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
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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
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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
SYSTEMS
Source: Erik Bue
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4
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
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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)
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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)
– Intel’s Otellini predicts that 1.5 B PC’s 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
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Predictions: Telematics-Enabled Auto Sales
12
10
8
USA
W. Europe
Japan
6
4
2
0
2002
2004
2007
2010
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Prediction: Telematics-Enabled Autos In-Use
45
40
35
30
25
USA
W. Europe
Japan
20
15
10
5
0
2002
2004
2007
2010
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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
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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 req’d for telematics
$1800 navigation system req’d 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
•
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OEM Telematics Players – Offerings over Time (North America)
1996
1997
1998
1999
CY
2000
2001
2002
2003
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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)
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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)
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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)
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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
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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
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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
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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 3rd 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 Co’s: 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 Co’s.
• 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
OnStar’s Beginnings
1996
2002-3
Employees
18
436
Subscribers
1
2M+
Hardware
Phone
5th Generation
Services
8
15
Database
600K
7M
6
1,000+
1,500 Dealers
Factory
Advisor Seats
Distribution
Brand Recognition 1%
90%
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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
Luxury & Leisure
All Directions &
Connections services
plus:
• Personal Concierge
• OnStar MED-NET
• Information/
Convenience Services
• RideAssist
• Remote Door Unlock
• Remote Diagnostics
• Online Concierge
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OnStar Personal Calling
•
•
•
•
•
Embedded in vehicle
Hands-free, voice-activated interface
Pre-paid minutes
No roaming, no long distance charges
Nationwide wireless network coverage
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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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