Using Smartphone for Driving Data

June 14, 2013

 

Urvaksh Karkaria

Staff Writer- Atlanta Business Chronicle

 

One of the co-founders of Hughes Telematics is turning a challenge into opportunity with his new venture, Vehcon Inc.

 

At Hughes, Fred Blumer led the development of In-Drive, a telematics device that State Farm, AAA and others use for usage-based insurance. A major challenge to adoption of hardware-based systems, such as In-Drive, is the cost of the devices that plug into a vehicle’s onboard diagnostics port.

 

“There are a lot of companies that just don’t want to pay for and manage hardware systems,” Blumer said.

 

Blumer’s new startup with co-founder Joe Fuller uses the ubiquitous smartphone to solve that pain-point. The Advanced Technology Development Center (ATDC) Select company has developed technologies that allow sensor-packed smartphones to collect much of the data that hardware-based telematics systems monitor.

 

The smartphone-based approach can deliver 80 percent of the predictive data of an onboard telematic device, at about 10 percent of the cost, Blumer said.

 

“Vehcon has found a simpler and less expensive way to extract data from cars that is meaningful to insurance carriers,” said Merrick Furst, who advised the startup as part of Georgia Tech’s Flashpoint accelerator program.

 

Vehcon’s smartphone application captures data in five categories — including odometer readings, seasonality of vehicle usage and location data — that it shares with auto insurance companies and vehicle maintenance shops, such as Pep Boys and Jiffy Lube, with consumers’ permission.  Motorists receive incentives, such as insurance premium discounts and service coupons, for sharing the vehicle data with Vehcon’s partners.

 

With Vehcon’s technology, insurers and vehicle repair and maintenance companies can better predict customer needs, target their marketing and increase customer retention.

 

Blumer was cagey about disclosing all the vehicle data his company collects, and how the proprietary technology enables a smartphone to record it.

 

 “We are focused on collecting ambient data that’s in and around a car using all the sensors in the smartphone,” Blumer said. “Our initial focus is on collecting vehicle odometer data and areas of operation. Those are two of the most valuable data elements for the vehicle insurance industry.”  Insurance companies understand that the more you drive, the more likely you are to be in an accident, Blumer said.

 

By eliminating expensive hardware to collect the automobile data, Vehcon can pass on the savings to its industry partners.

 

“So, if an insurance company says, ‘We are going to spend $3 million to roll out a telematics program,’ they can reach 300,000 customers with Vehcon’s solution versus 3,000 customers with hardware-based systems,” Blumer said.

 

Vehcon helps national auto repair and service shops with lead generation. Based on the vehicle’s VIN number, Vehcon knows what scheduled maintenance a vehicle requires, and, based on the odometer data it collects, when the maintenance is needed.  Vehcon alerts registered users about the upcoming service and offers discounts for those services from its auto shop partners.

 

Plugged in: Fred Blumer and Joe Fuller found out it’s far cheaper to use a smartphone to gather valuable driving data than a device that plugs into a car’s diagnostics port.

Vehcon helps national auto repair and service shops with lead generation. Based on the vehicle’s VIN number, Vehcon knows what scheduled maintenance a vehicle requires, and, based on the odometer data it collects, when the maintenance is needed.  Vehcon alerts registered users about the upcoming service and offers discounts for those services from its auto shop partners.

 

When Vehcon entered Flashpoint, it had an entirely different market in mind for its technology.  The company aimed to collect vehicle data that would help fleets, such as delivery companies, improve driver safety and lower operating costs, Furst said.

 

“That’s the kind of thing that sounds rational, but it just doesn’t happen to be something that people wanted to buy,” he said.

 

Through Flashpoint’s “Startup Engineering” process, Vehcon discovered a new and profitable market after a Fortune 100 insurance carrier aggressively demanded price information for Vehcon’s product, Furst said.  For Vehcon, scaling will be a challenge. The company has large companies as customers who have demanding needs. Vehcon’s product, as it goes into consumer hands, will require tweaking and refinement, Furst said.

 

Vehcon is beta testing its software with major insurance carriers, and auto repair and maintenance companies now, through the end of the year. Blumer declined to disclose their names.

 

VehCon faces a familiar problem faced by startups going up against established consumer brands — name recognition.

 

The product will only be effective if large numbers of motorists download Vehcon’s smartphone app. To get the app on more consumer smartphones, Vehcon will rely on the insurance carriers and maintenance and repair companies to distribute the technology to their customers.

 

“This will be a feature and an incentive that they are presenting to those customers,” Blumer said.

 

To help keep pace with demand, Vehcon has raised $1.2 million from angel investors Meade Sutterfield, Steve Chaddick and the Auburn, Ala.-based AIM Group. Vehcon plans to invest the capital in product development and scaling of the platform.

 

Blumer sees the technology being adapted to new markets.  For instance, Vehcon can help consumers understand how much their car is worth, the best time to sell it and who might be most interested in buying it, based on how it’s been operated.

 

Further in the future, the smartphone could help consumers troubleshoot their vehicles by translating the cryptic diagnostic information the vehicles spit out, when, say, the “check engine” lights come on.

 

“The smartphone is a powerful computer,” Blumer said. “The revolution is going to be in ways that people use the power of the smartphone to do new things; it is going to impact a variety of industries in dramatic ways.”

 

Urvaksh Karkaria covers Technology and Health Care

 

© 2013 by Vehcon, Inc.