Telematics and “Connected Vehicles”

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

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2002 2004 2007 2010

USAW. EuropeJapan


Prediction: Telematics-Enabled Autos In-Use

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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

• 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 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 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”

Education

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