The future of in-vehicle communications is starting to come into focus.
This week, Ford Motor and Qualcomm announced a joint venture to deliver Web services to cars. The new company, dubbed Wingcast, will be charged with making mobile Web access as ubiquitous as car radios. General Motors plans a similar offering next season.
But unless the market changes dramatically between now and then, these symphonies of Web services may be playing to an empty house. The primary reason: the increase in wireless Web access from mobile phones and PDAs (personal digital assistants).
"Why do you want to build [wireless services] into a car when all of this is available on a phone or a PDA, and that market is growing like crazy?" asked Art Spinella, an analyst at CNW Marketing/Research. "I don't think this has legs at all."
CNW's research seems to back that up. Just 8 percent of consumers surveyed said they would be willing to consider in-vehicle Web access as an option if it was priced at US$25 a month. GM's OnStar service costs roughly US$40 a month; Ford said its Wingcast offering would be in the US$10- to US$30-per-month range.
The manufacturers beg to differ with CNW's findings. Within the next few months, GM will debut what it's calling the first Internet-enabled vehicles, the 2001 Cadillac DeVille and Seville. The automaker plans to have Web access in 32 of its 54 models by the end of next year.
In addition to the standard luxury-car fare, the new GM models will come equipped with the OnStar Virtual Advisor, an a la carte menu of Web services that includes e-mail, news, weather, sports scores and stock quotes.
Drivers will be able to forward messages from e-mail accounts to the OnStar service, which will then read them back via a text-to-speech engine. All the services will be voice-activated to minimise distractions for the driver.
In an effort to eliminate the redundant functionality of in-car Web services, Ford and GM plan to make their in-car Web services available on customers' mobile phones, which they can then plug into their vehicles.
"We're trying to leverage the vehicle as a communications node," said Chet Huber, president of OnStar. "We want to take advantage of the technology that's already there."
The automakers aren't jumping into this field-known as telematics-blindly. GM's OnStar service, which includes roadside assistance, emergency services and vehicle tracking, has been available with Cadillacs for several years and now claims close to 500,000 subscribers. Ford's Lincoln brand has a similar service, called RESCU.
But the advent of reliable, high-speed wireless Internet connections has executives salivating at the potential for a renewable revenue stream, not to mention access to a broader range of customer data in the form of personal news and information preferences.
GM plans a My OnStar Web page where subscribers can set preferences for what information and entertainment content they want delivered to their vehicles. The manufacturer will then be able to use that data to track the demographics and interests of its customers.
But the automakers face an uphill battle trying to transform these services into real moneymakers, analysts say.
"The OEMs hope to make money on telematics, but ... providing wireless services is not their core competency," said Jonathan Lawrence, telematics analyst at investment bank Dain Rauscher Wessels. "Relying on telematics to bolster shareholder value would be like trying to tow an aircraft carrier with a rowboat."
The automakers have faith that the public won't be able to live without these services, eventually. "Customers have taken a little while to catch up with the technology," said Michael Smith, manager of business strategy for Ford's Telematics operations. "But once word gets out, demand will follow."
