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Telematics and “Connected Vehicles” Mike Peterson (LFM ’94) Strategy Planning Manager OnStar

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Presentation on theme: "Telematics and “Connected Vehicles” Mike Peterson (LFM ’94) Strategy Planning Manager OnStar"— Presentation transcript:

1 Telematics and “Connected Vehicles” Mike Peterson (LFM ’94) Strategy Planning Manager OnStar

2 Telematics – LFM webcast.ppt 2 Telematics and Connected Vehicles Definition of Telematics Drivers Infrastructure Current & Future Offerings Challenges & Opportunities

3 Telematics – LFM webcast.ppt 3 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

4 Telematics – LFM webcast.ppt 4 Potential Components of a Telematics System ENABLED VEHICLE Call Center Content Providers Application Management CELL TOWERS WIRELESS INTERFACE Point – to – Multi-Point CELLULAR WIRELESS CONNECTIVITY BACK-OFFICE SYSTEMS Fiber / Cable Satellite / Microwave Source: Erik Bue

5 Telematics – LFM webcast.ppt 5 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

6 Telematics – LFM webcast.ppt 6 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)

7 Telematics – LFM webcast.ppt 7 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

8 Telematics – LFM webcast.ppt 8 Predictions: Telematics-Enabled Auto Sales USA W. Europe Japan

9 Telematics – LFM webcast.ppt 9 Prediction: Telematics-Enabled Autos In-Use USA W. Europe Japan

10 Telematics – LFM webcast.ppt 10 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

11 Telematics – LFM webcast.ppt 11 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

12 Telematics – LFM webcast.ppt 12 Examples: OEM telematics offerings Mercedes (Tele Aid):$240/yr + airtime to call center $75/yr route support/traffic package $1300 optional integrated phone $400 voice recognition option for phone Jaguar (JaguarNet):$ 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

13 Telematics – LFM webcast.ppt CY OEM Telematics Players – Offerings over Time (North America)

14 Telematics – LFM webcast.ppt 14 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)

15 Telematics – LFM webcast.ppt 15 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)

16 Telematics – LFM webcast.ppt 16 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 Voice portals (TellMe, BeVocal, Internet Speech, AOL By Phone) Cell phone voice services (Verizon, Sprint) Auto club services (AAA)

17 Telematics – LFM webcast.ppt 17 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

18 Telematics – LFM webcast.ppt 18 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)

19 Telematics – LFM webcast.ppt 19 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

20 Telematics – LFM webcast.ppt 20 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

21 Telematics – LFM webcast.ppt 21 Examples of Business Models “In Play” i-Mode DoCoMo: Define platform for 3 rd 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 $ for the 5-40GB drives. Source: Erik Bue

22 Telematics – LFM webcast.ppt 22 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.

23 Telematics – LFM webcast.ppt 23 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?

24 Appendix – OnStar Overview

25 Telematics – LFM webcast.ppt 25 OnStar’s Beginnings Employees18436 Subscribers12M+ HardwarePhone5th Generation Services815 Database600K7M Advisor Seats61,000+ Distribution1,500 DealersFactory Brand Recognition1%90%

26 Telematics – LFM webcast.ppt 26 Portfolio of Core OnStar Services Safe & Sound Automatic Notification of Air Bag DeploymentAutomatic Notification of Air Bag Deployment Emergency ServicesEmergency Services Roadside AssistanceRoadside Assistance Stolen Vehicle LocationStolen Vehicle Location AccidentAssistAccidentAssist Remote Door UnlockRemote Door Unlock Remote DiagnosticsRemote Diagnostics Online ConciergeOnline Concierge Directions & Connections All Safe & Sound services plus: All Safe & Sound services plus: Route Support/DirectionsRoute Support/Directions Information/ Convenience ServicesInformation/ Convenience Services RideAssistRideAssist Luxury & Leisure All Directions & Connections services plus: All Directions & Connections services plus: Personal ConciergePersonal Concierge OnStar MED-NETOnStar MED-NET

27 Telematics – LFM webcast.ppt 27 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

28 Telematics – LFM webcast.ppt 28 OnStar Virtual Advisor Stock Quotes –Fidelity Investments News –Wall Street Journal – –CNNRadio Entertainment – Sports Scores/News –The Sporting News Radio – Weather – Traffic –Metro Networks/Tele Atlas Personalized web-based information delivered to the vehicle using hands- free, voice-activated interface

29 Telematics – LFM webcast.ppt 29

30 Telematics – LFM webcast.ppt 30 XM Satellite Radio Two Geo-stationary satellitesTwo Geo-stationary satellites 1,700 terrestrial repeaters1,700 terrestrial repeaters In-vehicle equipmentIn-vehicle equipment ­Receiver ­Antenna ­Radio head unit Terrestrial Repeaters XM Satellites Rock Roll

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