Cars Gone Wireless

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The device also captures video and audio of what was happening just before and after whatever triggers the alert and delivers the video over a wireless network so that it can be reviewed by the driver. "The insurance industry needs wireless in vehicles to produce a safer-driving public," says Patterson of Sprint, whose network conveys the video feed. "The adoption race in the insurance industry has exceeded our expectations."

Prices Dropping Fast

Prices of in-car services are dropping; some could even become available for free. DirecTV's (DTV) lineup of in-car TV channels from provider KVH (KVHI) costs $3,000 in equipment plus $5 a month in service fees to existing DirecTV subscribers. But in late 2009, companies including TV station owner Fox and cable operator Cox, both members of the Open Mobile Video Coalition, plan to offer an in-car service that lets users catch local TV broadcasts for free. "That's very competitive," says Mike Bergman, vice-president for new digital technologies at Kenwood USA, which has developed a prototype in-car receiver for this technology. "Nothing sells like the word 'free.'"

In large metro areas, consumers may be able to catch a dozen or more channels. And once equipment sales hit high volume, the price for related in-car equipment should drop to below $200, Bergman says. "It's becoming a lot less expensive to fit a car with the necessary hardware," says John Canali, an analyst with researcher Strategy Analytics. "It's only a matter of time before cars become connected to the Internet [and other services]."

In-car tech equipment has shrunk in size as well. This fall consumers will be able to buy a 1½-inch tall external antenna from Audiovox (VOXX). Related gear will only be 40% bigger than your average cell phone and could easily fit into the glove compartment or under the seat. The $600 gadget will catch TV channels, like CNBC and Comedy Central, broadcast over Qualcomm's (QCOM) MediaFlo network. The service is expected to cost around $8 a month.

Better in the Car?

As prices fall, in-car video and other forms of entertainment will likely become more mainstream. "This is going to go from a specialty product to a mass-market consumer product," says Winston Guillory, president of RaySat Broadcasting, which, along with AT&T, will launch an in-car TV service, called AT&T CruiseCast, in May. Related hardware will cost $1,300, and service, which will stream 22 TV and 20 radio channels, should run around $28 a month. "It's inevitable, trying to have the same experience in the car as in the living room," Guillory says. "We all spend more time in our cars [than at home]."

Some tech companies hope in-car services may eventually replace other mobile and at-home telecommunications services. Take startup Autonet Mobile, whose equipment is now a factory option on some Chrysler, Dodge, Jeep, and Cadillac models. For $400 to $500 in hardware, and $29 a month in service fees, Autonet turns your car into a Wi-Fi access point that's accessible by in-home phones and laptops. The company, which has so far sold more than 4,000 units, including some to talk-show host Jay Leno, has seen 221% sequential growth in unit sales in the first quarter. "I think people are starting to understand the car is the next place for growth," says Sterling Pratz, CEO of Autonet.

In the future, in-car services could get even more interesting. On Mar. 26, Apple (AAPL) received a patent for a wireless-enabled in-car navigation system that can use information such as the angle at which the driver's fingers touch the display to cancel a route or to map directions home. Apple wouldn't comment on whether it's working on an in-car navigation system.

And a startup called ICO plans a slew of in-car services including TV, Web connectivity, and navigation that could be provided via its own satellite as well as wireless networks, such as that of service provider Clearwire (CLWR). "Car sales may be down, [but] people are still out and about," says David Zufall, a senior vice-president at ICO.

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High Tech Electronics
Wireless Communication
US Automakers

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.