Telematics services, despite their slow start, are on the cusp of becoming standard features on millions of cars, but the kinds of services that will emerge as the most beneficial and applicable to consumers still remains to be seen.
“I think the big challenge for telematic content providers and vendors to overcome is finding the right product for their audience,” said Stephan Beckert, analyst with The Strategis Group, Washington, D.C.
Among the products and services now available from two leading providers in this area-ATX Technologies Inc. and OnStar-are emergency roadside assistance, route support, theft protection and automatic collision notification.
ATX provides telematics services for Ford/Lincoln-Mercury, Mercedes-Benz, Nissan/Infiniti and Jaguar automobiles. The company is the result of the August 1999 merger of Dallas-based Protection One Mobile Services and San Antonio-based ATX Technologies.
Protection One Mobile, along with Ford Motor Co. and Motorola Inc., entered the telematics market in 1996 with the Ford RESCU system, making Ford the first U.S. car manufacturer to offer a telematics service. The RESCU system has been available as an option on all Lincoln Continentals since its introduction, and Ford recently announced select 2001 Lincoln luxury cars will have voice-activated telematics systems featuring security and information access as a standard feature. The systems will be optional on the Ford Focus in Europe.
OnStar, a division of General Motors Corp., has said it hopes to have more than 1 million GM cars and trucks equipped with the OnStar system within the next 18 months.
OnStar first introduced service in 1997. The first-generation system included a full-featured cellular phone, emergency service, navigation and vehicle tracking, remote diagnostics and door unlocking. OnStar then phased out that system in 1999 and replaced it with a three-button system that communicates only with OnStar service centers.
OnStar now is taking steps to reconnect with its original business model. In January the company announced it was in talks with Bell Atlantic Mobile to put at least 1 million cellular phones in GM vehicles this year. The companies would split a monthly fee for the service, possibly generating $40 per month in revenue per vehicle, GM said.
“OnStar has been through two generations of systems and the third generation will be a voice-activated cell phone that will actually let you make real phone calls … if you choose to you can yell out a telephone number and it will call,” said Beckert.
ATX said it also is in talks with several carriers, but the company has yet to reach any final terms. The company expects to have an agreement with at least one carrier by the third quarter.
Another company trying to break into the telematics market is InfoMove. Founded in 1998, InfoMove provides drivers and passengers the ability to receive audible turn-by-turn directions and location-based traffic reports, as well as real-time notification of maintenance problems. The company currently is engaged in a pilot program.
Although basic emergency services are still in their infancy, cellular carriers and service providers already are being asked when Internet access will become part of the telematics package.
Several factors will play a part in the success or failure of in-vehicle Internet access, although Beckert thinks “bringing the Internet to cars is a lot of hype.”
Clem Driscoll, president of CJ Driscoll and Associates in Palos Verdes Estates, Calif., concurs.
“Everybody doesn’t want tons of information thrown at them when they’re sitting in their cars,” he said.
A survey conducted by The Strategis Group in June 1999, showed only 16 percent of those surveyed were “definitely interested” in traffic and navigation services, whereas 24 percent said they were “definitely not interested.” However, 26 percent said they were “definitely interested” in emergency roadside assistance service, whereas only 10 percent said they were “definitely not interested.”
Service providers now are working toward enabling the downloading of e-mail and other text messaging, which either can be read off a small, in-vehicle screen or electronically spoken to the driver using text-to-speech technology. In the interest of cutting costs and promoting safety, limiting dependency on live operators will be one of the main challenges telematics operators will face, but ATX said live operators never will become obsolete.
“Certainly we will become more dependent on voice-activated technology,” said Gary Wallace, executive director of external affairs for ATX. “but we will always have live operator options. Emergency has to be a live operator service.”
Consumers can expect delays with the introduction of in-vehicle e-mail services because automobile manufacturers often take a long time to fully integrate new technology into the cars.
“We can’t put a lot of the services into the car through a wireless connection because the cycle times are real long … two to three years,” said Wallace.
ATX does expect significant expansion of the telematics market as competition increases and the price of hardware-the vast majority of which is manufactured by Motorola-continues to decrease. Placing more functionality in the response centers and less in the cars also will contribute to the growth of telematics, said ATX.
Some companies eagerly volunteering to join the telematics cause in recent months include IBM Corp.-which signed a deal with Motorola to create telematics solutions that will bring Internet data to vehicles-and Nokia Corp.-which will compete with Motorola on the equipment side with the launch a few weeks ago of its Smart Traffic Products division.
Strategis is predicting lucrative times ahead, saying approximately 11 million cars and light trucks will be equipped with a telematics product by year-end 2004.
“There’s not a car manufacturer that’s not looking seriously at this,” Beckert said.
