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Safety First But Not ForemostSafety First But Not Foremost

As with cell phones, the initial appeal of car-based telematics has been safety and security.

InformationWeek Staff

March 28, 2002

3 Min Read

As with cell phones, the initial appeal of car-based telematics has been safety and security. According to a 2001 survey by Driscoll-Wolfe, the services consumers cited as most desirable were emergency 911 location, roadside assistance, and stolen-vehicle tracking. "Safety and security will be the underpinnings of this business model," says Jon Bucci, national manager of the Net Car unit for Toyota Motor Sales USA.

Because motorists feel most secure talking to a live operator, systems from OnStar and ATX Technologies Inc. use a live call center. Ford Motor Co.'s Wingcast, a joint venture with Qualcomm Inc., will also have a live call center. "The foundation of OnStar is safety and security through a live adviser," says Don Butler, VP for OnStar's Virtual Adviser Program.A driver using OnStar or one of ATX's carmaker-branded systems can push a Mayday button to summon help in an emergency, or, if a car deploys its airbag, the service center can automatically send a message to emergency service providers. In addition to information about the car, the telematics service center can provide rescue workers with the driver's medical history. Other emergency services include locating a stolen car and letting drivers back into the cars if they lock themselves out. As evidence of the value of these systems, in January, the ComCare Alliance, a nonprofit safety advocacy group, urged automakers to "quickly adopt next-generation telematics safety technologies in all their cars."Emergencies occur rarely, however, especially during the first-year trial period, and many customers appear unwilling to pay for a service they anticipate using infrequently if at all. "Consumers want safety but will only pay so much for it," says Larry Haddad, corporate manager for cross-car-line product planning and marketing for Nissan North America. In addition, cell phones already provide many consumers with a sense of security, particularly when the E911 system mandated by the Federal Communications Commission can more accurately locate a driver in distress."If we continue to sell telematics as a safety and security device, we will not see explosive growth," says Michael Heidingsfelder, a partner at strategy consulting firm Roland Berger. He cites OnStar's own experience: Launched in 1997, OnStar claimed about 2 million subscribers by the end of 2001, but the company declines to discuss how many of those pay to use the service. OnStar also won't say what percentage of customers renew their $199 basic or $399 premium subscriptions when their trial periods end, but analysts estimate that at least 40% drop out. "A lot of customers will not prolong their membership with OnStar when they need to pay for it," Heidingsfelder says. That means that hundreds of thousands of drivers with OnStar built into their cars' electronics systems don't use the service. Ford's Wingcast has apparently learned from OnStar the limitations of basing a service on safety and security. The new company aspires to become a wireless network for motorists and a platform for wireless applications and services.Once people get safety and security under control, they will look for ways to use the system more efficiently, Wingcast CEO Harel Kodesh says. Because of the amount of time Americans spend in their cars, "we believe there will be great demand for the right set of services," he says, "but the services have to be right and they have to be reasonably priced."(Ford recently announced huge budget cuts and layoffs in an attempt to regain profitability. "Given the current financial and management situation at Ford and the fact that a lot of people who have been promoters of Wingcast within the Ford organization have either left, been retired, or have new posts is creating several problems for Wingcast," Heidingsfelder says. Wingcast officials insist that Ford remains as committed to Wingcast as ever.)close this window

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