Date post: | 14-Jun-2015 |
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Project Wily CoyoteThe Roadrunner System
Team WilyAmer Bukhari, Bosco Lau, Kelvin Chiu, Candy Tang, Derek Leung, Sumi Cheung
Introduction
The story starts…• One of group mates needed to arrange renewal of the third party
insurance of his 7-seater private car• He is…
• more than 10-yr driving experience• no accident nor claims record• 30+ years old• 2nd car• only drive 1-2 times per week
• Premium quoted by insurer: HK$4k per annum• He thinks insurer charged him too high
Market Observations
• Third Party Liability Insurance...compulsory for licensed vehicles• Average premium for private car is about HK$3k in 2009
Source: Office of the Commissioner of Insurance
Market Observations
Risk assessment criteria How relevance to risk? Considered?
Driver’s particulars
Age Highest risk age group: 20-29 Yes
Gender Casualties rate:Male 3.6 per 1000 *Female 1.8 per 1000 *
Yes
Occupation High risk occupation: Logistics, construction, engineering, security.
Yes
Claims history NCB (Non-claims bonus) Yes
Vehicle’s particulars
Make/Model Powerful car vs saloon Yes
Price Only applicable for comprehensive insurance Yes
Driving attributes
Frequency of car usage - Business use vs personal use- Mileage
Partial
Date/time of car usage accident rate doubles*: 17:00-19:00, Saturdays No
Normal average speed >10% fatal accident is due to speeding * No
Driving locations Higher risk locations: Yau Tsim Mong, Shatin, Kowloon City *
No
* Transport Dept, HKSAR - Road Traffic Accident Statistics 2008
Adverse Selection Effect• Solve asymmetric information with
objective verification• Riskier drivers, higher premium• Set price ceiling towards risky drivers• Qualitative drivers are attracted to
purchase comprehensive policy Balance avoidance of adverse
selection against the potential business from people who seek higher coverage
Fill the Gap
• New Product Development• The Roadrunner System
✔ ✔
Market Need List / Features
• Privacy vs high accuracy tracking – a configurable system
Party Needs Priority Features
Insurer Mileage ★★★★★ Odometer / process Geo data
Districts covered ★★★★★ Process Geo data
Speed ★★ Process Geo data
Easy collection ★★★★ Wireless comm. Of data
3rd party access ★★★★ Common platform
Low Cost/Maintenance ★★★★★ Off the shelf component
Risky Analysis ★★★ Data processing capability
Driver Privacy ★★★★★ Filter/Hide location tracking
No need to go to garage ★★★★★ Wireless comm. Of data
Cost covers insurance (10%)
★★★★★ Cost benefit
Logistics Real time location tracking ★★★★ Location tracking (high accuracy)
Car Rental Recovery ★★★★★ Location tracking (on demand)
Banks Recovery ★★★★★ Location tracking (on demand)
Scope of ProjectScope of Project – Roadrunner System
Product Description •A low cost, configurable device to collect vehicle information including, GPS location, mileage, speed•Wireless communication of data, configuration & software updates to and from central server•A common platform for access of the information
Key Business Goals More profit for insurers, high market transparency, lower cost for low risk drivers
Primary Markets Insurance companies, drivers
Secondary Markets Commercial sector:Car rental companiesLogistics companies with fleet of vehiclesBanks
Assumption •Relatively new market, few competitors / existing product & service•Configurable services to expand secondary markets
Stakeholders Manufacturers, mobile operators, internet providers, drivers, insurance companies
Product Concepts - Data Collection & Storage
• Data Collection– Raw data
• GPS location (32bit x 2)• System clock (32bit)
– Derivative information• Distance travelled(Δ location / time)• Speed (distance / time)• Time (day vs night)
• Data Storage– 512MB [31 x 86,400 x (96 / 16) byte ≈ 15MB ]
• Batch update (e.g. once per month)
Δx
Δy
(x1,y1)
(x2,y2)
Δz
Time (X,Y)
10:42.00 110,223
10:42:15 113,225
10:42:30 114,230
… …
Product Concepts - Communication Process
• 2 way communication• BlackBox Server
– Mileage– Traffic blackspots info– Speed– Geo-location– Depends on configuration
• BlackBox Server– Update configuration– Update software
Design Overview
Product ConceptsGeo-location vs Privacy Issue – A Solution
• What is the objective?– Insurers : risk assessment– Exact geo-location NOT
required– Geo-location mapping to
risk value e.g. 1 to 5– Solution : score based
system– Server updates BlackBox
with reference location & scores
– BlackBox sends cumulative score
Product Concepts - BlackBox
• Technology– Convenient data collection
• GPS, wireless 3G, battery powered (car & backup)• Software configurable, updatable via wireless network
• Platform– Stability, cost & easy to maintain
• Off the shelf components (ARM, Android)
• Physical– Easy to install
• Benchmark: IPhone 3GS – small size• PCB board : 105mm (l) x 60mm (w)
– Tamper proof, withstand extreme weather conditions• Durable casing, water-proof, tamper-proof
– Design• Functional, visual appeal not necessary
Product Concepts - Central Server
• Hardware– Intel based server
• Capability– Web & database server (Apache, MySQL)– Redundancy backup (multiple machines)
• Connectivity– Datacenter rack (co-location)– Gigabit Ethernet (24/7 Internet Connectivity)
• Software– Open standard (http, XML)– Customized web application (Google Map)– Remote configure BlackBox via web interface– User authentication access
Cost breakdown – iPhone Benchmark
Source: http://www.isuppli.com/Pages/Home.aspx
Component descriptions USDFlash memory NAND, 1GB, MLC 1.50 Application processor, ARM core, Package on package 14.46 Baseband HSDPDual ARM 926 and ARM7Core 13.00 SD RAM-Mobile DDR, 1GB package on package (Mounted on application processor) 4.25 Memory MCP 128mb NOR Flash and 512Mb mobile DDR 3.65 RF transceiver Qual band GSM/EDGE, Tri band WCDMA/HSOPA 130mm RF CMOS 2.80 GPS receiver single chip, 0.13um, with integrated Front-end RF, PLL, PM correlator engineand host control interface
2.25
Power IC FR function 1.25 FEM Quad band GSM, Tri band UMTS Antenna Switch and Quad band GSM RX RF SAW Filters 1.35 Power IC FR Application Processor function 1.30 Misc electrical components (small Ics, Discrete semiconductors passives, etc) 8.15 Misc electrical components (connectors, acoustics, antennas,etc) 3.75 PCBs 3.30 Misc Mechanical components (Plastics, Metals, Hardwares, Shielding, insulation, etc) 6.20 Battery (500mAh, 3.7V) 2.00 Main enclosure housing (Machined Aluminum unibody) 2.80 Total BOM 72.01 Manufacturing cost 10.00 Cost for the device 82.01
Fixed cost for start up:3 Central servers 7,692 Open source website development 25,641
33,333
CPU /Memory
Communications
Others
Product Cost Analysis
Component of the blackbox is similar to a smart phone. Major investment cost includes the software development for mileage & position tracking and central servers
Cost component USDFixed cost:
One time Set up cost 33,333 Server rack space rental (per year) 1,282
Variable cost:Product unit cost 82 50MB data transfer (per blackbox per year) 135
Product cost analysis
• US$110 up-front for device (@35% margin)• Pricing structure
• Rebate given on the following year insurance (Lock in)
• Minimal disruption - opt in, discount over current price
• Discount price card – transparent pricing
• Plan 1 - Standard• US$180 per year (@35% margin)• 20% of typical insurance premium
• Plan 2 – High accuracy location tracking• US$820 per year• Value added service
Pricing Model (example)
Score Discount
<10 30%
11-20 25%
21-30 20%
31-40 10%
>40 0%
Summary – Wily CoyoteRoadrunner System
• Planning / Concept Development– Identification of Competitive Products– Setting Target Sales Price Points (volume discount)
• Testing and Refinement– Facilitating Field Testing (Prototyping)
• Production Ramp-up– Placing Early Adoption with Key Customers– Aiming for Quick Hits First– Feedback and Control
• Detail Design– Marketing Plan: Spending, Positioning Mix– Articulation of Market Opportunity– Defining Market Segments and Collecting Consumer Needs– Developing Promotion via Insurance Agencies– Identification of Lead Users (Target Marketing)
Target MarketingMarket 1 - Driving pattern information driven:
Target MarketingMarket 2 - Geo-location information driven:
Target MarketingMarket 3 - Distance information driven:
Target MarketingMarket 4- Speed information driven:
Summary – Wily Coyote (Cont’d)
Sustainability Design– “Green-idea” and Safety driven
• Partnering with Green NGOs and other Initiatives
– Plan for Product Options and Extending Product Family• Kill switch for starting Vehicle • Camera to record the moment of a vehicle’s collision• Low-Jack type device in the case vehicle was lost or stolen• Partnerships with commercial ventures and long term Motor Co’s
– High Barriers to Entry• Insurance, Government, Vendor Relationships• Technology Barriers• Wide-spread initiation• Ease of Use and Cheap as chips
– “Wily, on Anything with Wheels”
Q & A