On a scorching summer day at Nissan's (NSANY) Advanced Technology Center, a team of researchers and their visitors pile into two cars and begin circling the parking lot. The facility, an hour's train ride southwest of Tokyo in the town of Atsugi, is a hub for thousands of designers and engineers who work on the next generation of cars. Their debates are usually about green engines, lithium-ion batteries, or carbon-fiber frames. On this day, though, the visitors aren't from a car company—they're from Google (GOOG), and they've come to see Nissan's latest navigation system prototypes and discuss closer collaboration. "I firmly believe that smart automobiles will have a positive effect on quality of life—traffic, speed to get places, safety," says John Hanke, who led the Google delegation. "Google is thinking beyond maps and search in the car."
While the companies won't disclose what they discussed in Atsugi, it's not hard to imagine the possibilities of a partnership: Suppose you're driving to a client's office but realize you forgot the map. You open your e-mail from your car's computer, which searches for messages containing addresses and shows them first. You click on the address where you're headed and the computer calculates the fastest route, using real-time data transmitted from cars miles ahead of you that are stuck in traffic. As you near your destination, your windshield doubles as a virtual 3D map to show which building you're looking for.
The Nissan-Google meeting highlights how automakers are looking at creative ways to make cars more like other Internet-connected mobile devices. Today's cars are already high-tech gizmos on wheels. They bristle with sensors, lasers, and chips that monitor the engine, shift gears, and pump the brakes when a collision seems imminent. But carmakers have been cautious when it comes to online services. Most telematics and car-navigation systems only give directions, warn about traffic jams, and perform basic Net searches.
Depending on Smartphones One reason: the lack of wireless technology in cars. Automakers sell about 60 million vehicles a year globally, but only 3 million cars on the road have a two-way wireless connection, according to market researcher iSuppli. Built-in global positioning systems are just as rare. On the other hand, tech makers are expected to sell 75 million smartphones and PDAs with GPS this year. Small wonder that consumers are more likely to use maps and online services on the go from a Net-linked phone than a car-navigation system.
For now carmakers are offering limited services. BMW (BMWG.DE), Daimler's (DAI) Mercedes Benz, and Nissan let motorists send Google Maps data to their car from a home or office PC. Nissan recently added RSS feeds and Google Calendar features to its Car Wings telematics service in Japan. In the coming months, Volkswagen (VOWG.DE) is expected to unveil a 3-D navigation system, developed with Google and chipmaker nVidia (NVDA), that uses online road and weather data to help drivers anticipate real-time traffic conditions and find alternate routes.
Why is the auto industry behind? Industry executives blame their own long product-development cycles and a resistance to open technology standards. Typically, carmakers spend three to five years to develop and test a new model. By contrast, tech makers release new products every few months. With tech companies switching to standardized software, product cycles are shortening further. Not so for car companies, which are loath to make last-minute technology decisions. "In the past, [the car] was, in a way, isolated from the networked world and confined to a proprietary and closed" system, says Tsuguo Nobe, who heads Nissan's Car Wings in-car telematics group. The shift to standards and open collaboration "will definitely happen," he adds.
The auto industry's slump offers a chance to act. Auto executives say they are trying to simplify access for all kinds of data—from maps and e-mails to music and videos. "The car should be in a position to deliver it to me and to mask the technology and the complexity from me because I want to drive," says Graham Smethurst, who heads BMW's Munich-based division that works on navigation and entertainment systems.
Challenges Ahead But designing a voice-activated system that aids drivers without distracting them is a challenge. And automakers prefer not to add on tech to new models at the last minute. "Even in the best-case scenario, if a carmaker decided to partner with Google, you're talking at least three years before results," says Phil Magney, iSuppli's vice-president of automotive research.
To spur change, BMW is leading a group of automakers and tech firms that have developed open-source standards for infotainment tech in cars. Known as the GENIVI Alliance, the group, which officially launched with eight members in March, is counting on software standards to help them save on cost and time. GENIVI now has 21 members, including automakers General Motors and PSA Peugeot Citroën (PEUP.PA); parts suppliers Visteon (VSTN) and Delphi; and tech firms Intel (INTC), Freescale Semiconductor, and Texas Instruments (TXN).
BMW's Smethurst, a former engineer at a British telco who heads GENIVI, credits Apple's (AAPL) iPhone and Google's Android software as GENIVI's inspiration. The consortium hopes to persuade tech companies—from giants like Google, Yahoo! (YHOO), and Microsoft (MSFT) to tiny startups—to create iPhone-like applications for cars.
While Nissan, BMW, and the GENIVI Alliance are working closely with tech companies, plenty of automakers aren't, analysts say. Another hurdle: Automakers need a simple, low-cost, pay-as-you-go wireless service that connects cars to the Net. It would help, too, if car owners don't have to sign up for a separate wireless plan. "If we had an [always-on Net] connection to the car, we'd be able to do more things than we can today," says BMW's Smethurst. "The guys who are pushing these always-online devices—whether it's the netbooks guys, Google, or Microsoft—they need this connectivity. They need it at a price and a bandwidth that meets their customer requirements. So do we in the automotive industry."