Carmakers May Finally Get Telematics Right With Microsoft-Ford Pact

Rust belt 2.0?

No, not the right message; scrap that one. Whatever it’s labeled, after years of missteps trying to develop and market in-car technologies that keep people connected, automakers have a chance to get it right. And given new involvement from West Coast tech companies, the networked "smart car" concept is likely to be more than the illusion of a beleaguered industry grasping for cool and a competitive edge.

The best example of this West-meets-Midwest alliance is a new offering from Ford and Microsoft that will be touted this week at the Consumer Electronics Show in Las Vegas and the North American International Auto Show in Detroit. A dozen of Ford’s 2008 models set to come out starting later this year--including the Explorer, crossover Edge, and entry-level Focus--will offer an in-dash system called Sync that allows hands-free cell phone calls, driving-friendly text messaging, and a media player based on Windows CE. "Consider Sync like a small PC we’ve embedded in the vehicle," says Gary Jablonski, Ford’s manager for infotainment product development. Ford is reviewing all the capabilities of a smartphone as features that could be added to the system.

Hands-free communication via Bluetooth already is available from automakers and aftermarket manufacturers, but drawbacks include incompatibilities between consoles and devices and rapid obsolescence. Sync is designed to get around those problems; Microsoft says Sync will support almost any Bluetooth-capable device, including Apple’s iPod and Microsoft’s Zune.

So that drivers can keep both hands on the wheel, Sync will accept voice commands for song selection and come with 25 preprogrammed text messages (such as "I’m running late") that can be triggered from a steering wheel button. Customers eventually will be able to devise their own preprogrammed messages at Ford’s Web site and download them through the car’s USB drive. No word on what Sync will cost.

Momentum is picking up in other areas of automotive telematics, including navigation, maintenance monitoring, and accident response. Chrysler has tapped Hughes Telematics to provide a system for its 2008 models similar to General Motors’ OnStar navigation system, details of which could come this week.

Yahoo is working with Dash, a Silicon Valley startup, to offer a combo search-navigation device later this year that can be suction-cupped to the dashboard. Type "Wi-Fi" into the device to get a list of nearby Wi-Fi spots--Yahoo conducts the Web search over a cellular network--and directions to those locations through Dash’s navigation system.

Yahoo is talking with other companies about using its Local API for in-vehicle search services. It’s an area of interest to Detroit--though they’re still kicking the tires. "Web search is a dimension that everyone is exploring," says Nick Pudar, VP of planning and business development for GM’s OnStar. "I see a lot of experimentation. We’re thinking about that space as well."

San Francisco startup Autonet Mobile has a deal with Avis to offer its portable Wi-Fi hotspot device in rental cars starting in March; a Northern California dealership group recently agreed to offer the device as an aftermarket option. Autonet Mobile’s product creates a Wi-Fi network in the vehicle for laptops and game devices, plus connectivity to the Internet over a cellular network. It’s meant as an alternative to PC cell cards, which aren’t an option for many devices.

TIME TO BREAK OUT
If it sounds like a lot of technology fluff, remember that in-vehicle DVD players went from being a luxury to commonplace within a couple of years. With the Ford and Chrysler advances, 2007 could be the "breakout year" for telematics, says Paul Magney, president at Telematics Research Group. This is the first year GM is making OnStar available in all of its vehicles, for $200 to $300 a year.

With 4.5 million subscribers to its 10-year-old OnStar, GM is adding 4,000 to 5,000 a day. "The level of awareness and acceptance of technology by society continues to increase, and prices continue to come down," Pudar says, noting that OnStar’s bundling more services while holding prices flat.

There’s also a generation of tech-savvy kids getting driver’s licenses. "We looked at the aftermarket technologies related to DVDs, movie players, PDAs, and GPS systems, and the expectation is mushrooming," says Jay Baron, a director at the Center for Automotive Research. "It’s incredibly appealing to our younger generation that’s walking around with all these technologies."

Yet technology could also doom in-car telematics. As smartphones get more sophisticated--GPS, search, music--and cell cards get cheaper and PCs smaller, they may offer much of what the automakers’ envision selling themselves.

That’s essentially what happened to Ford’s accident-response system, RESCU, which fizzled a few years after it was introduced in the Lincoln. And in 2000, Ford partnered with Qualcomm to develop an in-car cell service, Wingcast, that died before coming to market. Ford underestimated how much drivers would use their existing cell services. This time, Ford and Microsoft built Sync as a platform to enhance portable devices like cell phones and iPods. "The overwhelming user case is mobile phone--far and away No. 1," says Velle Kolde, product manager for Microsoft Auto. "A distant second was media player integration."

Ford, whose unit sales fell 8% last year, sees this as one way to get people excited about its vehicles. "A piece of our product strategy is to have infotainment and communications be an essential part of Ford’s DNA," Jablonski says.

Microsoft’s auto group, around since the mid-’90s, has experienced its own failures, including an in-car PC marketed by Clarion that flopped. Microsoft learned it needed to work with carmakers more closely. Consumer tech’s life cycle is 12 to 18 months, while a car lasts seven to 10 years. Sync has a way to bridge that gap: It can be upgraded by a USB key with up-to-date software.

Simple? We’ll see. Cost will be an issue: Monthly service fees range from $17 to $27 for OnStar to $49 for Autonet, plus about $300 for the device. That sets up tough competition as more capabilities pour into cell phones, and device cell cards get faster and cheaper. But enough forces are coming together to drive telematics in the right direction.