OnStar to get competition, sorta
Hughes Telematics, which once was owned by General Motors and traces its history back to the reclusive billionaire himself, is planning to go into competition with OnStar, just as the market for OnStar’s services may have matured.
Hughes, which is based in Atlanta, is expecting shortly to announce that they will be cutting a deal to put an OnStar-like service into Chrysler products. Unlike the OnStar model, however, the Hughes system will not only offer their service by monthly payment contract, but will offer it as well on a pay-per-use basis.
In many other respects, such as being able to diagnose vehicle performance problems remotely an open locked doors, the Hughes system will be similar to that which OnStar has offered for years.
Hughes may have hit on something, even though the overall OnStar concept seems dated. The idea of having a pay-per-use option is likely to make the concept much more attractive than OnStar to those who have the system in their vehicles as a freebie.
General Motors has, for some time, made OnStar standard equipment in all new GM cars and has provided a complete package of services for the first year, without charge. However, after that, it charges a monthly fee which requires signing a year-long contract. The rate of retention has always been low, and GM has taken to advertising OnStar primarily as a safety feature. However, the system was originally designed to do more – in particular, serve as the car telephone and a navigation aid.
In those two departments, however, OnStar rapidly fell behind the competition. People preferred their own cellphones to the OnStar system. Carmakers themselves offered in-dash navigation to compete with OnStar, and then Garmin and others undercut both. That’s left OnStar with little real purpose. GM, however, has kept pushing it, and has attempted to adapt it to new realities by such mechanisms as downloadable directions that integrate the navigation system with the OnStar system. It remains, however, much more expensive and much more cumbersome than a Garmin from Best Buy.
Automakers have always had a rather old-school view of automotive consumer electronics. They tend to view the car as a platform onto which built-in things should be added. That’s really no different than the mentality at work when the first original equipment radio was installed in a Packard. Even today, it has taken automakers a substantial time to be clued into the notion that cars should offer iPod jacks, perhaps because automakers believe that these systems compete with their own optional systems. The epitome of this retrothink is the new Cadillac CTS, which is available with and extensive system that allows collecting a library of music in-car and, basically, does nothing that could not as easily be done by simply letting the user access his iPod’s content through the vehicle’s acoustic system.
Ford seems to be breaking away from this model with its new Sync system, which may have leapfrogged the competition. But, Sync does not attempt to create an outside entity to monitor the car or serve its occupants personally, as does OnStar.
By allowing people to use their system on a pay-per-use basis, Hughes may have found a way to encourage people to continue using the system past any free introductory period.
Whether, however, the carmakers that use the Hughes system can make any money on it, however, is another thing.
Increasingly, such systems appear to be an answer to a question not asked.