Automotive Telematics and

GPG Multimedia in the United States

Electronic toll collection Car navigation

Traffic management and route-
guidance On-board internet and
Internet and e-mail access “Mobile
office” Theft-tracking Emergency call
On-board collision-warning Interactive
vehicle diagnostics Value-added
content services Nav Systems
Reservations Entertainment Bundled
systems Communications Video
games DVDs Integrated systems
Electronic toll collection Car navigation
Traffic management

GLOBAL POLICY GROUP

 Automotive Telematics and
GPG Multimedia in the United States
Outline of Presentation
• Defining Telematics
• Passenger Car Telematics Market Overview
• Commercial Vehicle Telematics Market
Overview
• Recent Developments: Emerging Drivers of
Growth in the Passenger Market
• Future Trends in Passenger Car Telematics
• Future Trends in Commercial Vehicle
Telematics
 Automotive Telematics and
GPG Multimedia in the United States

Defining Telematics
GPG Defining Telematics

telematics
the convergence of wireless
communications, location
technology, and in-vehicle
electronics which is being used to
integrate the automobile into the
information age
 Telematics Building Blocks:
GPG Technologies

Location Voice-recognition Communications

Technology Technology Technology

Map Networking
Databases Integrated Telematics Systems and Vehicle
Navigation Mayday Car Audio/ Interface
Systems Systems PCs Video Technology
Systems

Wireless
Interior Phones
Systems
 Telematics Building Blocks:
GPG Applications and Services
Services available using
telematics devices:

Emergency call Navigation and E-commerce

or mayday route guidance applications
services services
Interactive value-
Device-to-device Remote vehicle added services
communications access and
diagnostics Commercial fleet
Interactive management
Person-to-
on-board
person Remote vehicle
entertainment
communications theft tracking
 Automotive Telematics and
GPG Multimedia in the United States

Passenger Car Telematics

Market Overview
 The U.S. Passenger Car Market:
GPG Current Device Options
• Autonomous navigation systems
• Integrated multimedia systems
• On-board personal computers
• Rear-seat entertainment systems
• Installed wireless phones
• Can be integrated with mayday service
Handheld wireless phones and PDAs
• Not telematics devices
• Could affect telematics demand
• Similar technologies/functions, but portable
• Wireless integration soon possible
 The U.S. Passenger Car Market:
GPG Current Service Options
• OEM mayday or emergency call services
• GM/Saab OnStar, Ford/Lincoln RESCU,
Mercedes TeleAid, Jaguar Assist, etc.
• Simple interface, connects to human voice
• Fee- or subscription-based
• Range of services (mayday, concierge, etc.)
• Independent information and emergency
call services
• ATX, Cross Country Group
• Similar services, fees, etc., to OEM systems
• Often serve as call centers for OEM systems
 The U.S. Passenger Car Market:
GPG Key Telematics Suppliers
Automotive Communications
Dot.coms
networking and technology firms
interface firms
Satellite Location
radio firms technology
firms
Automotive Automotive
audio firms Telematics Call center
firms
Nav system
producers Automotive
interior firms
Automotive
electronics Voice recognition Mapping
firms technology firms software firms
 Automotive Telematics and
GPG Multimedia in the United States

Commercial Vehicle
Telematics Market Overview
 The U.S. Telematics Market:
GPG Telematics Devices for Tractors

• On-board integrated telematics systems

• On-board computer, GPS, wireless
communications, interface with tractor data bus
• Driver interface in cab for data and voice
communications with dispatcher
• Screen for incoming text messages with
keyboard or touchscreen for sending messages
 The U.S. Telematics Market:
GPG Telematics Devices for Trailers
• On-board integrated tracking systems with
GPS receiver/antenna, wireless
communications, and battery/charger
• On-board sensor systems to allow
monitoring of whether trailer is loaded,
doors open, temperature, etc.
• Sensor system often integrated with tracking system to
send real-time information to the fleet office
 The U.S. Telematics Market:
GPG Commercial Vehicle Services
• Communications
• Tractor and trailer location
• Routing/dispatch/ETA information
• Electronic driver logs
• Reporting
• Billing/accounting
• Electronic customer relations management
• Remote tractor/trailer monitoring/diagnostics
• Theft monitoring
• Driver performance monitoring
• Fleet management, cost, productivity assessments
 The U.S. Telematics Market:
GPG Fleet Service/System Providers
• Communications/information service providers
• American Mobile, Qualcomm/OmniTRACS,
ARINC/Dominium, HighwayMaster, Orbcomm
• Communications/information systems providers
• Cadec, XATA, Eaton
• Internet-based communications/information
services
• @Road, Qwiktrack
• Truck-stop kiosk/hook-up internet-based
communications/information services
• DriverNet.com, PNV
 Automotive Telematics and
GPG Multimedia in the United States

Recent Developments:
Emerging Drivers of Growth
in the Passenger Market
 Driver #1:
GPG Volume
• More telematics and multimedia devices as
OE options on MY2000 cars and light trucks
• Primarily on luxury models
and minivans
• Some telematics and
multimedia devices are
standard equipment in
MY2000
• Only on luxury models
 Driver #1:
GPG Volume

• More OE telematics services in MY2000

• Particularly emergency-response services
• Some (OnStar) expanding beyond luxury models
• OnStar available on 29 MY2000 GM models
• Rely on simple interface, human contact
• More OEMs providing telematics service
interface as standard equipment
• Revenues derived from service fees or
subscription
 Driver #1:
GPG Volume
• Expanding range of products is essential to
market’s growth
• Increasing consumer awareness of telematics
• Availability in rental cars, increased
advertising (especially OnStar and Mercedes)
• Telematics systems in hands of early acquirers
and other trend-setters
• High satisfaction and intention to make
second purchase among telematics users
• Higher volumes reduce prices, encourage
innovation and integration
 Driver #2:
GPG Proliferating Industry Alliances

Computer Mapping Nav system

software software producers
Automotive firms
firms
electronics
firms OEMs
Automotive
interior
Voice firms
technology Telecom
firms Telematics service
Call center
suppliers providers
Communications providers
technology firms OEMs
Networking “Content” Telecom
Location technology equipment
technology providers
firms providers
firms
 Driver #2:
GPG Proliferating Industry Alliances
• Telematics applications depend on diverse
technologies
• Beyond scope of one individual company
• Beyond scope of automotive OEMs
• Beyond scope of traditional automotive suppliers
• Beyond scope of telecom, consumer electronics,
IT suppliers
• Telematics services require diverse types of
content, customer relations, etc.
• Alliances essential to meeting needs for
diverse technologies and skills
 Driver #3:
GPG Movement on Standards
• Auto and electronics firms cooperate on standards

In-vehicle Telematics
Standards Standardizing
interfaces to
TSC AMI-C
promote “plug-
IDB and-play”
SAE
Forum

Standardizing open
networks through
ITS Data Bus
 Driver #4:
GPG Benign or Supportive Public Sector
• Regulations have helped create market
• E-911 regulation provided invaluable boost to
GPS location technology
• EPA and CARB regulations helped drive OBD-I
and OBD-II development
• Federal and state governments actively
promoting ITS research and deployment
• Safety concerns on hold so far, but threaten
• Industry adopting some self-regulation
• NHTSA focus to date on cell phones
• States and localities also concerned
 Driver #5:
GPG Telematics and E-commerce
• Many OEMs view telematics services as part
of web that extends customer relationship
• Envision wide-ranging revenues from service
fees, vehicle maintenance, advertising, etc.
• Simple interface as standard equipment
• Contrast with device-led growth in Japan

Internet Internet Call

OEM
content portal center

Satellite Service
Radio Providers
 Recent Developments Drive
GPG Projections of Growth
Subscribers to Telematics Services
12 11.17

10
Millions of subscribers

7.98
8

6 4.96
4
2.54
2 0.82
0.01 0.06 0.2
0
1997 1998 1999 2000 2001 2002 2003 2004
Source: The Strategis Group
 Automotive Telematics and
GPG Multimedia in the United States

Future Trends in Passenger

Car Telematics
 Key Features of Next-Generation
GPG Telematics Devices
• Simple interface
• Technological capabilities must be balanced by
safety concerns and consumer interests
• Voice recognition and text-to-voice
• May be key to safety while car is moving
• Systems may limit some functions to parked car
• “Plug and play”
• Consumer will be able to install next-generation
telematics and multimedia systems
• Overcomes disparity in design and life cycles
 Key Features of Next-Generation
GPG Telematics Devices
• “Node on the internet”
• Connect vehicle to internet content
• Safety concerns must be addressed
• Real-time features
• Real-time traffic key to growth in nav systems
• Move away from limited coverage of
autonomous CD- and DVD-based systems
• Integration of functions
• Single interface for wide range of applications
• Communications (data and voice), navigation,
audio, vehicle controls
 Next-Generation Telematics:
GPG Is Integration the Killer Application?
• Everyone hopes for a single “killer app”
• Navigation systems key in Japan
• Killer application in U.S. could be integration
• Integration of interface for voice/data
communications, vehicle controls, vehicle
diagnostics, location technology, etc.
• Integration can ease driver distraction
• Integration driving cross-sectoral alliances
• Risk: Integrated devices can easily become
outdated as technology rapidly changes
• Does the answer lie in services, not devices?
 Key Features of Next-Generation
GPG Telematics Services

• Voice/human contact essential

• Call centers will not be replaced by internet
• Particularly essential to mayday services
• Most important to older buyers
• Location-based content to increase
• Nationwide coverage essential
• Real-time traffic, weather, road status
• Location-based concierge services and POIs
• Location-specific targeted advertising
 Leading Areas of Consumer Interest
GPG in Telematics Services
Remote Door Unlock 28%

Routing Assistance 31%

Remote Diagnostics 31%

Lost & Found 24%

Stolen Vehicle Tracking 41%

Vehicle Alarm Notification 25%

Severe Impact Notification 56%

Airbag Notification 38%

Roadside Assistance 61%

Emergency Response 61%

Source: ATX Technologies 0% 10% 20% 30% 40% 50% 60% 70%
 Potential Roadblock #1:
GPG Price

• OE telematics devices still expensive

• Installed nav systems cost $1800-$2000
• Often bundled in luxury packages costing
anywhere from $2500 to $7000
• Aftermarket systems also expensive
Device prices must come down
• Telematics services usually start at
$200/year for basic package
Service prices less an issue – provided
interface is standard equipment
 Potential Roadblock #2:
GPG Competition from Portable Devices

Portable Vehicle

Cell phones Bluetooth Portable

Smart Phones
Laptops
IDB Bus

PDAs Dockable Cell phones

Nav Systems
Mayday Systems
Nav systems
Driving Installed Audio/Video
Technology Systems
AutoPC
 Potential Roadblock #3:
GPG Privacy
• Privacy issues long raised about Internet
• Ability of Web sites to track individual
preferences without permission raises concerns
• Telematics compounds concerns through
vehicle tracking, remote monitoring, etc.
• Concerns already appear in trucking industry
• Consumer concerns slow ITS deployment
• Consumer concerns likely to grow
• Telematics service revenues depend on
location-specific advertising, selling location
and purchase information, etc.
 Potential Roadblock #4:
GPG Infrastructure
• Telematics infrastructure poorly developed:
• Multiple wireless communication standards
• 3G may resolve some of this problem
• What about 4G?
• Traffic information is inconsistent
• Traffic Data Forum aims to address issue
• Poorly developed public ITS infrastructure
• National ITS Architecture could address
interoperability issues
• ITS Deployment funding increasing
• Unclear support for IVI research
 Potential Roadblock #5:
GPG A Proliferation of Standards
Device-to-Device Communication
Connection Standards Standards
IrDA 3GPP
In-vehicle Telematics
Bluetooth Standards WAP
TSC AMI-C

IDB
Forum
SAE
Safety
Traffic
ITS Standards?
Data
Standards
Forum
Infrastructure Standards
 Potential Roadblock #6:
GPG Safety
• Regulators target cell-phone use in cars
• NHTSA recently issued public warning
• States and localities consider bans
• NHTSA now targeting in-vehicle telematics
• NHTSA “forum” and public hearing assess
industry efforts, need for federal action
• Ongoing driver-distraction studies seek data
• In-car internet and e-mail of particular concern
• Hands-free does not solve distraction problem
• NHTSA open to industry self-regulation
• Emergence of groups modeled on MADD?
 Automotive Telematics and
GPG Multimedia in the United States

Future Trends in Commercial

Vehicle Telematics
 Long-Haul Trucking to Remain Key
GPG Telematics Market
• Key customers in long-haul trucking sector
• Larger for-hire fleets have resources and needs
• Evolving technology offers growth opportunities
• Sector dominated by proprietary systems
and well-entrenched national providers
• Qualcomm, HighwayMaster, American Mobile
• Developing new products and services to take
advantage of new technologies
• Trailer-tracking offers new growth area
• Demand driven by concerns about theft, lost
trailers, efficient fleet-management, etc.
 Commercial Vehicle Telematics:
GPG Future Trends
• Open data bus could offer new opportunities
• IDB Forum has held discussions with heavy-
truck standards groups
• Adoption of IDB architecture could open door to
new services and devices
• Multimedia, in-cab computer, infotainment
• Truck makers could become more active
• Portable devices would appeal to fleets that
rely on rental units
• “Turnkey” solutions would appeal to smaller
LTL fleets and short-haul fleets
 Commercial Vehicle Telematics:
GPG Future Trends
• Growth in location-based wireless fleet-
management services
• Communications, asset tracking, remote
diagnostics, theft monitoring, etc.
• Integrates electronic fleet-management and
CRM functions with the Web
• Integration with “virtual” marketplaces
• Existing suppliers, communications, and
software firms developing new products
• Smaller fleets prime market for new internet-
based technology and services
 Commercial Vehicle Telematics:
GPG Privacy and Safety Pose Threats
• Privacy issue is a major potential roadblock
• Fleets use data for performance reviews,
incentive programs, etc.
• Truckers angered by close monitoring of
performance, driving techniques, etc.
• Drivers and unions oppose tracking of trucks
• Fears of “big brother”
• DOT mandate of electronic recorders sparks
backlash
• NHTSA and FMCSA concerned about safety
of trucking telematics systems
 Commercial Vehicle Telematics:
GPG A More Mature Market
• Unlike passenger market, trucking sector has
existing telematics infrastructure
• Long-haul market dominated by Qualcomm, etc.
• Heavy investment to date make it hard for
fleets to move to more open systems
Truck makers play little role to date
• Smaller fleets offer best target
• Internet-based services appealing due to low
start-up costs
• Truck-stop services target individual truckers
• Fast-growing short-haul sector also key
 Automotive Telematics and
GPG Multimedia in the United States

Summing Up
 Summing Up:
GPG Keys to the U.S. Telematics Market
• Development of integrated devices with
simple interfaces that address safety
concerns – at an affordable price
• Need to provide more than portable devices
• Standardization is key to meeting goals and
offering latest technology in the car
• Simplicity and safety essential in vehicles,
even at expense of “gee-whiz” technology
• Industry must impose limits – or regulators will
• Risk of public backlash if safety not addressed
 Summing Up:
GPG Keys to the U.S. Telematics Market
• Development of targeted services delivered
safely with low-priced (or free) interface
• Need to compete with other similar services
• Potential competition from telcos, etc.
• Consumers do not want multiple internet
accounts, e-mail addresses, phone
accounts/numbers
• OEM-Internet alliances may be answer
• Privacy could become increasingly important
• Key question: Why should the consumer
pay an automaker for these services?
 Automotive OEMs and Telematics:
GPG Competing in an Open Market

• OEM service-focused strategy endangered

by open access, portable devices
• Europeans see handheld devices as key
• Safety/roadside aid services clearly appeal
• Voice contact essential in U.S. market
• Key test: Renewal rate for OnStar
• Costs of delivering such services will escalate as
subscriber base grows
• OEMs must get consumers to buy broader
range of services from them