Cars Gone Wireless

Automakers and tech companies are adding a growing array of information and entertainment extras such as Web access in vehicles

By Olga Kharif

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Editor's note: The story has been corrected to show that J.D. Power expects 10.4 million cars, not 15 million cars, to be sold this year.

Ford is getting its geek on. Like other automakers, the U.S. carmaker has long outfitted cars with CD players, satellite radios, and navigation systems. But now, Ford also boasts Web access.

Starting in March, Ford (F) began offering Web access through an optional, $1,195 in-dash PC to buyers of some of its trucks, including the F-150 pickup. Aimed at small business owners such as contractors, the PC lets users surf the Web using the Opera browser on Sprint Nextel's (S) wireless network. "There's a need for productivity, a need for connectivity," says Ed Pleet, a product manager at Ford.

Other automakers, wireless service providers, and a host of companies hope to tap into that same need, equipping vehicles with a broadening array of high-tech services, such as Internet access and TV services. "One could see countless opportunities when you put Internet in the vehicle," Pleet says.

Autos Are Virgin Territory

Wireless service providers such as Sprint, AT&T (T), and Verizon Wireless face a largely saturated cell-phone service market where 90% of the U.S. population already owns a cell phone. But automobiles and other vehicles represent a vast, largely untapped market. "It's our next billion-dollar opportunity," says Jim Patterson, president of wholesale business at Sprint. There are 244 million cars registered in the U.S., and about 10 million new cars are expected to be sold in the U.S. this year, despite the recession, according to J.D. Power & Associates. Only a few tens of thousands of them have access to telecommunications services.

Why would the ailing auto industry introduce new, potentially costly in-car services during an economic slump? Carmakers increasingly view Web access and TV services as a way to differentiate their offerings and lure buyers from rivals. The availability of OnStar roadside assistance services has helped goose sales of Pontiacs and Chryslers in the past decade, experts say.

What's more, wireless network access is more widespread and affordable. In mid-April, TomTom will start selling its first wireless-connected navigation device, the TomTom GO 740 LIVE. The gadget uses the Jasper Wireless network to help customers look up local fuel prices and search for local businesses.

Training Teen Drivers

In August, Chrysler and Mercedes (DAI) cars will start carrying gear from Hughes Telematics that lets users call for roadside assistance and find out about bridge closures via Sirius XM's (SIRI) network. AT&T and Verizon Wireless will provide connectivity for the successor device, due for release in 2010.

Insurance companies are starting to push wireless connectivity in cars in a bid to reduce claims. In late 2007, American Family Insurance started offering DriveCam service at no charge to families with teen drivers. The service, which normally costs $899 the first year, aims to reduce risky driving by alerting users to potentially unsafe maneuvering, such as hard braking and swerving.