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Are in-car computers headed for a dead end?

November 24, 2010

Ford Motor Co. said last week it is pulling the plug on Wingcast LLC, its joint venture with Qualcomm Inc. to produce telematics services in vehicles. Ford's decision means Wingcast will be dissolved. Unless other manufacturers revamp current business plans, pessimists charge, the car of the future will include an outdated, malfunctioning jumble of incompatible electronic gadgets.

Experts gathered in May at Telematics Detroit 2002, a trade show for people who engineer and manufacture dashboard electronics such as wireless devices, navigation tools and passenger entertainment systems-an emerging industry known as telematics. The two-day conference proved a stark contrast to the euphoria that surrounded in-vehicle computing just one year ago. Many experts urged automakers, especially General Motors and its 7- year-old OnStar division, to cede the young market to wireless providers and technology start-ups, lest they lose focus on their core business of designing and manufacturing vehicles.

Most automakers try to develop telematics standards internally. "Automakers need to appreciate the fact that telematics is a subsegment of the great wireless market and not a separate market," said Andrew Cole, keynote speaker and wireless practice leader at London-based strategy consulting firm Adventis. "We believe that the current attempt by automakers to become service providers must go away.

The wireless manufacturers will be the deliverers, and the automakers will be the enablers, based on the irrefutable view that the cell phone is king." Criticism surfaces even from within the ranks of the auto industry. Several automakers, including DaimlerChrysler, have decided to surrender to technology companies some of the $20 billion in worldwide telematics revenue expected in 2010. Executives who have crunched the numbers say no automaker sees profits in the sector anytime soon.

"We had some hubris and thought we could figure out a business model for the industry six or seven years ago," said Jim Geschke, vice president of electronics integration for Milwaukee-based Johnson Controls, which partners with DaimlerChrysler and plans to launch wireless electronics in vehicles in mid-2003. "But we couldn't. So we recoiled and reinvented our approach. "We shifted paradigms and realized this was the key," Geschke said, triumphantly whipping out a cell phone from his suit jacket. "This is the mobile brick."