Automakers trail in the great gizmo race

A customer at Rockland Toyota in suburban New York recently asked why he couldn't recharge his cell phone through the USB port built into the otherwise sophisticated Toyota Venza crossover.

Evan Kuperman, the dealership's assistant general manager, took a deep breath. He shrugged his shoulders and smiled.

"Customers want everything to work with everything," Kuperman says of the proliferation of personal electronics. "How're you ever going to make that happen?"

Indeed, how to make that happen is a key challenge for the U.S. auto industry today. Smart phones, iPads, antenna-equipped laptops, MP3 players and the wide world of Internet connectivity have become so core to American society that automakers are struggling to keep up with the challenge.

And they are not entirely succeeding.

The electronics and telecom industries are advancing at a 21st-century pace of product development. Meanwhile, automakers plod along on three- and four-year model cycles. That discrepancy means that automaker-installed features are becoming outmoded well before a consumer is done with a vehicle.

To compound automakers' challenge, portable store-bought devices are becoming more popular.

Vehicle engineers work on traffic-alert technologies and introduce them into onboard navigation systems, which can add $2,000 to a car's sticker price. But an ordinary smart phone already can zoom in on local traffic conditions via the Internet at no extra charge. Smart phone navigation can be downloaded for around $50.

Even car radios, around since the days of Al Jolson, could soon be supplanted by outside technologies.

J.D. Power and Associates' 2011 U.S. Automotive Emerging Technologies Study, released late last month, finds that 86 percent of smart phone owners now use their devices in their vehicles. Just one year ago, half of the consumers in Power's survey said they wanted their vehicle to have Internet connectivity. This year, two thirds of consumers say they want it.

But typical of the broad industry trend, drivers wonder why they should pay a premium for in-car features that no longer cost very much outside the car. Power's 2011 survey found that 71 percent of consumers want navigation technology in their vehicles. But once they learned the price tag for it, only 47 percent of them were still interested.

"Luxury vehicle owners think differently about this than lower-end buyers and younger consumers," says Mike VanNieuwkuyk, Power's executive director of global vehicle research. "But what's happening is that those nonluxury consumers are going to go out and find their own less expensive solutions. And it's going to influence what the industry does."

Those alternative solutions are also typically more up-to-date, adds, Phil Magney, vice president of automotive research at the industry forecasting firm IHS iSuppli.

"Some of the key technologies currently marketed by the OEMs have peaked," he warns. Among them: dedicated navigation systems, CD players, anything involving complicated switching and onscreen menus, onboard hard-disc drives and even standard AM/FM radio.

"It makes no sense whatsoever to be designing the next-gen navigation system and expecting to sell it for $2,500," Magney says. "Those days are going away rapidly."

Another big dead end for automakers: built-in entertainment devices.

"Why would you spend $2,000 for a rear-seat entertainment system when you can buy four iPads for $500 each?" asks the tech-savvy manager Kuperman. "And the kids can carry the pads into the restaurant with them when you stop."

Replacing built-in electronics are devices purchased outside traditional auto industry circles, Magney adds, such as smart phones and aftermarket products.

This may be a heretical question to ask: Does it make sense for automakers to compete?

If the electronics industry is giving consumers inexpensive new gadgets and tools faster than the auto industry can, why don't automakers simply step aside and spend their r&d money elsewhere--say, on chassis enhancements?

Trisha Jung takes exception to that notion. Jung, formerly Nissan North America's chief marketing manager for the electric Nissan Leaf, has been tasked to start a Nissan U.S. group called Vehicle Connected Services. With a staff in Nashville and Silicon Valley, Jung will help the automaker position itself in the swirling arena of Internet connectivity.

"The industry is moving into a new opportunity," Jung says. "The OEMs are not going to become software developers. But the challenge is: How do we integrate the driving experience with what consumers are doing and want to do?"

It's hardly a new challenge. Remember the car phone? In the 1980s, communication advances made it feasible to install telephones in vehicles, with dialing pads built into the console. By 1999, Mercedes-Benz USA could proudly announce that it would have car phones available on all models in 2000 through a partnership with Motorola.

But even then, the telecommunications industry was moving faster than automakers. By 2000, the number of cell phones in the United States had increased to 180 million, up from just 45 million five years earlier. Today, there is a cell phone in use for nearly every man, woman and child in America. That is hardly a scenario that warrants investing to design a phone dialer in a car's console.

Many functions that automaker telematics services seek to provide are available on cell phones or portable tablets. Cell phone features provide free navigation, roll up a car's windows or sound its security alarm, unrelated to the vehicle's manufacturer. Phone apps can provide reminders for scheduled car maintenance or alert a driver when a friend might be inside the Starbucks at the next intersection.

Four years ago, Nissan Motor Co. announced it was hiring 1,000 additional engineers in Japan to beef up new technologies. Nissan CEO Carlos Ghosn vowed that Nissan would unveil a stream of 15 new vehicle technologies a year starting in 2009. To showcase the effort, the company showed journalists some of the advanced ideas under commercial development.

One was a drowsiness-detection system that alerted drivers who might be falling asleep at the wheel. A complex, basketball-shaped robot mounted in the car's dashboard to perform multiple functions would focus sensors on the driver's eyes. When the eyelids drooped, the system would take steps to pep up the driver, like bringing in fresh air.

Fast forward to 2011: No such feature is available on a Nissan vehicle. But a Danish electronics company, ASP Technology Ltd., this year began selling its own drowsy-driver detector called the Anti-Sleep Pilot, for a mere $179. The dash-mounted disc--the size of a cookie--will beep intermittently during the course of a drive, based on the driver's health and fatigue characteristics. If the driver reacts too slowly to the alert, the beep changes to an alarm.

If $179 is too pricey, ASP also offers an iPhone app of the Anti-Sleep Pilot for $19.95.

Yet automakers press ahead.

"We acknowledge that connectivity is everywhere now," says Alan Hall, spokesman for Ford Motor Co.'s technologies. "People expect to be able to get a baseball score or next week's weather or send an e-mail birthday card no matter where they are. And there's no avoiding that.

"But in this trend, we see an opportunity to provide a solution for a safer driving environment," he says. "We want to make it possible for customers to keep their hands on the steering wheel."

Ford's hands-free Sync communications system is available across a wide spectrum of Ford and Lincoln vehicles, either standard or as a $395 option. Sync lets owners plug in their iPhones or other Bluetooth-enabled phones and enjoy the otherworldly experience of having their e-mails and text messages read to them by an automated voice. Ideally, drivers keep their hands safely at 10 and two o'clock on the steering wheel.

"The other reason we're pursuing this technology," Hall adds, "is because, obviously, it sells cars."

Automakers have a long tradition of innovations that have little to do with engines, wheels and sheet metal. In the mid-1950s, Ford introduced what it called Signal-Seek Radio, a feature that allowed car radio listeners to glide silently from station to station, minus the static, searching for content as they drove. The feature became known as Town & Country because the automaker gave drivers a choice between searching for only local radio stations (in town) and searching across a wider geography for more remote stations (country).

But technology keeps advancing. And when it does, automakers rarely seem to keep the upper hand.

General Motors was instrumental in introducing satellite radio to drivers a decade ago with its investment in XM Satellite Radio. More than 20 million vehicles across the auto industry now have the special radios that receive the merged satellite systems of Sirius XM. As with cable TV, subscribers pay monthly fees to listen.

This summer, some automakers are eagerly awaiting the introduction of the second generation of Sirius XM radio, dubbed Sirius XM 2.0. But the market has evolved.

Drivers are turning in droves to cloud-based entertainment content, such as Pandora. Pandora is an Internet program that plays music tailored to an individual listener's taste. Pandora can be enjoyed by anyone with an Internet-connecting cell phone, free.

And Pandora is the tip of the iceberg for mobile music. Internet radio stations now stream music and news all over the world in endless variety, through laptops and smart phones, for free. According to Arbitron, more than one out of four Americans age 12 and above now listen to online radio.

A consortium of German manufacturers, including BMW, Volkswagen, Audi and Daimler, has a new proposal that is sort of an "if you can't beat 'em, join 'em" solution.

Their technology is called Terminal Mode. Terminal Mode is what the tech crowd refers to as a "platform," like Ford's Sync. But instead of spending r&d money to design what goes into the platform, Terminal Mode would be little more than a blank screen.

Drivers would plug in their own devices, and through Terminal Mode, the outside devices would become the vehicle's onboard gizmo center. Navigation, music, e-mails, weather alerts, Angry Birds, downloadable TV shows could all be projected into the car through the vehicle's audio speakers, onto a neutral screen.

But hurdles remain.

First, Terminal Mode cannot handle all types of phones. So like the Toyota customer vexed by the Venza port, there will be those left out. Second, a blank screen does not a Mercedes make.

"Mercedes takes a great deal of care in deciding what its interiors look like," says IHS' Magney. "With Terminal Mode, it would just look like your iPhone, whatever the particular iPhone screen looks like. And there would be no real difference in what that screen looks like in the Mercedes or the same screen in a mass-market car.

"I'm not sure customers are going to be happy with that."

Can automakers and their r&d staffs win this war?

"No one's going to throw in the towel," Magney predicts. "The OEMs have to stay on top of all this stuff. If they don't, they will risk losing out to more technologically advanced companies."

Gizmo price warElectric features on mobile devices offer tough price competition to automakers.In-carOutside supplierNavigationUp to $2,000Cell phone: $50 app; free or small monthly fee  Rear-seat video systemUp to $2,000iPad: $499-$699  Drowsiness detectionPart of options packageASP Technology dash-mounted unit: $179 iPhone App: $20  Satellite radioSirius/XM: $12.95 a month subscription feePandora music programming: free Web Internet radio: free

By Lindsay Chappell- Automotive News