We have had several discussions on this board about telematics, and the Wingcast joint initiative between Ford and Qualcomm. In some ways, after the initial fanfare of the joint venture, many of us had hoped for more visible excitement. Of course, the difficult times that Ford has had since have not helped matters. But Wingcast has continued to labor along, to bring its system to market. You can visit www.Wingcast.com for some general information about the venture, but overall the information there is still limited. But I know they are working behind the scenes; I have in fact met engineers who work for Wingcast, and it is definitely for real! The linked article shows summary stats of reported usage by category, i.e. what do people use their systems for? the Strategis Group estimates that there will be more than 11 million domestic telematics subscribers by 2004, generating revenue of $1.7 billion. According to UBS Warburg, that number could conceivably rise to $24 billion by 2005. It would seem reasonable to expect Wingcast to capture 25 to 30% of new domestic subscribers after it has been in existence for about a year. Ford expects more than a million of its new cars and trucks to be equipped by the end of 2002, three million by 2003 and virtually all of its cars and trucks by the end of 2004, with the level and depth of services increasing each year during that period.. __________________ TMF Money Advisor
My purpose in this post is to respond to an earlier request (assignment!) by Lokicious to start some discussion on Wingcast, and whether/how it should factor in the revenue stream for Qualcomm. While I touch on that towards the end, I am much more interested in telematic services and related issues from a user standpoint, so this post ended up being more of a primer on telematics.
First, the commonly accepted definition from Wingcast's web site: Telematics refers to systems that combine the functionality of internal vehicle electronics, wireless communications, and information technology such as the Internet and Global Positioning Systems (GPS) for the delivery of information, services, communications and applications.
Some of the services envisioned by Wingcast are listed here. From my readings, we can expand on this list somewhat, and distinguish eight categories of services that one might want out of their on-board telematic system:
1. Mayday services: ability to signal distress, provide location of the vehicle, send some information about nature of the problem and status of both vehicle and occupants (e.g. anyone hurt, what part of the vehicle might need repair), and summon help.
2. Navigation and traffic information: what route to take to one's destination, congestion spots to avoid, etc�
3. Advanced vehicle monitoring systems�ability to diagnose the status of different vehicle components (mechanical and electronic), and obtain advice about repairs, replacement, etc� kind of an expert system for better vehicle condition management. While this could be an autonomous on-board device, it becomes "telematic" if it allows interaction with a remote database, or with a remote virtual or real technician. For example, On-Star offers automatic airbag deployment notification, remote door unlock, remote engine diagnostics (also useful in emergency situations).
4. Safety enhancing driver aids: this may be beyond the strict realm of telematic services, though its user interface would be integrated with the on-board telematic device. It would include collision avoidance systems, night vision, and heads-up displays of roadside-beamed traffic control devices (e.g. a traffic signal or railroad crossing lights that warn approaching vehicles of their existence).
5. Voice communication�replicate or enable usual mobile phone capabilities
6. Organizer capability and other productivity tools, preferably synch-able with PDA [personal digital assistant] or laptop. For example, given the activities that need to be accomplished on a given morning, it would, in combination with (2) above, suggest a schedule and itinerary, e.g. stop at the dry cleaners', drop off child�
7. Infotainment services�this is a very broad, catchall category that includes services available through general web access (i.e. the notion of turning one's car into a web browser), as well as specialized services provided by the telematic carrier. These would also include satellite digital radio, and possibly downloadable digital movies, MP3's etc., provided sufficient bandwidth is available (not envisioned in the initial stages of deployment, at least not on a nationwide scale). And let's not forget games, games, and more games for the restless teens.
8. M-Commerce-- this could be viewed as a subcategory of infotainment, enabled by web-access, but I have broken it out because it is likely to require separate capabilities that are built into the platform, and also likely to be a potential source of revenue that requires its own business model.
There is a ninth category that I have not seen discussed much in conjunction with telematic carrier services, though I have heard it suggested in automotive circles:
9. Peer-to-peer communication�there is no reason why neighboring vehicles would not be able to communicate directly, bypassing the main carrier network; this would have two applications: safety alerts from vehicles that may be too close for comfort, and staying in contact with companion vehicles (caravan-like, much like early CB radios�).
Telecom implications: air interface, business model, and service plans
The above capabilities have different telecommunication implications, in terms of coverage and data rates. For instance, mayday services must be available at all times, in all locations�period. This would suggest satellite access, as a last resort. On the other hand, video downloads may be available only along major freeways, where CDMA 1X or DO may be available through carriers like Sprint.
Wingcast, as a virtual carrier, is likely to bundle telecom access through a carrier like Sprint, using its CDMA 1X (and higher) network where available, digital AMPS air interface where available, for some services for which the latter provides acceptable quality of service and availability (likely limited to voice calls, simple messaging and mayday services), as well as satellite-based capabilities. With regard to the latter, one can envision several levels�a very basic level would be similar to the current Omnitracs capability, whereby a satellite system is used to passage short messages at low cost; it is ubiquitous and low cost to use, but it has low bandwidth. The higher end would be enhanced Globalstar access; certainly for mayday, but also for premium services if the user is willing to pay.
As a virtual carrier, it is also likely to bundle its Wingcast multi-mode, possibly multi-carrier access, with the usual wireless phone plans. For example, you could apply minutes from your Sprint plan (bundled with and sold through Wingcast) to calling either from the vehicle-based system or your own mobile phone. In fact, Ford already has a strategic alliance with Sprint PCS to provide mayday service and in-car connectivity in its current line of high-end vehicles; the plan is called RESCU. Of course, we also know that Qualcomm has a strategic partnership with Sprint, e.g. using its network for Omnitracs-based services. In Europe, Ford offers a service with Vodafone called Ford Telematics, recently announced.
As an example of an existing system, check out GM's On-Star's web site. Two plans are offered: a safety and location plan (for about $200 a year), and a "premium plan" (for about twice as much). One would expect thrifty but prudent individuals to sign up for the first plan, while those who use their vehicle for long trips with the family might find value in the premium plan (though the one offered by On-Star is more towards frivolous luxury, e.g. concierge service, than family utility). For more discussion of telematic services offered by On-star and others, there is a brief article on m-commerce.
On-board devices must integrate with user's existing PDA, mobile handset and/or 3G devices. In fact, a recent model introduced by Daimler-Chrysler for Chrysler vehicles in the US relies exclusively on connecting one's external device and externally procured service contract. However, because no network or service is presently ubiquitous, Wingcast and a full-featured telematic system will need to have its own hardware and software, including:
(1) the modem, i.e. chipset that will allow the above multimode connection capabilities [which then is likely to be highest-end fully featured QCT MSM chips with Snaptrack, BREW, terrestrial and Globalstar-enabled];
(2) on-board display, which is typically the dashboard screen we've seen so many examples of (some pictures (Toyota)) and the excellent article in Technology Review, with several good pictures), and/or possibly heads-up displays which some have argued to be ergonomically desirable;
(3) a sound system, but that's old hat, just call Bose; and
(4) the user interface, an extremely critical element on which rests the success of the entire system. This is particularly important because of the driving environment. As noted in an article,
crucial to telematics' success is deciding how much information can be presented to the driver at one time and in what form. "A lot of work is being done to figure out what that interface should look like," Infineon's LeFort said.
How much to make vehicle-dependent versus user-portable will be an important question, [one] that will evolve over time as new devices and services become available. For instance, there are today some GPS-based navigation devices that are essentially handheld (e.g. see Magellan.)
Market Size and Implications for Qualcomm
To summarize, Wingcast will draw on the following capabilities, products and services of Qualcomm's:
1. ASICS for the telecom portion; as noted, these would be high-end multimode chips, including Globalstar capability. One would all chipsets to be made by QCT for Wingcast. Appropriate royalties would probably need to be paid per unit, from Wingcast to QTL.
2. Snaptrack�GPS is clearly essential for all telematics, since they are inherently location-based capabilities. There is no reason for Wingcast to get its GPS and wireless-enhanced location capabilities from anyone else. Snaptrack will be built in the chipset.
3. BREW�as a platform for all the downloadable services, and to enable and monetize third-party applications and services. It is not clear whether this BREW-based community would be ready by the time Wingcast launches; however it seems conceivable that it will eventually be an important element.
4. Wireless business services�Wingcast, as a carrier and service provider, may well become like Omnitracs is for the trucking industry, though not as pervasive; Omnitracs absolutely dominates in trucking; Wingcast will apply to Ford, Nissan and whatever other smallish automakers might join, possibly some of the Koreans in the US (capitalizing on common CDMA-centric capabilities), and also one major European automaker for its US vehicles (I understand VW has not committed yet to a provider). This may well form a nice recurring usage-based revenue stream (though it will be shared across several players).
How large is the market likely to be?
An obvious place to look for guidance on how significant the Wingcast initiative might be is current statistics for On-Star. In a recent press release,
OnStar announced today that it will end the 2001 calendar year with close to two million subscribers; � OnStar grew its subscriber base by more than 250 percent this year.
"We are very satisfied with our subscriber rates, renewal rates and user response," said OnStar President Chet Huber to reporters at Comdex. "Our subscription-based business model continues to thrive by offering quality services drivers want and need in their vehicle on an easy-to use, flexible technology platform."
Are users satisfied with the service?
According to OnStar customer research 95 percent of subscribers activate the service, 86 percent said OnStar gives them peace of mind and 76 percent said they would recommend OnStar to a family member or a friend.
OnStar has had more than 10 million interactions with subscribers and is touching subscribers in every county in the United States and all provinces of Canada. On a monthly basis, OnStar is responding to:
� 200,000 routing calls per month
� 15,000 door unlocks/month
� 14,250 roadside dispatches/month
� 300 air-bag deployments/month
� 375 stolen vehicles located/month
Another interesting survey of high-end navigation system was reported by J.D. Powers.
While penetration of navigation systems remains at less than 1 percent of the market, the number of cars, vans and light-trucks models that offer factory-installed navigation systems grew from 26 to 45, according to the J.D. Power and Associates 2001 Navigation Usage and Satisfaction StudySM released today.
[note: several of these navigation devices do not involve "telematic" services, i.e. they are self-contained units with GPS capability and navigation using stored maps.]
More than one-half of new owners use their system at least once or twice a week.
Finding residential/business addresses or routes to unfamiliar locations are the most common system uses.
The user satisfaction report seems to confirm the GM On-Star findings.
Customers feel strongly about their navigation systems. More than one-half of current owners surveyed "definitely" would recommend a system like theirs to others. In addition to being navigation system advocates, two-thirds of current owners indicate future vehicle purchase decisions will be influenced by a navigation system option.
I have seen several projections of take-up and penetration, in a variety of sources that I cannot put my finger on at this time. From the Wingcast web site:
In the initial announcement of the venture, it was stated:
Using half of these numbers should add about half a million units in 2002, translating into higher-end chipset sales for QCT. As the system grows, the contribution to handset units, chipsets and royalties would be the equivalent of having another major carrier, about the size of Sprint, adopt CDMA. It is probably unreasonable to expect the services to start generating earnings for a couple of years. Given that valuation models do not include any revenue from this venture, we may well have another nice kicker in the wings.
BRational (still waiting for teleportation�)
A good reference is the ITS (Intelligent Transportation Systems) America Society web site, which has a large and quasi-continuously updated collection of links to related articles and reports. If you're more interested in public policy aspects of providing information to motorists and travelers, ITS America recently submitted a white paper to US DOT; it is downloadable.
Another good electronic newsletter with up-to-date news releases, articles and links is TelematicsUpdate.com.
For more links, you can also visit the Business 2.0 site.
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We have had several discussions on this board about telematics, and the Wingcast joint initiative between Ford and Qualcomm. In some ways, after the initial fanfare of the joint venture, many of us had hoped for more visible excitement. Of course, the difficult times that Ford has had since have not helped matters. But Wingcast has continued to labor along, to bring its system to market. You can visit www.Wingcast.com for some general information about the venture, but overall the information there is still limited. But I know they are working behind the scenes; I have in fact met engineers who work for Wingcast, and it is definitely for real!
The linked article shows summary stats of reported usage by category, i.e. what do people use their systems for?
the Strategis Group estimates that there will be more than 11 million domestic telematics subscribers by 2004, generating revenue of $1.7 billion. According to UBS Warburg, that number could conceivably rise to $24 billion by 2005.
It would seem reasonable to expect Wingcast to capture 25 to 30% of new domestic subscribers after it has been in existence for about a year.
Ford expects more than a million of its new cars and trucks to be equipped by the end of 2002, three million by 2003 and virtually all of its cars and trucks by the end of 2004, with the level and depth of services increasing each year during that period..
TMF Money Advisor