When the concept of telematics began to emerge in the early '90s, engineers at General Motors had a far-reaching vision: an interactive communications system that would provide safety, security, roadside assistance, and convenience to drivers any time of day or night, anywhere in the U.S. and Canada. Such a system would deliver an array of services to a vehicle's occupants while helping the driver to maintain control of the vehicle. Its ultimate goal was to limit the amount of driver distraction for safer driving. What evolved in 1994 was an ambitious venture that would bring together three diverse companies—General Motors (GM) and its two subsidiaries, Hughes Electronics with its satellite communications experience and Electronic Data Systems (EDS) with its data-processing expertise. The next year, the infrastructure started to come together in a joint venture named OnStar, a wholly owned subsidiary of GM. A system based on the Global Positioning System (GPS) resulted, providing drivers with route directions, emergency assistance, up-to-the-minute stock quotes, e-mail, and other services—anytime, anywhere (see "How GPS And OnStar Work," p. 52). Hughes is no longer involved with OnStar, but EDS provides IT and Call Center assitance.
Officially launched via Cadillac at the 1996 Chicago Auto Show, OnStar was greeted with guarded optimism. It then ran $799 a year, plus dealer installation costs, which varied by as much as twice the service's price depending on the dealer. So although OnStar offered many of the features it offers today, they cost much more. Not surprisingly, OnStar's debut was somewhat sluggish.
GM later introduced this service as factory installed, which took advantage of production economies of scale, making for a more consistent and reliable service. It bundled OnStar's hardware and software into most GM vehicles and made it part of the vehicle purchase price beginning in 1999. You can now purchase the system under one of three plans, with the lowest-priced subscriber package costing $199 per year. Users simply need to have it activated on their vehicles.
OnStar's success so far can be measured by the sheer number of subscribers. At the end of 1997, there were only 1100 subscribers. Today, approximately 2.5 million subscribers use OnStar, and several thousand new users sign up each day. User statistics also capture the breadth of OnStar's reach. For instance, each month subscribers initiate about 700 airbag deployment notifications, some 500 stolen-vehicle requests, around 5000 emergency button presses, approximately 14,000 remote-diagnostic requests, 13,000 roadside assistance calls, 27,000 remote door-unlock requests, and 220,000 route support calls.
Two early OnStar pioneers are Walt Dorfstatter, GM's OnStar vice president of engineering, and Bruce Radloff, chief technology officer. Dorfstatter started out on the OnStar hardware side, while Radloff handled the information technology side. (Radloff was not employed at OnStar when the service was first offered.)
"What we did was converge three basic technologies—GPS, cellular communications, and automotive electronics," says Dorfstatter. "When we discussed this concept back in 1994, many people could have easily envisioned it, but the challenge was how to integrate all of these capabilities into an affordable end-to-end solution."
"When we started out, there were several challenges of converging many unassociated technologies like the IT and advisor's side, the vehicle's side, the satellite side," adds Radloff. "The service cannot work unless all of the links are merged together, and the quality of service is totally dependent on this."
"Factory installation really unleashed the cost-effectiveness of OnStar. We purposely throttled OnStar's rollout in the beginning. We knew that we couldn't take on the world early on," says Radloff. "So we targeted some very key car models at the time, particularly some of GM's high-end cars. We wanted to get it out there, do some experimenting, see if it was a set of services the consumer wanted, and then make appropriate adjustments to market demands."
By no means is OnStar the only system on the market. But it's acknowledged to be by far the leader due to the infrastructure and support it has built. Ford has a limited-availability system called RESCU (remote emergency services cellular unit) and VEMS (vehicle emergency messaging system). Volvo (part of Ford) has the On Call system. Mercedes-Benz offers the TeleAid and Command system with features similar to OnStar and a navigation system that now uses DVDs instead of CDs. But none of these possesses anywhere near OnStar's market share, largely because of GM's head start.
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