Special Coverage

Management Briefing Seminars

Consider ATX Group the Rodney Dangerfield of the telematics world.

Although about 1 million vehicles on North American and European roads use ATX’s road-side assistance service, the supplier doesn’t get nearly the respect as does its rival, General Motors Corp.’s OnStar subsidiary.

OnStar, an exclusive service offered to GM vehicle owners, has five times the number of subscribers and an enviable brand identity, bolstered by effective radio commercials highlighting “real-life” calls from distressed motorists.

Even the upstart Hughes Telematics, which is barely two years old and won’t produce its first telematics unit until next year, seems to get more attention than ATX, thanks to an aggressive publicity campaign.

Helping Hughes in the marketplace is a contract it won – by displacing ATX – to begin delivering telematics modules next year for Chrysler LLC vehicles in North America and, later, Mercedes-Benz.

ATX had the Mercedes business for years, but Hughes becomes the German auto maker’s preferred telematics supplier in November 2009.

ATX President and CEO Steve Millstein takes the lost contract in stride. His Dallas-Fort Worth, TX, company has the BMW, Peugeot, Citroen, Maybach and Rolls-Royce brands as customers.

ATX, which helped pioneer telematics when it began its service in 1997, will add two new customers within the next few years, but the supplier has not yet identified them.

And Millstein says ATX will more than double its number of subscribers to 2.5 million by 2011. Much of that growth will come in Europe, where he says ATX hopes to offer its services in additional countries.

“We plan to be in all the European Union countries,” says Millstein, who discusses “The Connected Vehicle” in a speech Tuesday at the Management Briefing Seminars in Traverse City, MI.

“We’re looking at three to four companies to handle the calls and the service,” such as navigation, road-side assistance, automatic collision notification, remote diagnostics and stolen-vehicle recovery.

The current contract with PSA Peugeot Citroen runs through 2011 and includes service for the U.K., France, Germany, Italy and Austria.

ATX currently has 500 employees, including software programmers and staffers at response and data centers in northern Texas and Düsseldorf, Germany. The company reports 2007 revenue of $77.2 million.

Currently, about a quarter of new cars produced in North America come from the factory equipped for telematics services. By 2011, Millstein says about half of all new cars will come so equipped.

“Some form of telematics is simply going to be in cars,” Millstein says in a January 2008 white paper. “It’s becoming as central to the driving experience as those once-upon-a-time luxury options, power steering and power brakes.”

In 2005, ATX introduced the first Driver Interactive Voice Application (DIVA), which integrates in-vehicle telematics, Web access and other services, including the ability to remotely control vehicle functions from any location. The service remains in testing mode and is not in use yet by consumers.

Millstein says ATX will continue to grow with or without the Mercedes business, and that the supplier has retained about 70% of the customers who have used the telematics service over the years.

“Mercedes has been an outstanding partner. They gave us an air of legitimacy,” he says. “How many OEMs keep their suppliers forever? There is nothing we could have done to keep them as a customer.” Other customers ATX has lost over the years include the Ford, Lincoln, Jaguar and Infiniti brands.

As for the telematics segment overall, Millstein expects three to five new players in the coming years, beyond ATX, OnStar and Hughes.

“I would be shocked if there were just two of us in it,” he says of the market.

As the sector matures, Millstein expects telematics to become less about responding to an event (such as a crash or stolen vehicle) “and more about an always-on experience wherever you are mobile. It will be less about technology and more about personalization of services.”

In addition, he expects the demise of subscription-based services and the emergence of a global telematics platform. “Telematics may no longer be linked to a single ‘box’ in the vehicle, but could be channeled to and from the vehicle through other devices.”