Electronic Design

Telematics: A Market In Need Of Sensible Value Proposition

For any new market to grow, it's going to take a value proposition that makes sense, is easy to communicate, and at a cost point where the underlying business model works.

When OnStar entered the market in 1996, we built our business model around a very broad consumer proposition encompassing safety, security, and peace of mind and embarked on a strategy of continuously improving quality and dramatically lowering costs. We've stayed on that path for nearly seven years and have seen our subscriber base grow to well over 2 million while watching industry hype and a number of competitive entrants come and go.

Since our inception, we've launched five generations of hardware, each with improved performance, better user interface, and lower costs. Managing that within the rigorous constraints of a new vehicle development process has required a tremendous team effort with our partners and has been a key ingredient for success.

OnStar has looked at applications as wide ranging as buses, police cars, delivery vehicles, motorcycles, and pleasure boats. These markets, like most, are driven by the cost to launch the service and the ability to track assets or support information going to drivers at a level that makes economic sense for customers. Here, it's important not to confuse what's possible technically with what makes sense economically. Our main focus has and will continue to be on what we see as the overwhelmingly largest opportunity—the retail consumer market. We're presently applying OnStar at the rate of 5000 vehicles a day, and that continues to grow.

The early notion that OnStar-like services would only attract luxury car buyers has turned out to be a myth. It's really a mistake to say that our services are uniquely more attractive to someone who buys a $40,000 or $60,000 vehicle rather than someone who pays $15,000 to $20,000 for a car. Our research and experience confirms that services like OnStar are just as attractive to people buying small cars, mid-size SUVs, mid-size cars, and minivans as it is to those buying very high-end SUVs or very high-end luxury cars, and we're proving that across the U.S. and Canada with millions of interactions every year.

TAGS: Components
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