In-Car Technology Sharply Accelerates

The battle for the dashboard is heating up in the automotive world, as car makers race to offer new in-car 'infotaiment' systems

by Matt Vella

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When Microsoft (MSFT) Chairman Bill Gates appeared onstage with Mark Fields, Ford Motor's president of the Americas, at last month's Consumer Electronics Show, the jokes were ready: How do you "control-alt-delete" from behind the wheel? How do you prevent popup ads at 65 mph? The last thing Ford needs is a new way to crash.

But the jointly developed product the companies unveiled at the show, a 2008 vehicle option simply called Sync, is a serious attempt by Ford (F to tap into the ballooning market for automotive infotainment systems. This market consists of a broad range of digital car accessories at the intersection of the information superhighway and the actual highway.

For a price estimated between $500 and $700, Sync-equipped Ford cars will be able to smartly interface, via Bluetooth or USB connectivity, with a wide variety of gadgets, from cell phones and PDAs to Apple (AAPL) iPods. Drivers can access and play music, make phone calls, or listen to text messages out loud by using wheel-mounted buttons or through voice commands. Sync doesn't require models to have more costly navigation options, but in vehicles with both systems, Sync's functions can also be controlled through a touch-screen interface.

Sync drew attention at the show thanks to a bevy of unique features. Drivers can instruct their car stereos to "play similar," prompting the system to call up songs in the same musical genre. The voice system can also read common text-message shorthand, translating symbols into "smileys" for example. Better yet, the system's built-in software is upgradable. Gary Jablonski, manager of infotainment systems at Ford, says that this will allow the company to deliver new features in the future, ranging from support for new types of phones and devices, to possibly streaming music from the Internet.

Largely similar functionality has been available from aftermarket vendors and in many high-end luxury vehicles from the likes of BMW and Mercedes-Benz. But Ford's system pools previously disparate capabilities into one command center inside the dash and will likely be the first of its kind offered across a company's full product lineup. Sync will be available on a dozen 2008 models this fall, including less expensive cars like the Ford Focus and Fusion. By the 2009 model year, it should be available on nearly all Ford, Lincoln, and Mercury vehicles. For the moment, the system isn't intended for Ford luxury brands Jaguar, Land Rover, and Volvo.

That rapid timetable is partly an indication of outsized sales potential. In the U.S., the Consumer Electronics Association estimates that factory-to-dealer sales of all in-vehicle technologies will grow 11.5% to $9.6 billion this year from $8.5 billion in 2006. "We're hitting critical mass," says Megan Pollock, communications manager for the CEA. "Manufacturers realize that they can't be on a six-year cycle anymore. To keep up with technology, they have to accelerate."

Indeed, prospects for systems like Sync are bright. San Antonio-based consulting firm Frost & Sullivan reports that the annual North American infotainment sector—made up of products like Ford's and similar ones emerging from its competitors, but excluding pricier factory-installed navigation systems—will grow to $4.4 billion by 2011, up from $2.5 billion in 2005. Sandeep Kar, a senior industry analyst with Frost & Sullivan, says "The OEMs [original equipment manufacturers] are, generally, growing sales much faster [than aftermarket suppliers]."

A Boost for Ford

Because the company has yet to announce firm pricing, it's hard for analysts to predict how many Sync sales Ford could make. The Telematics Research Group in Minnetonka, Minn., which tracks sales of vehicle electronics, forecasts that the company could cumulatively sell as many as 3,335,000 Sync implementations by 2012, across its three core brands.