E-business Watch
Tracking the online media to bring you the key e-business trends

January 30, 2001 I

The Connected Car

It's a February evening in 2002, and you are in the middle of a 4-hour drive home from a tiring business meeting. As fresh snow falls, the onboard computer warns that a storm is moving in fast. Pulling into a gas station, you use the onboard Internet browser to check for the closest hotel with a vacant room, and make a reservation with your credit card. After choosing where to eat, you e- mail the office from the restaurant parking lot to let them know you won't be back in town until the next day.

While this scenario is still at least a year away, it does provide a small glimpse of how companies in the automotive and wireless sectors view the future. With North Americans spending more than 500 million hours in their cars each week, the opportunity to capture the attention of this lucrative audience is driving innovation across a number of related industries. Allied Business Intelligence predicts that the value of in-vehicle transportation systems will increase from $1 billion in 2000 to more than $8 billion by 2005.

The Automakers

Much of the future of this "connected car" rests in the hands of the large auto manufacturers. Since these companies design the car, they ultimately control how their vehicles will interact with the Internet.

General Motors leads the way in implanting telematics - the supply of data and voice services -- in its vehicles. Since 1996, GM's OnStar service has used satellite communications to monitor vehicles' performance, send warnings when an air bag deploys, and connect drivers to a live representative for directions or other assistance. OnStar currently has about 850,000 subscribers and is expected to reach 3 million subscribers by 2002.

General Motors has recently added the delivery of Web-based information to its subscribers. OnStar's new Virtual Advisor service uses speech recognition technology to provide Internet-based information such as news, e-mail, stock quotes and personalized traffic reports. GM CEO Richard Wagoner has stated that their vision is to eventually equip all GM vehicles with OnStar, essentially putting an Internet portal in all GM cars and trucks.

Ford hopes that Wingcast, a joint venture it launched last year with Qualcomm, will help them take the telematics lead. While details are limited, Ford has indicated that it will work with hardware, software, and content providers to introduce a full suite of Internet services. Ford plans to begin implementing Wingcast solutions into several of its models near the end of 2001, and expects that by 2004 it will be standard on most Ford vehicles.

DaimlerChrylser, which has been the slowest of the major automakers to introduce telematics into its vehicles, recently demonstrated the prototype Dodge Super8 Hemi, a concept car with a complex on-board computer system built upon a Linux and Java platform.

Independent Suppliers

While the automakers exercise a great deal of control over the future look and feel of the connected car, they are very dependent upon independent hardware, software and auto parts companies to deliver the value-added components of the connected car. To fill this need, a number of small and large companies are making their own bids for a piece of this newly emerging pie.

Communications & Information management

Creating a solid platform that enables drivers and passengers to keep in touch with their contacts will be a standard feature in Internet-enabled vehicles. One of the early leaders is start-up MobileAria, which has received significant investments from Delphi, the world's largest auto parts supplier, and Palm, a leader in wireless devices. The company plans to launch a set of applications that will run on Delphi's "Mobile Productivity Center," a specialized cradle that combines a handheld computer and mobile phone to form a connection to the Internet. Applications running on this platform will allow drivers and passengers to send Email by recording their voice to a digital file, and transmitting it as an Email attachment.

Entertainment

"Infotainment" systems are another significant component of the Internet-enabled vehicle. In their most advanced forms, complete infotainment systems will provide passengers with personal access to a rich selection of audio, video and text-based information: everything from access to their personal collection of MP3 files, to video-on-demand, satellite radio, and detailed information related to the vehicle's location. Companies such as auto parts suppliers Johnson Controls and Visteon and software and hardware companies such as SM Satellite Radio, Sirius Satellite Radio, and PhatNoise are all working on products tailored to the in-vehicle environment.

Trip Planning

Trip planning applications are a natural fit for the Internet-enabled car. Online mapping companies such as Mapquest should be well positioned to benefit from increased demand for detailed mapping and driving directions.

At the same time, a number of new entrants are providing more specialized, location-specific services: Exitsource helps drivers plan trips ahead of time by finding food, gas, lodging, and other attractions near highway exits, while Televigation provides real-time, dynamically changing navigation to drivers, based upon their car's precise location.

Other Services

Once the connection between the automobile and the Internet is made, the possibilities for new services are boundless. For example, mechanics will eventually be able to download diagnostic information from vehicles and determine servicing requirements before they even see the vehicle. On the retail front, orders for everything from fast food to hotel rooms will be placed from the automobile and made available when the vehicle arrives at its destination.

Challenges

One key challenge faced by the automakers is their customers' limited willingness to pay for these new services. CNW Market Research, a consulting company that serves the automotive industry, found that although nearly half of the people it surveyed would be interested in some kind of in-car web access, only 15 percent were interested at a price of $25 a month.

Perhaps a more major problem are the serious safety and security issues that need to be addressed. A 1999 study by the U.S. National Highway Traffic Safety Administration found that approximately 10 percent of all fatal crashes in 1999 were linked to some form of driver distraction. Even more striking, a 1997 study by the New England Journal of Medicine found that people who use their cell phone's while driving have the same likelihood of being in an accident as drunk drivers. These findings, combined with a growing body of anecdotal evidence of the risk of driver distraction, have pushed safety concerns to the forefront of any discussion of on-board Internet access.

These concerns have led to an increased focus on voice-recognition software as a key component of the in-vehicle interface. They have also prompted Ford to create a $10 million laboratory that will study the impact of dashboard computers, mobile phones and other in-vehicle gadgets on drivers' reaction speeds and driving quality.