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| Companies & Strategies Car talk Is there money in wireless broadband for cars? Automakers, telecom carriers and hardy innovators are intent on finding out.Cars can be prosaic, so Volvo has taken to selling computers. At the Ford Motor unit's headquarters, near Göteborg, Sweden, engineers are tweaking their new On Call system, a dashboard screen that displays maps in conjunction with a 24-hour call center, available for further driving directions, concierge services or emergency notification. For those prone to locking their keys in the car, the center can also open it up remotely. Future versions may let the driver activate the whole show, engine and all, using a web-enabled phone or palm-held computer.This is the automotive industry's stab at the Holy Grail of 3G telecom technology, the broadband future that so far has been just a snore in cellular phones nearly everywhere but Japan and South Korea. Over the last 15 years, automakers and their big suppliers have taken a $3 billion gamble--much of it placed in the so-called Telematics Valley around Göteborg--that the deep human need for connection will create a new profit center for a car industry that is not at the moment very profitable. Of course, you can already get global positioning systems (GPS). The first such offering, General Motors' OnStar, was launched in 1996. OnStar's service starts at $199 a year for basic maps and emergency notification and goes up to $799 for help in finding, say, a hotel or haberdasher. The system comes in 44 GM models and also in several other makes and claims 2 million subscribers, with 5,000 new sign-ups daily. The dreamers in Göteborg think that's only the start. "In the future, car companies will be software companies," says Niklas Wahlberg, who heads the telematics group for Volvo Cars' luxury division, whose research center, opened in June, is the valley's anchor. For automakers, the payoff is not just in selling high-markup options; it's also in gaining the loyalty of customers who might otherwise be easily lost at trade-in time. Other features envisioned include a remote demobilizer, essentially the reverse of the ignition option favored by Batman for his vehicle. The demobilizer would thwart a carjacker or burglar and, in the process, delight insurers. Volvo also wants to use GPS to enable owners to locate a car in a parking lot or garage using a cell phone or find the nearest available parking. "There's a lot of issues around this," says Kent Eric Lang, the managing director of Mecel, Delphi Automotive's car-parts operation in Göteborg. "How you handle the safety and security, how you shouldn't disturb the driver while he's driving and the liability issues. But we've been working with the technology for quite some time." Today hardware for wireless communication in vehicles, available in 7% of new cars worldwide, is a $4 billion market. As economies languish and the blush of first adoption wears off, the market is expected to stall until 2004. Then it will pick up, according to the research outfit GartnerG2; it projects that by 2012 the majority of new cars will come with wireless hardware. So in laboratories around Göteborg, such companies as Volvo, Mitsubishi Electric, Mecel and Mecel's Stockholm rival, Autoliv, are trying out hardware and software not only to allow familiar forms of data communication but also to permit a base station to monitor the mechanical state of the vehicle. OnStar can already detect if a car's power train is having trouble, but it can't say exactly what's wrong with it. Naturally, worries about Big Brother could crop up--is it GM's business if you use water in the radiator instead of antifreeze? But it sure would be nice to be alerted to a loose fan belt or a fuel leak. In any case, we're a ways off from that. One big reason is that telematics is reliant on telecom. And telecom is so depressed that carriers have drastically slowed investments in the superfast 3G networks involved here. "Without 3G, it limits the services that can be sold, so that there's no money in it," says Gunnar Ström, the senior project manager for telematics at the Caran Total Design Center of WM-Data, a Volvo supplier in Göteborg. Carmakers nonetheless hope that the systems will one day be as standard in cars as radios. In a gadget-crazy country like Japan, screens for navigation and traffic information are wildly popular. And there are those impressive sales totals for early U.S. versions, such as OnStar. Sidebar Along for the ride -
Icahn Talks Up Telecom - 10/15/02 12:15:00 PM ET The raider is poised to take control of XO as Forstmann retreats to the sidelines. Intel's Earnings Rise Vs Dismal Year Ago - 10/15/02 4:21:11 PM ET Intel reported a rise in Q3 earnings and said Q4 sales would come in at $6.5 billion and $6.9 billion. Layoff Tracker Update: Oct. 15, 2002 - 10/15/02 4:00:00 PM ET Northwest Airlines to eliminate 100 management positions. The Most Expensive Homes In America - 10/10/02 6:30:00 PM ET The economy is struggling yet the average home price on our list is up. The catch is that no one's buying. 200 Best Small Companies - 10/10/02 6:30:00 PM ET Our annual roster of profitable up-and-comers are defying the Nasdaq's six-year low. |
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