (Park Associates)
Intels Otellini predicts that 1.5 B PCs will have wired or wireless broadband
connections by 2010
Cable broadband services posting operating profits of ~60% (CIBC)

Consumers want to be more productive

Consumers pay $15-100/mth for cell phones & internet service providers
Average US citizen spends 541 hrs/yr driving in vehicles (1.5 hrs/day)
(NTPS)
97 M people in the US spend at least 37 minutes commuting in their car
every day.

Automotive industry is highly competitive; features and services which

provide a lead are crucial to success
Source: Erik Bue

Predictions: Telematics-Enabled Auto Sales

12
10
8
USA
W. Europe
Japan

6
4
2
0

2002

2004

2007

2010
8

Prediction: Telematics-Enabled Autos In-Use

45
40
35
30
25

USA
W. Europe
Japan

20
15
10
5
0

2002

2004

2007

2010
9

Current Telematics Services - Consumers

Safety
Air Bag Deployment
Notification
Seat Belt Tension
Notification
Emergency Assistance
Roadside Assistance

Security
Automatic Theft Notification
Theft Tracking
GeoFencing

Remote Vehicle
Operation
Remote Unlock
Remote Horn/Lights

Information Services

Navigation Assistance
Points-of-Interest
Vehicle User Info
Convenience Services
Internet Based Services

Vehicle Status
Remote Diagnostics

10

Additional Telematics Services - Fleets

Fleet Performance
Maintenance Management

Fleet Tracking

Asset Management
Vehicle Information
Usage Monitoring
Vehicle Tracking

Fleet Utilization

Customer Processing
Paperless Manifest
User log book
Instant Messaging
Job Dispatching

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Examples: OEM telematics offerings

Mercedes (Tele Aid):

$240/yr + airtime to call center

$75/yr route support/traffic package
$1300 optional integrated phone
$400 voice recognition option for phone

Jaguar (JaguarNet):

$2250 + airtime
Includes portable phone and voice-activated controls

BMW (Assist):

$120/yr
$1290 phone reqd for telematics
$1800 navigation system reqd for telematics

Volvo (On Call Plus):

$240/yr
Does not offer route support or remote diagnostics

OnStar:

$200/yr for safety & security services (airtime included)

$400/yr to include information & navigation services

12

OEM Telematics Players Offerings over Time (North America)

Whos missing:

1996

1997

1998

1999
CY

2000

2001

2002

2003

13

Many opportunities exist in the future to enhance

current services and create new ones.
Data services
Software downloads
Content downloads

Enhanced vehicle diagnosis & repair

Expansion into other dimensions of vehicle lifecycle
(manufacturing, vehicle development, design)
Key enablers for future services/growth

Communications bandwidth
Coverage (wireless)
Vehicle penetration
Vehicle integration (messaging)
Reduced costs (hardware, service)
Standards (Bluetooth, vehicle messaging)

14

There are many pieces of the puzzle which create

value in telematics.

Marketing of services (education of consumers)

Integration of services (menu structures)
Integration of equipment into vehicle
(human/machine interface)
Connection of vehicles to content (wireless)
Conversion of data into services (back office)
Content providers (vehicle data, entertainment)

15

Competition among service providers is seldom oneto-one; each player has a slightly different offering.
OEM-owned telematics service providers (OnStar)
Aftermarket devices (LoJack, NetworkCar, Mobile Guardian)
Independent telematics providers retail (ATX, Cross
Country)
Independent telematics providers fleet (Qualcomm
OmniTRACS, @Road)
Voice portals (TellMe, BeVocal, Internet Speech, AOL By
Phone)
Cell phone voice services (Verizon, Sprint)
Auto club services (AAA)

16

In addition, each piece of the telematics value chain

has its own set of players.
Content
TeleAtlas, NavTech, MetroNetworks
CNN, Disney, ESPN

Operating systems (Microsoft, Java, Linux)

Vehicle hardware (Delphi, Nokia, Samsung)
Voice recognition (Nuance, Speechworks, IBM)
Call centers (EDS, GE, Cross Country)
Business Operations (Digitas, Acxiom, Sigma)

Issues in partner selection:

Volume capability
Support capability (established firm?)
Exclusivity
Flexibility

17

Finally, there are a variety of wireless technologies

that can be applied to telematics.

Cell (Analog, CDMA, GSM; voice, data/SMS)

Short-range communications (Bluetooth)
Medium-range communications (802.11)
Satellite communications (Boeing Thuraya, XM Radio,
Sirius)

Issues in technology selection:

Level of ubiquity
Reliability of technology
Upgradability
Level of control over provider (multiple sourcing)
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Challenges Hardware/Technology
Clockspeed mismatch

Telematics services (1-6 months)

Consumer electronics (6-18 months)
Vehicle development process (3-5 years)
Vehicle ownership lifecycle (6-15 years)

Shifts in technology (analog digital)

Technology application (client vs. server)
Challenges Societal
Government regulation (FCC E911)
Interface with emergency service providers

19

Challenges Strategic/Financial
High cost of infrastructure
Investment = control

Involvement of multiple partners

Packaging of services
Wide variety of customer needs/wants
Consumer confusion

Selection of business model

Upfront equipment sales

Service subscription
Grow critical market mass
Operating efficiencies
Licensing/royalties

20

Examples of Business Models In Play

i-Mode DoCoMo: Define platform for 3rd party software development:
monthly revenue from: basic service, data traffic and fee from 3 rd party
service providers
Microsoft: Create the OS for vehicles that becomes the standard that all
future consumer telematics applications must be built off of
OnStar: Seed network through factory-installation onboard vehicles
purchases
Cell Cos: Compete based on lowest price to service quality ratio
TiVo: Charge monthly service fee upfront at a discount
Palm/PDA: Define & market hardware & OS; nurture application
developers. Make alliances with Cell Cos.
Dell: Least expensive, custom-assembled modular systems based on
commodity components
Leverage COTS Components: eg Apple iPod: Over 1M people have
been willing to pay $300-500 for the 5-40GB drives.
Source: Erik Bue

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Parting Thoughts

Telematics represents a significant but complicated

opportunity.
There are many ways to create value in telematics,
many of which have yet to be fully exploited.
The telematics industry is a network of partners
across a variety of disciplines.
The winners in telematics, as well as the ultimate
potential of the industry, is yet to be determined.
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Open Questions (for discussion)

How does/could your business participate in this

space?
What needs to happen to unlock the full potential of
telematics?
What service domains will be most important in the
future?
What business model(s) do you think will be most
successful?
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Appendix OnStar Overview

OnStars Beginnings
1996

2002-3

Employees

18

436

Subscribers

2M+

Hardware

Phone

5th Generation

Services

15

Database

600K

7M

1,000+

1,500 Dealers

Factory

Advisor Seats
Distribution

Brand Recognition 1%

90%

25

Portfolio of Core OnStar Services

Safe & Sound
Automatic
Notification of Air
Bag Deployment
Emergency Services
Roadside Assistance
Stolen Vehicle
Location
AccidentAssist

Directions &
Connections
All Safe & Sound
services plus:
Route
Support/Directions
Information/
Convenience Services

Luxury & Leisure

All Directions &
Connections services
plus:
Personal Concierge
OnStar MED-NET

RideAssist

Remote Door Unlock

Remote Diagnostics
Online Concierge

26

OnStar Personal Calling

Embedded in vehicle
Hands-free, voice-activated interface
Pre-paid minutes
No roaming, no long distance charges
Nationwide wireless network coverage

27

OnStar Virtual Advisor

Personalized web-based information

delivered to the vehicle using handsfree, voice-activated interface
Stock Quotes
Fidelity Investments

News
Wall Street Journal
ABCNEWS.com
CNNRadio

Entertainment
Disney.com

E-mail
Sports Scores/News
The Sporting News Radio
ESPN.com

Weather
Weather.com

Traffic
Metro Networks/Tele Atlas

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XM Satellite Radio
XM
Satellites

Rock

Two Geo-stationary
satellites

Roll

1,700 terrestrial repeaters

Terrestrial
Repeaters

In-vehicle equipment
Receiver
Antenna
Radio head unit

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