telematics and “connected vehicles” mike peterson (lfm ’94) strategy planning manager onstar...

Telematics and “Connected Vehicles”

Mike Peterson (LFM ’94)

Strategy Planning Manager

OnStar

[email protected]

Telematics – 040109 LFM webcast.ppt2

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


Potential Components of a Telematics System

ENABLED VEHICLE

CallCenter

ContentProviders

ApplicationManagement

CELL TOWERS

WIRELESSINTERFACE

Point – to – Multi-PointCELLULAR WIRELESS

CONNECTIVITY

BACK-OFFICE

SYSTEMS

Fiber / Cable

Satellite /Microwave

Source: Erik Bue


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)


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


Predictions: Telematics-Enabled Auto Sales

0

2

4

6

8

10

12

2002 2004 2007 2010

USAW. EuropeJapan


Prediction: Telematics-Enabled Autos In-Use

0

5

10

15

20

25

30

35

40

45

2002 2004 2007 2010

USAW. EuropeJapan


Current Telematics Services - Consumers

Safety Air Bag Deployment

Notification Seat Belt Tension

Notification Emergency Assistance Roadside Assistance

Security Automatic Theft Notification Theft Tracking GeoFencing

Vehicle Status Remote Diagnostics

Remote Vehicle Operation Remote Unlock Remote Horn/Lights

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


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


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

•


1996 1997 1998 1999 2000 2001 2002 2003CY

OEM Telematics Players – Offerings over Time (North America)

Who’s missing:


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)


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)


Competition among service providers is seldom one-to-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)


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


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)


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


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


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


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.


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?

Appendix – OnStar Overview


OnStar’s BeginningsOnStar’s Beginnings

19961996 2002-32002-3

EmployeesEmployees 1818 436436

SubscribersSubscribers 11 2M+2M+

HardwareHardware PhonePhone 5th Generation5th Generation

ServicesServices 88 1515

DatabaseDatabase 600K600K 7M7M

Advisor SeatsAdvisor Seats 66 1,000+1,000+

DistributionDistribution 1,500 Dealers1,500 Dealers FactoryFactory

Brand RecognitionBrand Recognition 1%1% 90%90%


Portfolio of Core OnStar ServicesPortfolio of Core OnStar Services

Safe & SoundSafe & Sound

• Automatic Automatic Notification of Air Notification of Air Bag DeploymentBag Deployment

• Emergency ServicesEmergency Services

• Roadside AssistanceRoadside Assistance

• Stolen Vehicle Stolen Vehicle LocationLocation

• AccidentAssistAccidentAssist

• Remote Door UnlockRemote Door Unlock

• Remote DiagnosticsRemote Diagnostics

• Online ConciergeOnline Concierge

Directions & Directions & ConnectionsConnections

All Safe & Sound All Safe & Sound services plus:services plus:

• Route Route Support/DirectionsSupport/Directions

• Information/ Information/ Convenience ServicesConvenience Services

• RideAssist RideAssist

Luxury & LeisureLuxury & Leisure

All Directions & All Directions & Connections services Connections services plus:plus:

• Personal ConciergePersonal Concierge

• OnStar MED-NETOnStar MED-NET


OnStar Personal Calling

• Embedded in vehicleEmbedded in vehicle• Hands-free, voice-activated interfaceHands-free, voice-activated interface• Pre-paid minutesPre-paid minutes• No roaming, no long distance chargesNo roaming, no long distance charges• Nationwide wireless network coverageNationwide wireless network coverage


OnStar Virtual Advisor

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

Personalized web-based information Personalized web-based information delivered to the vehicle using hands-delivered to the vehicle using hands-

free, voice-activated interfacefree, voice-activated interface


XM Satellite RadioXM Satellite Radio

• Two Geo-stationary Two Geo-stationary satellitessatellites

• 1,700 terrestrial repeaters1,700 terrestrial repeaters

• In-vehicle equipmentIn-vehicle equipment

ReceiverReceiver

AntennaAntenna

Radio head unitRadio head unit

Terrestrial Repeaters

XM Satellites

Rock Roll

telematics and “connected vehicles” mike peterson (lfm ’94) strategy planning manager onstar...

Documents

telematics system

telematics volvo

vehicle messaging slide

telematicsenabled autos

vehicle development

vehicle cell phone

telematicsenabled auto

current services