'Telematics' Lures Auto Makers,
But Will It Reel In Consumers?
By JOSEPH B. WHITE
Staff Reporter of THE WALL STREET JOURNAL
So you're driving down a lonesome road when suddenly a voice pipes up from somewhere in your dashboard.
"Mr. White, your engine appears to be losing oil pressure. We strongly recommend you take the next exit and proceed to Outback Ford. Right turn, then two miles."
Sounds pretty weird, but it could happen. Maybe.
The Internet bubble is history, but the idea of connecting your car to the Net using global positioning systems and wireless telephony -- known in the technology world as telematics -- is alive and well in the auto business.
General Motors Corp. says its Onstar system has two million subscribers, including owners of GM brand vehicles and a growing number of people who drive Lexus and Acura cars which use Onstar's service. Later this year, Audi, Subaru and Isuzu will start offering Onstar as well.
Ford's telematics play -- a joint venture with mobile-communications provider Qualcomm called Wingcast -- plans to start rolling out its first products later this year. Other auto makers and technology suppliers have competing plans for hooking vehicles up to the information grid, such as hardware that allows you to synch your phone or PDA with the radio. After numerous hitches and revised timetables, it appears that a significant wave of telematics offerings is about to hit the market over the next year or two.
Join the Discussion: What kind of telematics service interests you? And how much would you be willing to pay for it?
The trouble is, no one really knows what you -- the ordinary commuting and family-vacationing motorist -- will do with telematics, or how much you will pay for it whenever you decide what it is you want to do.
"I'm not sure consumers know what they want," says Karen Francis, the Ford vice president responsible for the company's telematics and consumer e-commerce strategies.
Searching for a Killer App
Who cares about telematics at a time when the auto business appears to be on the straight road to hell, no Onstar operator's directions required? Well, a lot of very smart and senior people in the car business seem to care a lot, in part because they have sunk a lot of money into this area, and in part because they believe there's a killer app here -- if only they can find it.
At Ford, for example, Ms. Francis says the idea that telematics technology could be used to diagnose problems with a vehicle before they result in a costly breakdown is getting serious attention.
"The diagnostic, prognostic capability should be something that, over time, allows us to lower the price of the vehicle," she says. "If we can save tons of money in prevention, we can take a lot of the cost out of the total ownership experience."
Ford's chief operating officer, Nick Scheele, evidently agrees. He took the opportunity afforded by a major industry conference in Detroit last week to express enthusiasm for telematics-enabled preventive maintenance and to say that he wants it in Ford vehicles within the next couple of years.
GM's Onstar subsidiary already offers a form of this service: If your "check engine" light comes on, for example, you can call the Onstar operator from your car and ask for a diagnosis. The Onstar operator can read the trouble codes broadcast by your car's onboard computer and let you know whether the light is on because of a trivial problem (your gas cap is loose) or because of something more serious.
For instance, that call might discover that a spark plug is misfiring. That's a minor matter, unless you ignore it for too long. Eventually, a misfiring plug can cause your catalytic converter to burn up, taking with it $1,000 or so of your hard-earned cash.
Spokesman Nick Richards says Onstar is studying the potential for using its data links for preventive maintenance. "We haven't made any conclusion," he says, adding that continuously receiving information from a vehicle "gets into a privacy issue. It's got to be done in a way that the consumer asks for it."
Onstar's Mr. Richards says the GM service has had more than 10 million "interactions" with customers, and every month gets about 200,000 calls for directions, 15,000 calls from customers locked out of their cars, 14,250 roadside-assistance requests and 300 notifications of an airbag going off.
Onstar's surveys show that 85% of the service's subscribers agree with the statement: "To me, the most important feature of OnStar is the automatic notification of emergency personnel if the airbags go off." On the other hand, a less-overwhelming 47% say they'd "love to have access to the Internet in my vehicle via voice commands."
Separately, R.L. Polk & Co., a well-known automotive consumer data gathering company, says a survey of visitors to the Detroit Auto Show found that consumers seemed most intrigued by hands-free cellphones (67% said "gotta have it" or "very interested"), and were almost as keen on things like navigation systems and DVD players. The sample size (about 680 to 685 respondents per question) and the audience (Motor City car geeks) would probably cause some market researchers to reach for their salt shakers, however.
Finding a Price Point
But the real question is, how much would you pay for this?
Would you pay $16.95 a month? That's the cost of the basic Onstar "Safe and Sound" service package, which also includes the remote door-unlocking feature, automatic notification to Onstar when your airbag deploys, and roadside assistance. Would you pay $34.95 a month for Onstar's "Directions and Connections" package, which throws in access to an Onstar operator to give you directions and make hotel reservations on the fly? Or would you pay $69.95 a month? That'll get you the full soup-to-nuts Onstar service package, "Luxury and Leisure," which offers a wide array of "concierge" services that seem to have nothing to do with driving your car, such as help finding a landscaper or a party planner, or e-mail reminders so you don't forget your anniversary.
I'm just guessing, but I suspect a lot of people -- even well-off people -- are going to be content with the basic services, particularly since things such as route guidance are going to be available on onboard-navigation systems that, in my limited experience, are more reliable than talking to an Onstar operator who is puzzling over a map, just as you are.
To the extent that telematics becomes a customer-relations or preventive-maintenance tool, how many consumers will ask: "Why should I pay extra for a satellite-enabled idiot light that helps the car company save on warranty costs? Let them foot the bill."
Privacy Concerns
Perhaps you might wonder: Will the car company use that data link to store information about how fast I drive, or where I go?
Well, they could. Or your insurance company could use that data to set rates for your auto insurance -- higher if you go into high-risk areas or, um, hit the gas a bit too hard. There already have been experiments in using telematics technology this way, including an infamous case in which a Connecticut rental-car company got in trouble with state consumer-protection regulators because it used data from black boxes installed in its cars to charge lead-footed customers extra for exceeding the speed limit.
But if you think a backlash from a few irate customers or regulators will end corporate interest in using telematics and global positioning to keep tabs on the use of their vehicles, guess again. Indeed, commercial fleets could well turn out to be the most enthusiastic customers for telematics services, because they can more easily see how the costs are offset by savings in efficiency, lost property, downtime avoided and so on.
The telematics industry is puzzling over all these issues, and more besides. It's still not clear what the best way is to present the services to customers. Onstar, at least for now, embeds a cellphone in the car, and charges you for the minutes you use onboard phone for hands-free communications. Wingcast and other rivals assume most customers will want to connect with telematics using a handset that they can take with them when they're not on the road.
Ford's Ms. Francis doesn't minimize the challenge: "This is where not being first to market gives us an advantage," she says. "We can learn from [rivals'] customer base what works and what doesn't."
So what kind of telematics service do you want -- and how much would you pay for it? Let's get the conversation started. |
