Tuesday, May 29, 2007

Microsoft-Ford Sync: Will it evolve to be a telematics platform?

The 2007 Consumer Electronics Show should be seen as a success by Microsoft and Ford. Not only did the two companies join together to launch Sync but the system won the People 's Voice Award.
In a last-minute flurry of votes, Microsoft Sync--a partnership between Ford and Microsoft--pulled ahead of the People's Voice pack. A factory-installed tech panacea, Sync will ship on 12 of Ford's 2008 cars and on the entire 2009 fleet. The flash-based system lets drivers call hands-free (12 phones work with the always-on Bluetooth connection) and control MP3 players via voice commands and buttons mounted on the steering wheel.
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For now, Sync is a joint initiative been Microsoft and Ford Motor Company. Ford hopes that this will be a point of differentiation against GM--which has led with its OnStar initiative. Microsoft sees it as a strategic way to extend the Windows OS beyond personal computer and mobile phones. Needless to say that the consumers will be able to sync their mobile phones that run on Windows Mobile; they will be able to play music from their Zune players. They have also announced that consumers can connect a broad range of Bluetooth-enabled devices and Apple's ipod (market leadership has some advantages!).

If we look beyond Ford-Microsoft initial launch posture, how will the telematics industry evolve in terms of key linkages?

1. Today's automotive market is characterized by a series of proprietary (firm-specific) closed platforms. OnStar--owned by GM-- is mostly available on GM automobiles although in recent past, other automakers have experimented with it (example: Toyota Lexus, Subaru and Audi). So, I do not think non-GM cars have OnStar functionality available now.

2. Before Ford's partnership with Microsoft, it launched a joint (85-15) initiative with Qualcomm labeled Wingcast. It was shut down after a lapse of about fifteen months without much fanfare.

3. Other automakers by now have their own version of telematics services. Lexus has Lexus Link; BMW has iDrive and BMW Assist; Mercedes-Benz has Command APS and so on.

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So, this is a classic case of multiple proprietary protocols--with no interoperability. Much like how we lived when we had independent automatic teller machines from the different retail banks that were not linked to one other. Now And no automaker is able to leverage network effects beyond their own driver base. What are the possible trajectories of evolution? Well... here are some likely scenarios.

One: The status-quo continues for sometime but with each automaker making its system open to accept multiple devices (using standards like Bluetooth and USB connections) and evolving the functionality and scope (just as OnStar has done over the last decade).

Two: One of the current proprietary systems (e.g., OnStar) is embraced by other automakers and evolves to become the automotive industry standard to allow for interoperability because of strong customer pull an demands.

Three: Sync evolves into an automotive platform beyond Ford Motor Company and Microsoft to allow other car manufacturers and software/hardware providers to participate in an open consortium.

Four: A new entrant emerges to create a cooperative consortium to ensure that the automotive industry embraces new technologies and deliver superior services to drivers (car-related, safety and convenience services) and passengers (information and entertainment).
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It is clear to see many advantages of seeing an automobile as a node on the network--not just for safety but also for convenience. OnStar and Sync are two powerful experiments in the shift towards network era in the automotive sector. Who will win in the race to create the platform for telematics is an open question. It is too premature to declare winners and losers given the importance of information technology in the transformation of the automotive sector.

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