I am sure you all know this is going to go BULLISTIC!!!!
globetechnology.com
Auto-repair shops wheel on-line
ATC drives garage diagnostics to the Web
TYLER HAMILTON
Technology Reporter
Thursday, March 2, 2000
Toronto -- ATC Technologies Corp., betting that future
growth in "smart" vehicles will fuel demand for
wired mechanics, is creating a Web-based diagnostic
service aimed at automotive repair shops throughout
North America.
Industry observers say the small Vancouver software
firm's service is a textbook example of future
business-to-business Internet applications, and one
that's cutting new tracks in the automotive sector.
The service, called autoWebtech, is essentially a
repair shop on the Internet.
Mechanics link a car's electronics system with a
computer, which is hooked up to a high-speed network.
Diagnostic software on the network performs an instant
engine analysis, issues a report, and even suggests
repairs. The mechanic then makes the necessary
fixes -- in less than half the usual time.
ATC estimates there are more than 125,000 automative
repair shops in the United States that can work on
three vehicles at a time, representing a market worth
nearly $2-billion.
John Goodwin, chief executive officer, says the
service is slated for launch in the first quarter of next year.
He expects ATC will sign up 10,000 of these shops by
2002.
"This is a classic Internet application," says Mr.
Goodwin, explaining that the service can also offer on-line
training sessions and manuals. "We are planning to be
the first to do it, and believe we will transform how the
automotive after-market performs in the U.S."
The idea -- and ATC's business plan -- was so
compelling that it got on the radar screen of Internet
incubator EcomPark Inc. The incubator gave ATC
$150,000 in December, and is open to further
investments.
"It seems like a no-brainer," says Warren Plunket,
manager of business development at EcomPark. "It
doesn't seem like anyone else out there is doing
something like this."
Just last week, ATC reached an agreement with Goepel
McDermid Securities to broker a private placement
worth $1.5-million, giving the company more cash to
push forward with its plan.
Dale Bishop, founder and president of ATC, expects
mechanics will also find the plan compelling. As more
cars are designed with onboard computer systems,
built-in Web access and satellite-tracking capabilities,
having a good ear and a solid wrench is less important
than it once was.
"Cars are very complex technological devices, more
than consumers know right now," says Mr. Bishop. "It's
been a very challenging environment for mechanics."
The underlying concept behind autoWEBtech is old, but
the approach is new. In the early 1990s, ATC --
through its subsidiary AutoSoft Tool Corp. -- began
developing software for personal computers that could
analyze exhaust emissions in older vehicles. It's the
same type of software that repair shops use today in
Ontario to test vehicle emissions.
In the United States, the Clean Air Act of 1990 made
it mandatory for 48 states to reduce car emission
levels by Jan. 1, 1995. Computer diagnostics were a
key part of the program, and the U.S. Environmental
Protection Agency planned to subsidize computer
purchases for participating repair shops.
ATC jumped at the opportunity, since more on-site
computers would create a need for diagnostic software.
But a series of political power plays, spurred by
corporate resistance and posturing by the EPA, led to
delays. The EPA wasn't making any friends,
particularly among pro-business Republicans. And when Newt
Gingrich got to the helm of Congress in 1994, he
eventually cut the EPA's budget by about a third.
"It effectively derailed the mandatory emissions
testing program in the U.S.," says Mr. Bishop, adding that it
also let the air out of ATC's tires. "It's hard to
sell shrink-wrapped software when the mechanic doesn't have
a PC."
By 1997, it became clear to ATC that its ambitions
had, as Mr. Bishop describes it, been "Newtered."
Fast-forward two years: Computer prices plummet, the
Internet becomes mainstream and e-commerce lays
the foundation for the new economy. To top it off,
North America's major car manufacturers announce plans
to create high-tech cars with wireless Web services,
driving even greater demand for diagnostic software.
It was then that ATC decided to reinvent itself. It
developed a new Internet-based model that combines PCs
and software as part of a service package. The service
is delivered over the Web and sold on a pay-per-use
basis. No longer do repair shops have to buy PCs
upfront and load their own software.
Now, the PCs are thrown in for free and mechanics can
subscribe to a full service that gives them the latest
versions of diagnostic and repair software.
Still, Mr. Bishop says it's only possible today
because of the growing popularity of high-speed Web access,
such a cable modems and digital subscriber line
technology.
"A mechanic is not going to keep his head under a car
hood and whistle Dixie for five minutes while a
graphic is downloaded on a screen," he says. "You need
the bandwidth."
In January, ATC signed an agreement with Toronto-based
application service provider InfoCast Corp.,
which will provide the network that can deliver ATC's
software. A bonus to that deal is InfoCast's own
partners: Sun Microsystems Inc. of Palo Alto, Calif.,
and New York-based AT&T Corp. ATC's plan is
to leverage those relationships, ideally having AT&T
handle the high-speed access to the repair shops and
Sun provide the cheap computers and consulting.
Just for good measure, ATC is trying to bring GE
Technical Services into the group. GE would provide the
technical support for the whole package of services.
And to broaden the software and content offerings,
ATC is in talks with SPX Corp., both a manufacturer of
handheld diagnostic tools and a provider of a full
line of well-known auto-repair software.
This "consortium," Mr. Goodwin explains, would shares
revenue. "We will collect all of the money and settle
all of our accounts." He said if ATC reaches its
24-month target, it will take in more than $60-million in fiscal
2002, compared with its current revenue of less than
$1-million.
"We're hammering out the roles and responsibilities
that each of us want to play," says Ken McLean, general
manager of InfoCast. "The business model is very
solid. ATC wants to be very aggressive in terms of the
number of [auto repair shops] they'll have on-line."
Mr. McLean says it's "spooky" how successful
autoWEBtech could become. "You have 125,000 dealers in
the automotive after-market, and these guys are all
looking to get into the e-commerce world," he says. "This
business leads itself very nicely into that."
And investors are just beginning to take notice. ATC,
which became publicly traded in 1997 through a
reverse takeover, saw its stock crack $1 on the
Canadian Venture Exchange last week. As recently as
mid-January, shares were trading below 25 cents.
"Raising money is the least of their problems," Mr.
McLean says. "The biggest challenge is delivery." |
