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COVER FEATURE: SUCCESS STORY
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...