OnStar system to go digital this fall
By Charles J. Murray, EE Times
February 19, 2003 (5:05 p.m. EST)
eet.com
CHICAGO — OnStar Corp. president Chet Huber defended his company's business model this week, saying OnStar will stick with embedded car phones even as it begins its move to digital technology this fall.
Despite intense scrutiny in the wake of the demise last year of telematics provider Wingcast LLC, Huber said that OnStar's focus on "safety, security and peace of mind" is unswerving, and that its business model is financially sound. "We have seven years of experience in this business and we're doing fine," Huber said during an exclusive interview with EE Times at the Chicago Auto Show. "We wouldn't be continuing down this path if it wasn't a viable business."
Huber said that OnStar's commitment to a business model based on a hardwired, embedded car phone is intact. That model, he said, continues to be the foundation of the company's safety-and-security philosophy, because embedded phones are always available in the vehicle when needed. Using OnStar's embedded communications module and GPS tracking technology, Huber said the company handles 5,000 emergency calls, remotely unlocks 26,000 car doors, recovers 500 stolen cars and performs remote vehicle diagnostics 14,000 times per month. Those functions couldn't be done through an ordinary cell phone connection, even if it were installed via a hands-free car kit, he said.
"If our customers just wanted to make hands-free phone calls, then it would be reasonable to ask if an embedded wireless connection is the best strategy," Huber said. "But if you're building a brand around safety and security, then the embedded phone is an absolute necessity."
Technical changes afoot
Huber acknowledged, however, that the wholly owned General Motors subsidiary will roll out a new generation of hardware this fall based on a digital communications technology similar to the kind used in portable phones. The new digital technology will be part of a move to allow customers who also own mobile phones to consolidate calls from their cell and car phones onto a single bill. The move could be an enticement to potential customers who feel they already have too many phone numbers and too many bills to pay.
Up to now, OnStar has stuck with analog phone technology, even as most of the mobile-phone industry has gravitated toward digital. OnStar stayed with the analog technology, Huber said, because analog enabled the company's phones to send a combination of voice and data messages. The ability to send both, the company said, is a key part of its safety-and-security philosophy.
"If the airbag goes off, then you want to be able to send a data message to the call center saying it deployed, but you also want to have a voice that comes on and asks if the driver is all right," said Terry Sullivan, vice president of communications for OnStar. "Up to now, digital hasn't been able to do that."
OnStar said this week, however, that its next-generation digital hardware will be capable of sending both voice and text. Its engineers have developed a digitally based system that could switch back and forth between voice and data signals, OnStar said. The company's sixth-generation electronics module will include a trimode design incorporating 850-MHz digital, 850-MHz analog and 1.8-GHz digital technology, Huber said.
The move to digital will also serve customers who want to put their OnStar calls on their existing mobile-phone bills. Most cellular carriers today use digital technology, and digital costs are said to be far lower than analog. The company's use of digital technology would make its system more compatible with those of existing carriers, and would make a common billing procedure possible, Sullivan said.
Observers in the industry have said they expect a competing system from Chrysler Group to give OnStar its first real taste of head-to-head competition when it reaches the market later this year. Chrysler's system, which employs Bluetooth technology, is being watched closely by analysts because it would allow customers to bring their personal phones into their vehicles and use them hands-free while they drive. Many believe that system will be popular because it doesn't force consumers to buy an extra mobile phone, as OnStar's does.
"The market will be watching to see how well Chrysler does with their system," noted Paul Hansen, publisher of The Hansen Report on Automotive Electronics. "Right now, Chrysler's approach looks good because it calls for less of an investment on the part of the company."
In contrast, General Motors has invested heavily in OnStar, which uses global positioning satellite technology and staffs a call center 24 hours a day.
Many industry observers have questioned whether OnStar is profitable, especially in light of last year's demise of Wingcast, which was heavily funded by Ford Motor Co.
A 59-page study by The Hansen Report last year questioned the GM subsidiary's viability, suggesting that its customer renewal rates were just 42 percent. The study also stated that the presence of an OnStar embedded phone added no perceptible value to a used vehicle.
Mum on finances
"Nobody outside of OnStar really knows how they're doing," Hansen said this week. "Most people still don't see how they can make a buck with that business model."
OnStar, however, has refused to divulge details about its financial status and its renewal rates. "We're not a publicly held company that has to disclose our financial information, and we'd just as soon let the other companies in this space figure out the business model for themselves," Huber said.
To date, OnStar has dominated the fledgling telematics business, capturing approximately 90 percent of the in-vehicle telematics market and more than 2.5 million subscribers. It also has business ties to Acura, Audi, Isuzu, Lexus and Subaru.
Huber said that OnStar does not consider Chrysler's system a direct competitor in many ways. Chrysler's technology is aimed at personal calling, he said, while OnStar is aimed at safety and security.
"They have no GPS or embedded connection beyond the audio integration for hands-free calling," Huber said. "We don't think the Chrysler system will come close to anything we're doing with OnStar." |
