Automakers, Tech Try to Dial Up Smart Cars

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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."

Hall is BusinessWeek's technology correspondent in Tokyo.

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