Telematics Beyond Voice: Look Ma, No Hands

If anything is certain about what drivers want from telematics, it's that nothing is certain. But most players in telematics believe the "killer app" will be safe, hands-free cell-phone use. In surveys of frequently used services, voice mail and receiving phone calls without touching a button rank at the top of the list, says Sachal Gidwani, executive VP of business development at automotive equipment supplier Delphi Automotive Systems.

Wingcast CEO Harel Kodesh sees hands-free driving as part of safety. "My wife buys a phone because she wants to make sure that if she breaks down in the dark, she can call me," Kodesh says. "But the fact is, she spends a disproportionate amount of time talking to friends."

Hands-free driving systems might also pre-empt legislation, such as New York City's ban on talking on the phone while driving. More than 40 states are considering similar legislation. According to a Roland Berger report, "Government regulations banning in-vehicle usage of regular (or non-embedded) cell phones are the impetus for the growing demand of hands-free communication and the development of voice recognition."

But voice-oriented telematics services won't do much for data-oriented content and service providers. In telematics, as in other wireless applications, the United States is still very much a voice market. "Wireless data as a service has not caught on," says OnStar's Bruce Radloff. He says OnStar would like to develop ubiquitous services for its mobile customer base, but because of cell coverage limitations in the United States, it can only offer wireless data services to customers in areas where cell coverage is consistently available. "My ability to develop a unique set of services that only exist in the Bay area, for example, is difficult, because I can't channel specific cars to go to just those dealerships where I can offer those services," he says.

Once 2.5-generation and third-generation wireless becomes available in the United States, Radloff says, wireless services will tightly integrate voice and data, such as combining onboard navigation systems with updated information. Onboard navigation systems rely on data that's installed at the factory or by the dealer. "New areas to live in pop up all the time, roads get changed," Radloff says. "By doing it offboard the vehicle [via a wireless connection], we can ensure that the currency of data is the best that we can provide. We can centralize the data and download it to the vehicle in data packets and then enable the driver to get the turn-by-turn functions either through a voice interface or through some kind of display."

For a glimpse of the future of data services and content, American carmakers are looking abroad. "The [Global System for Mobile Communications] environment that Europeans find themselves in is a good opportunity for us to do some learning, because we're hoping some of those capabilities end up over here as 2.5G and 3G come onboard, particularly with [Short Message Service]-related services and those kinds of things," Radloff says. "With GSM, every time you place a call you open up a voice and a data channel. To be able to enhance the interaction with our subscriber by providing supporting data is a good thing to do," he says.

Some analysts believe that the data automakers get out of the car might far surpass the value of information they send to drivers. Telematics systems from OnStar, ATX Technologies, and Wingcast are built into the car's nerve center, the bus, and can relay information about the car to the service provider. "Remote vehicle diagnostics is probably the most promising telematics application because it has to do with the vehicle itself," Gartner senior analyst Thilo Koslowski says. Servicing cars is not a very efficient process, he notes, so "there's lots of opportunity to make this much more successful, much more enjoyable for the consumer."

If carmakers can translate that data into information drivers find useful, such as sending a notification about a potential problem or telling a driver when it's time for maintenance, the driver might more likely to buy his or her next car from the same manufacturer. If the automaker uses telematics in a smart way, it can save a lot of money in internal processes, such as better management of warranty costs and of inventory for spare parts, says Michael Heidingsfelder, a partner at Roland Berger.

It can also steer customers to dealers, who often make most of their profits from service rather than sales but who lose "as much as 60% of their customers after the first year," Heidingsfelder says. Such vehicle information can also make dealer service better and more efficient: "Service managers have told us that if they could just download fault codes overnight, before the vehicle comes in, that goes a long way toward diagnosing a problem," an ATX spokesman says. "If they need to get a part, they can preorder it and have it ready rather than keep the car the entire day."

So far, however, manufacturers have failed to cash in on the information their systems can accumulate. "There's over 100 data points we collect now off of a Mercedes that we really don't do anything with," acknowledges the ATX spokesman. Similarly, OnStar has not yet understood what under-the-hood applications telematics can provide it with, Heidingsfelder adds.

But that may change, given ATX's Jan. 21 launch of a vehicle-management system that lets its telematics systems send such information to automakers and dealers. The company expects its automaker customers--Mercedes-Benz, BMW, and Ford's Jaguar and Lincoln lines--to use the service this year, and it's also selling the technology to dealers, so they can link directly to their telematics-equipped customers.

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