It’s probably a good thing that automobiles are thinking more and more for their distracted drivers.
Reading street signs, “talking” to other vehicles, circumnavigating traffic snarls, conducting a remote diagnosis, and even providing movies, music and instant communication like e-mail and Internet use: there are scores of jobs diligently conducted by telematics, enabling vehicles to wirelessly communicate, navigate and entertain drivers via complex computerized systems.
The definitions and categories are as diverse as the different jobs these systems perform. Regardless, telematics is expected to add up to a $6 billion a year industry by 2010.
It’s undoubtedly a boon for the motorist, but this electronics tidal wave is perceived by many as a threat to the aftermarket, as auto manufacturers are able to literally steer drivers into their service bays for repair and maintenance.
Those who are troubled by this apparent OE dominance shouldn’t throw in the towel just yet. Industry experts see a definite need and a place for the aftermarket in the telematics segment, especially as hardware and services become more cost-effective and new products demand quicker product development cycles, something the OEs often can’t accommodate.
Providers are beginning to emerge who aren’t associated with auto manufacturers, and GM’s plans to offer its well-known OnStar system as standard equipment on all its retail vehicles by the end of 2007 is expected to bring telematics to critical mass: both factors will inadvertently benefit the aftermarket.
The means of communication and the devices used to communicate are rapidly changing. And as you’ll see, the potential for innovation is limitless, the only boundary being imagination itself.
Understanding the nervous system
With sophisticated sensors and smart, internal systems accessible at the push of a button or inflection of the voice, vehicles are sharing more information and carrying out tasks using a sea of computer code, designating electronics as the nervous system of the automobile.
Small, removable chunks of memory and portable media will make accessorizing an automobile in coming years not much different than upgrading a computer. Microsoft is even in on the game with its TBox, a two-button panel that works with a personal digital assistant (PDA), cell phone or other portable device through voice commands.
Advanced safety functions are in play as well, like black box accident data retrieval and in-vehicle cameras to keep an eye on the road and read road signs, along with systems that keep the driver in the lines; automakers even boast that cameras can monitor where the driver’s eyes are aimed to ensure alertness.
Some companies, mainly luxury carmakers, report progress in comfort and convenience such as isolating sound and temperature to particular areas of the automobile, customizing smells and starting the vehicle or adjusting seats by accessing a remote website location.
Other features are in store, like fingerprint recognition and ultrasound
technology.
In the 1970s, only 9 percent of a vehicle’s value was derived from electronics, according to Detroit News, which added that by 2010, the number of electronics in the vehicle will total 40 percent. And from there, the number is expected to double only three years after.
“It’s all about wireless,” says Phil Magney, president and principal analyst of the Telematics Research Group. “(Telematics) is enabling us to do things in the vehicle that were once only available in the home or office.” Magney refers to such functions as checking e-mail, surfing the Net and taking advantage of voice-activated technology to operate the vehicle.
“The cockpit of the vehicle is changing drastically,” he adds.
TRG names backseat entertainment, navigation and the use of Bluetooth-based wireless communications, which enables hands-free cell phone use inside the car, as leading features for the 2005 model year. About 28 out of 37 auto manufacturers are offering navigation and backseat entertainment, the research group found.
Piggybacking on existing signals
Telematics systems once relied exclusively on satellites to communicate, but now providers are piggybacking on digital cellular signals through agreements with carriers like Sprint and Verizon, making the act of communication more cost-effective and helping the technology reach “critical mass,” a buzz term that will make a world of difference for the automotive aftermarket.
A network service provider taking advantage of existing cellular carriers is Aeris.net, which offers its proprietary MicroBurst mobile to mobile (M2M) network to 30 North American wireless carriers, covering 350 million people, according to the company.
Aeris.net began as a specialized data network for security systems and still contracts with such well-known customers as ADT and Brinks.
“What you want is a wireless network that is constantly listening, always on,” says Dick Gossen, Aeris.net’s president and CEO.
The hardware, which can be found at big box electronic stores and is made by companies like Audiovox, serves a number of purposes such as setting a speed limit on the vehicle and recovering a stolen car.
For example, if a vehicle is stolen, it will first transmit its exact location. Then, the vehicle will go into a shutdown mode: “When the thing comes to a halt, the engine stalls, the doors lock and the horn goes off,” describes Gossen.
A telematics system should comprise a multi-layered network service that manages multiple channels, he believes. “You want someone to seamlessly open the multiple channels at the same time.”
Aeris.net, through its AerFrame system, manages these channels — like OnStar — sometimes switching from a data channel to a voice channel, speaking directly to the driver to possibly get more information, as well as dispatching emergency personnel to the accident scene.
The transition of cellular providers from analog to digital will also assist this reliance on cellular networks, says Joerg Dittmer, senior industry analyst at Frost & Sullivan.
Though many services such as OnStar support both digital and analog networks, “In 2008, cellular carriers won’t be obliged to support analog networks anymore,” he adds.
Like TRG, Dittmer agrees Bluetooth is an emerging trend, the advantage being that cell phones are used as hardware.
A disadvantage to this portability, though, is that stolen vehicle tracking will be compromised when the hardware is not permanently installed in the vehicle.
Commercial push helps critical mass
The path to widespread acceptance of telematics is additionally being pushed along by commercial fleets, which have used global positioning systems (GPS) for quite some time to keep tabs on vehicles and cargo.
A number of network service and hardware suppliers in the telematics industry currently sustain themselves doing business with the commercial end of the market; the passenger vehicle side is soon expected to follow.
WebTech Wireless, which provides wireless solutions for commercial fleets, says better cellular signal coverage has prompted more complete fleet service, even in the desolate rural thoroughfares that once afforded only spotty coverage.
Chief Technology Officer Cameron Fraser admits that penetration in fleets is still relatively low.
He says the next challenge will be integration with back-office systems.
WebTech offers a wireless tracking system that helps back-office personnel keep an eye on tire pressure to help reduce roadside delays.
A system by Networkcar, primarily aimed at fleets, plugs into an on-board diagnostic port to send wireless information to a secure website, says President Dave Dutch.
He sees fleets as the first adopters of this technology because of their more powerful ROI.
Networkcar performs automatic vehicle location (AVL) and remote diagnostics. Along with providing vehicle tracking and monitoring mileage and other functions that Dutch says save labor costs for companies, Networkcar conducts remote emission tests in agreement with governmental bodies. He says this feature saves a company the time and transportation involved with driving to a smog check station.
Another commercial push is Wal-Mart’s campaign to make radio frequency identification (RFID) of its inventory more widespread.
In May, Wal-Mart reported RFID was being used in three distribution centers and 150 stores and clubs in Dallas.
The mammoth retailer represents an exception, however, as the majority of suppliers and retailers in the aftermarket still do not use this locating system.
Elbow room for the aftermarket
Telematics is evolving from the lavish, expensive full-color GPS screens embedded in the console to slimmed down components like portable navigation devices (PNDs) and cell phones.
Some portable devices cost as little as $300 and include color screens, removable memory and an ability to be used in more than one car, according to the Telematics Research Group, which offers an advantage to motorists. Functioning like OEM-installed equipment, this portable solution often relies on the same map database providers as the carmaker’s GPS systems.
PNDs represent the next generation of Pocket PCs and other small computers, according to the research group, which adds some cell phones can easily be converted into navigation devices, especially as phones become ever more sophisticated.
This value-conscious evolution is bound to tip its hat in favor of the aftermarket, says TRG’s Magney.
“Cell phones have the ability to reshape navigation,” he says.
These devices that sell for less than $500 will definitely lead to a boost in telematics usage, he posits. “Pretty soon, a portable device will be all of the following: a cell phone, a navigation system, a media player, a calendar and phone book.”
This leaves plenty of breathing room for the aftermarket to get involved.
“The aftermarket may come into the market with a more cost-effective solution,” he adds. “There are plenty of opportunities.”
Though OEs are positioned to hold a captive market with their own proprietary systems, prolonged research and development periods work against them in the face of rapidly changing technology.
Items like microprocessors are often strapped into the OE development stage for years, and a lot can happen in that amount of time where technology is concerned, says Magney. “(With devices like) navigation systems and audio head units, the aftermarket is able to respond to some of these opportunities faster than the OEM market.”
An example of the OEs “missing the boat” happened with CB radios — popularity died by the time they were standard equipment in new cars. Gossen, from Aeris.net, recalls buying an El Dorado with a CB installed in the dash “with whom I could talk to no one.”
Beyond safety and navigation, entertainment, known more widely as infotainment, presents a promising business prospect as well.
Security and safety are other strong selling points.
Plugging his company’s products that include theft recovery and monitoring your children’s driving habits, Gossen offers: “Nothing sells like knowing where your teenager is on a Friday night.”
Frost & Sullivan’s Dittmer, however, is less optimistic about the aftermarket’s place in telematics.
“I think it will remain predominantly OE,” he foresees, citing OnStar’s leadership position in passenger vehicle telematics. The No. 2 provider, he adds, is the ATX Group, which services Mercedes and BMW, followed by Cross Country, which provides Volvo’s telematics systems.
The ‘Star’ of the show
OnStar has become the gauge of the current state of vehicle telematics and the litmus test to which all others are compared.
As mentioned earlier, GM plans to install the telematics system in all of its retail vehicles by the end of 2007, which the Telematics Research Group believes will bring this technology to the forefront with a velocity never before seen.
Along with lowering the cost of installing the system, OnStar’s standard equipment push will heighten awareness of telematics among the general public, as well as pressure GM’s competitors to follow suit, TRG believes.
OnStar is a complete solution that takes advantage of multiple wireless channels for navigation and safety, among a score of other features.
“This is going to revolutionize the amount of services that are going to be provided,” says Jim Schell, manager of OnStar Communications, who adds there are currently more than 3 million subscribers to the service.
The independent repair sector has definitely taken notice as remote diagnostic capabilities are keeping motorists captive to the carmaker for maintenance and repair.
GM’s foray into telematics is the result of a long path that traces back at least 15 years.
“From a business perspective, back in the ’90s, GM was trying to figure out how they could provide customers with additional services,” says Joe Adrid, who was involved with the groundwork that would later become OnStar. “The big push was customer loyalty and how we could add value to that customer base.”
Adrid, currently account director for the aftermarket solutions team of R. L. Polk & Co., worked for Electronic Data Systems at the time, which handled the information data processing expertise of this groundbreaking project. GM also worked with Hughes Electronics (who offered satellite technology) and Delco Remy during this period, says Adrid.
From a technology standpoint, the early ’90s was an era at the convergence of GPS, cell phone technology and the Internet, lining up all the pieces for this project that would reshape vehicle technology.
“The safety and security measures of this were a major component back then and I really think it carries its focus today,” offers Adrid. As sophisticated as OnStar becomes, one of its features is still as vital now as it was back then: having the doors unlocked when the keys are accidentally locked inside, he points out. (OnStar receives 36,000 requests a month for remote door unlocks.)
Adrid performed market research for EDS and recalls skepticism from focus groups that evaluated the system, which was known throughout its development by such handles as Project Beacon and Mobile Communications Services.
“People were in that George Orwellian (mindset) and were cautiously optimistic,” he says. Luckily, the public at large had become more accustomed to technology in subsequent years.
“I think very highly of what OnStar has done over the past 15 years,” Adrid adds. “It’s interesting to think about the next 15 years.”
New developments for OnStar include an advanced automatic crash notification (AACN) that uses a group of sensors to notify OnStar about the severity of the crash and other factors to help emergency personnel quickly determine what services are needed at the scene.
“For 2005, AACN is on 12 models,” says Schell. “As we go forward, we’ll be expanding this to other models.”
Other improvements include enhanced voice recognition and continuous hands-free dialing. Previously, the driver was forced to speak each number slowly into the system.
But not everyone’s on board with OnStar’s strength and reach.
The fact that OnStar never went through aftermarket channels is actually a detriment to its development, believes Dave Dutch from Networkcar.
“Anything that’s introduced in the vehicle works its way through the aftermarket first,” he says. “Whether it’s cruise control or car alarms. (OnStar) didn’t go through the normal process of the aftermarket and I think it’s hurt them.”
He foresees the proprietary GM technology being trumped by cell phones and other more cost-effective devices.
“OnStar is keeping its eye on all of the technology being introduced...not sitting still and resting on its laurels,” responds Schell.
Poised for the masses
Imagine receiving an e-mail from your service provider after your check engine light comes on telling you what the problem is, and, if it’s critical, making a service appointment for you, says Dutch, from Networkcar.
Others describe a scenario wherein the service provider e-mails the repair for downloading into the vehicle.
So what else will it take for telematics to reach critical mass?
Some believe it will not emerge for the masses out of necessity; rather, the need for entertainment and convenience will facilitate the break-through. Others say cost will lead the journey toward mass usage.
Magney, from the Telematics Research Group, thinks communication will be the No. 1 driver toward critical acceptance, followed by entertainment and safety.
Ultimately, nothing will stand in the way, he adds.
“As soon as someone comes along and offers a value proposition, the market will take care of itself.”
“Clearly people will pay for entertainment,” says Paul Drysch, vice president of sales for Aeris.net, who thinks widespread telematics use will be driven by (in this order) productivity, convenience and infotainment.
Dutch says telematics is definitely poised for the masses.
But regardless of how impressive a product is, consumers do not want to be lulled from their safety zone, advises Gossen.
“The hallmark of a failed product,” he says, is one that “requires someone to change the way they live and change the way they do business.”
