Telematics Made Easy

OnStar chief Chet Huber says maintaining a simple customer interface and stressing safety features are the keys to a successful telematics future.

Engaging and genial, the president of OnStar Corp. is not the sort of person you would expect to have a war college degree under his belt. But prior to taking control of General Motors Corp.’s OnStar division in 1995, Chet Huber attended the National Defense University’s Industrial College of the Armed Forces in Washington, D.C.

Nearly a decade later, Harvard MBA graduate Huber is likely finding his MS degree in national resource strategy useful in the rough and tumble world of telematics.

Defined by the Forrester Report as ‘devices that wirelessly connect vehicles to customized information and services,’ telematics has gone through a tough initiation in the automotive market. While GM’s OnStar service has endured to become the big dog in the business with two million subscribers, other players, large and small, have fallen by the wayside. Most notable of the failures was Ford Motor Co.’s much anticipated Wingcast system, a joint venture with Qualcomm Inc., which was scrapped last year without ever going into operation.

Aside from OnStar, the other main provider to have survived the telematics shake-out is ATX Technologies. From his position, Huber sees maintaining a simple customer interface and stressing the safety features as the keys to successful evolution of the business. The perception of technical complexity is a turn-off to many consumers, argues Huber, who dislikes the word telematics for that very reason.

Countering critics who argue OnStar’s business model is flawed, Huber says the numbers tell a different story. Subscriber retentions (the number of people who renew their basic $16.95 per month service after the first free year) are running above 50 percent, higher than most analysts’ figures. And as an indication of customer usage, OnStar offers the following statistics on monthly interactions: airbag notifications, 700; roadside assistance, 14,000; wireless connectivity, 12 million minutes/month (February, 2003); stolen vehicle location, 400; remote unlock, 27,000; convenience services, 289,000; emergency services, 6,000; route support, 220,000; remote diagnostics; 15,000.

One major achievement for OnStar is its adoption by a number of auto manufacturers other than GM. The list includes Audi, Volkswagen, Lexus and Acura, not to mention GM-allied brands, Isuzu and Subaru. In total, more than 60 vehicles on the market now come with OnStar.

So where does the telematics industry go now? Here, Huber answers that question and more.

Q. What have been your guiding tenets as you have developed OnStar?

A. We have tried to determine what consumers really want out of this technology. Early on, a lot of people talked about dancing holograms on the dashboard and all those kinds of technologies that make great press releases. But we quickly determined it wasn’t about the technology. It was literally about being able to deliver a completely different approach to safety, security and peace of mind while you’re in a vehicle.

Q. Why should automakers be interested in telematics?

A. Leveraging communications and connectivity technology with a vehicle platform is important because Americans spend 500 million hours a week in their cars. So you have a very large opportunity to interact with people and build a connection at a price point that delivers customers superior value for safety, security and peace of mind.

We did a lot of research on the question of whether telematics makes a difference, not just to people once they have it, but whether it makes a difference in buyers’ consideration set for a vehicle. The two big ways that the auto industry looks at this question are conquest and loyalty; how often will you keep the customer you already have and how often are you going to conquest another vehicle owner? Our research showed that with two identical vehicles, if one has OnStar you will see the conquest and loyalty rates go way up.

Q. What about the perception by some observers that telematics is mainly a luxury vehicle feature?

A. People thought it would only have a high income, luxury market appeal, but that’s not the case. Our experience has shown the safety, security and peace of mind elements have very broad demographic appeal.

Q. In terms of technology, what are the next steps in telematics?

A. I think everybody believes that over time there will be pervasive high speed wireless 3G network built out, although it may actually come in stages. There is also talk of wire- less nodes in place where cars normally go, like gas stations, or roadside locations in high traffic density areas. So that while you fill up, your car would download two movies for the entertainment system.

In terms of building a real time database, that could happen automatically by collecting traffic information from the vehicles that are already out there. You have GPS in a car, and it can give location, direction and speed if you want to take it. So you could mine that data and paint a map with the flow rate of every main artery in the U.S. Things like that are not out of the question at all.

Potentially that could become a really nice public utility, because the alternative in gathering that information today is road sensors, which cost an unbelievable amount of money to build in and maintain.

The challenge to doing a traffic data base today is it costs too much to transmit the data back and forth. Now, as you get to more digitally- focused communications protocols where the costs come down, you could make a viable business out of being able to do that.

Q. What do you think of the wireless communications protocol, Bluetooth, which is being promoted by some telematics advocates?

A. We don’t see the likelihood of a high volume of devices being built with Bluetooth capability. Our main carrier partner is Verizon. It’s the biggest wireless carrier in the country. If you ask them how many Bluetooth phones are you going to start buying, you get a very lukewarm response. One problem is Bluetooth uses battery power.

Another issue for us is that to deliver our safety, security, peace of mind package in a dependable way you need an imbedded phone with high power levels.

Q. What about remote diagnostic capabilities? How do you see this developing?

A. We already diagnose powertrain modules in all vehicles that we cover and other modules depending on how the vehicle is architectured. I think you’ll see a time soon when the dealership will know you’re coming in for service. They will type in the VIN, and at night the system will make a house call on your vehicle while it is in your garage. So while you are asleep, the dealer’s computer system will go in and interrogate the diagnostic codes in the vehicle. When you arrive at the service line you will have a much smarter conversation because the dealer will already know what problems you are experiencing. You will also have the car calling in on its own if it sees a certain pattern of diagnostic codes. Ultimately, as data speeds increase, you’ll see parts of vehicles that are more software oriented be able to be serviced. You’ll be able to actually remotely flash some software into the vehicle.

Q. What about even more exotic features, perhaps for luxury vehicles?

A. There are lots of possibilities. For instance, perhaps you want to be able to download software from a performance/handling library so that if you’re driving out in the mountains, you can tune the adjustable suspension to specific environmental parameters. Or to comply with an emissions test, instead of going to a station, I’ll certify my car in my own driveway and I’ll send the results to the DMV over the network.

Then there’s the idea of a drawing a ‘geo fence’ around my vehicle, which is like the next level of theft deterrence. This is where the vehicle owner can set a perimeter of a certain distance and then the vehicle could page them, or e-mail them if it leaves that area.

Q. What opportunities do you see for the automotive supplier community in telematics as we go forward?

A. Well, I’m pretty confident we probably buy more GPS antennas now than anybody in the world. So there have to be exciting opportunities for anyone making cellular antennas, XM satellite antennas, anybody in the RF field relative to antennas. The keys to success in the RF field will be delivering antennas at lower cost and making them invisible.

There are opportunities in the area of microphones that can work in what is a very challenging acoustic environment. Also augmenting the capabilities of GPS and integration of components. There are terrific opportunities for up-integration of that functionality into either the entertainment system or into the vehicle’s central computer system. The content companies also have opportunities. For instance it has been suggested to me that people driving through scenic areas might like historic tours. So you arrive at Gettysburg, call OnStar, have the tour downloaded and it will be triggered by the GPS location of the car as you drive around.

Q. What is the secret to OnStar’s appeal?

A. We are here to deliver services that can really be helpful to people. At this point we are not worrying about synchronizing high bandwidth connections and all that kind of stuff, because the broad population really doesn’t perceive the value there. The other element is making the interfaces really easy. With OnStar you have three buttons. If you’re in an accident you aren’t even going to need a button. It works for you. If you press a button you’re talking to John or Sally or Debbie. You’re not programming things. You’re not hitting double function keys.

We did a review once with a panel of highly qualified people, professors and scientists. We showed them the three-button interface and I thought they would be under-whelmed because they would expect screens and more.

But after checking the system, one of the panel members told us one important message: ‘Don’t ever let them talk you into a fourth button.’