Telematics and “Connected Vehicles”
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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
ENABLED VEHICLE
CallCenter
ContentProviders
ApplicationManagement
CELL TOWERS
WIRELESSINTERFACE
Point – to – Multi-PointCELLULAR WIRELESS
CONNECTIVITY
BACK-OFFICE
SYSTEMS
Fiber / Cable
Satellite /Microwave
Source: Erik Bue
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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
0
2
4
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8
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12
2002 2004 2007 2010
USAW. EuropeJapan
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Prediction: Telematics-Enabled Autos In-Use
05
1015202530354045
2002 2004 2007 2010
USAW. EuropeJapan
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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
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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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1996 1997 1998 1999 2000 2001 2002 2003CY
OEM Telematics Players – Offerings over Time (North America)
Who’s missing:
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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 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)
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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 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
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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?
Appendix – OnStar Overview
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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%
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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
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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
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OnStar Virtual Advisor
Stock Quotes– Fidelity Investments
News– Wall Street Journal– ABCNEWS.com– CNNRadio
Entertainment– Disney.com
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
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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