General Motors Onstar

8 Pages Posted: 21 Oct 2008

See all articles by Paul Farris

Paul Farris

University of Virginia - Darden School of Business

Phillip E. Pfeifer

University of Virginia - Darden School of Business

Richard R. Johnson

University of Virginia - Darden School of Business

William McCormack

University of Virginia - Darden School of Business

Date Written: January 9, 2003

Abstract

In the drive to create the wired automobile, General Motors developed the OnStar system, a subscription-based wireless dashboard communication service that provided numerous safety and convenience features including emergency assistance, remote door unlocking, and making hotel reservations. GM was faced with several key questions regarding its market-leading telematics system. Should it syndicate OnStar, or was it of more value to the company as an exclusive feature? Should the OnStar division be spun off? Would telematics devices become standard for all vehicles, and if so, how would this affect decision making regarding OnStar? A teaching note is available to registered faculty, along with a video supplement to enhance student learning.

Excerpt

UVA-M-0659

gENERAL MOTORS ONSTAR

Six years after its launch in 1996, the telematics industry, having propelled itself up to that point with aggressive revenue projections and customer adoption rates, had fallen back to Earth. By 2002, an expert was describing the industry as “floundering” and comparing it with Apple's failed Newton in the early stages of the personal digital assistant (PDA) business. General Motors's OnStar, with a base of over two million customers, had emerged as the clear leader of the industry, but work remained to be done.

Introduction

OnStar was a subscription-based dashboard communication service created by General Motors (GM). The service provided numerous safety and convenience features, such as emergency assistance, remote door unlocking, and hotel reservations. OnStar was the market leader in the drive to create the wired automobile.

OnStar was a telematics device, combining vehicle control and monitoring systems with location tracking and wireless telecommunications. The Telematics Research Group estimated that 12.2 million telematics-enabled vehicles would be sold each year worldwide by 2007, representing 20% of all sales, and that 7.6 million of those vehicles would be in the United States, accounting for over 40% of all domestic sales. Further, they estimated the total installed base of telematics-enabled vehicles in 2007 to be 40.8 million vehicles worldwide, of which 29.7 would be in the United States, accounting for 12.4% of all domestic vehicles in use.

. . .

Keywords: new product introduction, emerging industry, product management, e-business

Suggested Citation

Farris, Paul and Pfeifer, Phillip E. and Johnson, Richard R. and McCormack, William, General Motors Onstar (January 9, 2003). Darden Case No. UVA-M-0659. Available at SSRN: https://ssrn.com/abstract=910092

Paul Farris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Phillip E. Pfeifer

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/Pfeifer.htm

Richard R. Johnson

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

William McCormack

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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