DETROIT - To promote its OnStar vehicle navigation service, General Motors eventually may let motorists have the hardware for free.
The automaker is 'taking a hard look' at the mobile telephone industry's tactic of giving away telephones to sign up new subscribers, said GM Vice Chairman Harry Pearce.
'This is typical of the model in consumer electronics,' Pearce said in a telephone interview on Friday, April 23. 'As hardware costs come down, the (price of the) hardware becomes less and less significant. In the cell phone business, you give away the hardware to grow the subscriber base.'
Pearce, 55, who was treated for leukemia last year, is masterminding GM's move into communications technology. He is in his seventh month of recovery after chemotherapy in Seattle. He returned to Detroit in December.
Now he commutes to GM headquarters four days a week and handles his remaining work at home. Pearce said doctors have told him he can consider himself cured if he goes two years without a relapse.
'I can put in a full day at work and not be wiped out,' Pearce said. 'I go to bed at a normal time. I regained my energy more quickly than I anticipated.'
Now he focuses much of his attention on GM's technology portfolio. GM's key communications partner is Hughes Electronics Corp. of El Segundo, Calif., which is investing in digital television and satellite radio. GM owns a majority share of Hughes.
Although GM has high hopes for OnStar, the communications network has grown gradually. GM has 50,000 subscribers for the service, which includes basic and premium service.
Using a cell-phone link, motorists may contact OnStar operators for route guidance and other services.
The second-generation OnStar hardware now sells for $695 - substantially less than the $1,300 installation fee typically charged for the first-generation version. From October through December, GM waived the $1,300 fee in a promotion to lure subscribers.
Subscribers choose either $199-per-year basic service or $399-per-year premium service. The basic package includes emergency services such as theft notification, remote diagnostics, remote door unlocking and automatic 911 notification if the airbag deploys. The premium service adds route guidance, concierge services and other perks.
Ultimately, GM wants to offer a range of consumer services that would fatten the bottom line of its core vehicle business.
Once a customer buys a GM vehicle, he or she would choose from a menu of monthly services such as OnStar, satellite radio or digital TV for home use.
To promote satellite radio, GM is working with XM Satellite Radio of Washington, D.C. Motorists who subscribe to the service will get 100 channels of music, news and other programming. Customers would buy a receiver and antenna and pay a small monthly fee. Subscribers would never be out of XM's broadcast range, since it will transmit its programming via satellite.
No introduction date has been announced.