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Hughes and AAA: The Distribution Channel for Aftermarket Telematics Solutions Widens

by User Not Found | 8月 16, 2011

At CES 2011, OnStar made headlines showing an aftermarket telematics solution which is now called, FMV (For My Vehicle).  Along with this announcement, OnStar also announced that it had secured the retail giant, Best Buy, as a distribution partner.  Securing Best Buy was a key win for OnStar, but questions remain about the extent to which Best Buy will promote FMV, how much knowledge Best Buy's staff will have about FMY, and if the staff can sell this technology to consumers?  While Best Buy was a key win for OnStar, Best Buy's motives seemed a bit unclear.  Electronic stores have been moving away from aftermarket automotive systems for a while.  These systems take up key real estate on the floor as well as additional real estate and staff for installation bays.  Even PNDs, which do not require installation, have been receiving considerably less floor space as they were quickly eclipsed by tablets as the new hot item.   Furthermore, the move seems a bit strange given Best Buy's recent push into the mobile handset market.

In contrast to OnStar, Hughes Telematics has targeted other channels of distribution.  In July, Hughes announced its partnership with American insurance company, State Farm, to bring insurance telematics to consumers.  Today, Hughes announced another breakthrough partnership, this time with AAA Club Partners.  AAA Club Partners is holding company comprised of 10 American Automobile Association (AAA) Clubs and the combined membership is almost 12 million across 20 states.   Unlike FMV, Hughes' solution can be self installed and features two-way voice connectivity for emergency services, enhanced AAA roadside assistance, and hands-free calling as well as vehicle diagnostics, location and speed alerts, vehicle diagnostics, and stolen vehicle locations assistance.  The solution offered by Hughes is also less intrusive, as it does not require replacing the OEM installed mirror, and instead plugs into the OBD-II port.  

The approaches to distribution differ in many ways.  Hughes appears to be creating strategy partnerships with organizations that are potentially stakeholders.  These companies are not just trying to profit on hardware and service but differentiate their service and enhance customer experience.   Furthermore, these organizations understand their customer base and can attempt to entice the right consumers into adopting telematics services.  This approach is very focused and alligning interested stakeholders could help reduce cost for all parties.   Given that OnStar has spent considerably on advertising to build its brand, perhaps its broader approach will work out, but Strategy Analytics' remains dubious given concerns about the current cost of FMV and early empirical data suggesting little consumer interest.  

Additional Insights:   OnStar: Time to Hit the Reset Button?

State Farm, Hughes Raise Usage-Based Insurance Bar

Yamei Puts Dealers in the Telematics Driver’s Seat

Usage-Based Insurance Brings New Competitors to Telematics Market

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