June 2001

The Commuter Computer

Continued from page 1

By Robert Buderi

Stand Aside, AAA

Telematics was born of technological, economic and societal trends that collided in the mid-1990s. Wireless networks were becoming established features of the telecommunications landscape. Carmakers found themselves facing many obstacles that had confronted computer companies as hardware products became low-margin items and they turned to services to build customer loyalty and profits. Highway congestion and longer commutes led the average American to spend 340 hours a year in cars as a driver, 201 as a passenger. Combine, and presto: the auto becomes an extremely compelling marketing target for information technology services.

First onto the track was Ford Motor. In 1996, it offered Lincolns with "RESCU"-mainly for emergency assistance. But Ford expanded slowly, and GM roared into the lead. Initially an option on three 1997 Cadillac models, OnStar is now offered on 32 of GM's 54 North American brands, and the company plans to extend it to all its cars. GM jealously guards OnStar revenue figures. But when you figure the basic price is $199 a year (first year free) and $399 for premium service, that's a heady potential windfall. Which may explain why a host of competitors have come out of the pits.

It also provides compelling reasons to tap Internet services that could both attract more customers and also hold down costs by automating the system-two keys to making telematics profitable, which it won't be until carmakers achieve the economies of scale needed to pay back their massive investments in the telematics infrastructure. Online automotive services fall into three main categories: productivity, convenience and entertainment. The first includes such things as e-banking, stock quotes and audible e-mail. Convenience covers route-guidance, weather information and news and sports updates. Entertainment includes MP3 music, games and movies.

The basic idea in all three categories is to use the vehicle as a "thin client" that carries the essentials for wireless communications-antenna, receiver, transmitter and the like-but does not have expensive storage or processing power. Instead, subscribers go to a special Web site and fill out a personal profile that lists the e-mail accounts and other information they want. Computing is handled by remote servers, so upgrading software and adding new services doesn't require changes in the vehicle.

But while the thin-client model is near universal in telematics, systems from different carmakers vary wildly in their details-particularly the interface. A driver uses OnStar, for example, by pushing one of three buttons and talking to an operator or to the automated system via speech-recognition software, with responses coming through the vehicle's sound system. But some competitors believe a voice-only interface is not enough. It's here the vision becomes most fun-and fanciful-as the Internet-enabled concept car takes to the road.