When GM designed OnStar in '95, Huber was working without a map
Photo credit: JOHN SOBCZAK
In 1995, GM recognized that developing the world's first in-vehicle, hands-free voice and data communication system would be fraught with risks, challenges and skeptics.
"There were no templates for it because nobody had been here," says Chet Huber, president of OnStar since its inception. "The risk was high, the pitfalls many. It would have been very easy for General Motors to simply dismiss the notion of OnStar as too risky."
But GM persevered and ultimately created the first widely adopted telematics applications in North America. GM succeeded, while others failed. After the 2002 demise of Wingcast, the telematics venture of Ford Motor Co. and Qualcomm Inc. that never got off the ground, skeptics expected OnStar to fold as well.
But it didn't. And OnStar has paved the way for others to try to connect the car to the outside world with technology.
For example, Hughes Telematics, of Atlanta, will have factory-installed telematics units in some 2010-model Chrysler LLC vehicles by next summer.
"I don't consider General Motors competition," says Erik Goldman, Hughes Telematics president. "We're big fans of General Motors. They frankly created this industry and created awareness."
One could argue that OnStar even paved the way for Sirius Satellite Radio and XM Satellite Radio.
The challenges of developing OnStar were apparent immediately. During development, GM built 55 iterations of the OnStar system.
"Every one between 1 and 55 was a failure," Huber says.
In one, the system thought that the vehicle's airbag had deployed and called for emergency assistance when anyone with a buildup of static electricity on his or her hand touched the door. In another version, a remote signal from OnStar designed to unlock the doors instead triggered flashing lights and a honking horn. Other versions drained the car's battery.
But with encouragement from the highest echelons at GM, development continued. GM introduced OnStar in September 1996, continued to add features and upgrade hardware and software and ultimately made it standard equipment on nearly all 2008 GM vehicles sold in the United States and Canada.
GM has been rewarded for sticking with the service. OnStar has achieved the largest telematics penetration in the automotive market with more than 5 million subscribers.
GM uses global positioning satellite technology to locate OnStar-equipped vehicles. Hands-free cellular technology links drivers to 24-hour OnStar advisers ready to provide services ranging from emergency assistance to driving directions.
How it began
The idea for OnStar was hatched in 1995 by Harry Pearce, then GM's executive vice president and chief counsel, along with EDS and GM Hughes Electronics Corp., two GM business units at the time.
Pearce sought out Huber, who had 20 years' sales experience in GM's locomotive business, to lead the startup team, dubbed Pilot Beacon.
"It became pretty clear pretty quickly that you could do something meaningful with those technologies, the equivalent of a co-pilotlike capability, where someone felt they were going to be better taken care of on the road," Huber says.
The team presented its proposal to Rick Wagoner, then president of North American Operations. Wagoner supported moving forward, as long as the product had an impact on how people viewed GM vehicles, Huber says.
In September 1996, OnStar sold its first unit. At the time, OnStar equipment was installed at dealerships.
OnStar needed support from the engineering, manufacturing and marketing communities to prosper, says Mark Hogan, who was president of e-GM at the time.
"At its inception, it was looked at as an add-on and a plus-cost," Hogan, now 57, recalls. It was "very unclear whether it really had any value from a customer standpoint.
"So a lot of internal nurturing went on to convince the appropriate engineering, manufacturing and marketing leaders that OnStar was really, really a technology that we needed across the board."
OnStar's most popular subscription plan today is Safe & Sound, which includes automatically alerting OnStar of a collision or airbag deployment. An OnStar adviser is immediately connected to the vehicle and asks whether the occupants are safe. If they are unable to respond, the adviser uses global positioning satellite technology to pinpoint their location and request that emergency help be sent to the scene.
"It's all about safety and security, in my opinion," Hogan says. "I would never let my child drive a car without OnStar."
Still, Hogan believes that GM and its customers have only partially realized the value of OnStar.
Only the beginning
John Middlebrook, GM's former vice president for global sales, service and marketing, concurs that GM is just starting to tap OnStar's potential.
"We're finding that there are all these other great advantages that telematics can give you in terms of diagnostics of your products and telling people when their tire pressure's low or they need an oil change or why their engine light went on," he says.
Middlebrook, who retired July 1, recalls how GM debated for years whether to make OnStar standard equipment on all GM vehicles.
"We now have enough people with true experience with OnStar, either through an accident or a door unlock or whatever, that it is clearly a competitive advantage for the company," he says.
The GM subsidiary does not release its earnings but says that it is profitable.
Tim Boone, sales manager at Boardwalk Auto Center (Chevrolet) in Redwood City, Calif., does not consider OnStar a competitive advantage — at least not yet.
"People like it; they just don't want to pay for it," Boone says. "They don't renew it because they don't use it enough." The first year of OnStar service is included in the vehicle price. After that, subscriptions range from $18.95 a month to $28.90 a month, depending on what options are included.
That sentiment could change with increased exposure to the system and new product offerings, Boone says. Chevrolet Corvette owners, for example, will be offered a new service in the 2009 model year: An OnStar adviser can send a signal to a subscriber's stolen vehicle to reduce engine power, slowing the vehicle down gradually.
"There's been a lot of talk about that among Corvette owners," Boone says. "That can have a greater impact than some of the other services."