Telematics and “Connected Vehicles”

Telematics – 040109 LFM webcast.ppt
2
Telematics and Connected Vehicles
• Definition of Telematics
• Drivers
• Infrastructure
• Current & Future Offerings
• Challenges & Opportunities

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

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

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
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
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
Predictions: Telematics-Enabled Auto Sales
12
10
8
6
4
2
0
2002 2004 2007 2010
USA
W. Europe
Japan

9
Prediction: Telematics-Enabled Autos In-Use
45
40
35
30
25
20
15
10
5
0
2002 2004 2007 2010
USA
W. Europe
Japan

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
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
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
•

OEM Telematics Players – Offerings over Time (North America)
13
1996 1997 1998 1999 2000 2001 2002 2003
CY
Who’s missing:

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
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-
16
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
17
– 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
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
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
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
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

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
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?

25
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OnStar Personal Calling
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28
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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

29

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ssaatteelllliitteess
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• IInn--vveehhiiccllee eeqquuiippmmeenntt
- RReecceeiivveerr
- AAnntteennnnaa
- RRaaddiioo hheeaadd uunniitt
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