Telematics and

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Telematics and Connected Vehicles

• Mike Peterson (LFM 94)
• Strategy Planning Manager
• OnStar
• michael.l.peterson_at_onstar.com

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

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

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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)
• Intels Otellini predicts that 1.5 B PCs 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
12
10
8
USA
6
W. Europe
Japan
4
2
0
2002
2004
2007
2010
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Prediction Telematics-Enabled Autos In-Use
45
40
35
30
25
USA
W. Europe
20
Japan
15
10
5
0
2002
2004
2007
2010
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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 reqd for telematics
• 1800 navigation system reqd 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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OEM Telematics Players Offerings over Time
(North America)

1996 1997 1998 1999 2000 2001 2002
2003
CY
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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, _at_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 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 Cos 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
  Cos.
• 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?

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Appendix OnStar Overview
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OnStars Beginnings
1996 2002-3 Employees 18 436 Subscribers 1 2M Ha
rdware Phone 5th Generation Services 8 15 Database
600K 7M Advisor Seats 6 1,000 Distribution 1,500
Dealers Factory Brand Recognition 1 90
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Portfolio of Core OnStar Services

• Directions
• Connections
• All Safe Sound services plus
• Route Support/Directions
• Information/ Convenience Services
• RideAssist

• Safe Sound
• Automatic Notification of Air Bag Deployment
• Emergency Services
• Roadside Assistance
• Stolen Vehicle Location
• AccidentAssist
• Remote Door Unlock
• Remote Diagnostics
• Online Concierge

• Luxury Leisure
• All Directions Connections services plus
• Personal Concierge
• OnStar MED-NET

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OnStar Personal Calling

• Embedded in vehicle
• Hands-free, voice-activated interface
• Pre-paid minutes
• No roaming, no long distance charges
• Nationwide wireless network coverage

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OnStar Virtual Advisor
Personalized web-based information delivered to
the vehicle using hands-free, voice-activated
interface

• E-mail
• Sports Scores/News
• The Sporting News Radio
• ESPN.com
• Weather
• Weather.com
• Traffic
• Metro Networks/Tele Atlas

• Stock Quotes
• Fidelity Investments
• News
• Wall Street Journal
• ABCNEWS.com
• CNNRadio
• Entertainment
• Disney.com

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XM Satellite Radio
XM Satellites

• Two Geo-stationary satellites
• 1,700 terrestrial repeaters
• In-vehicle equipment
• Receiver
• Antenna
• Radio head unit

Rock
Roll
Terrestrial Repeaters