Auto Industry Tries to Steer Consumers to Car Content

As automotive entertainment and information options grow from your basic AM/FM radio and CD player to include GPS devices, backseat DVD players, satellite TV and radio, and even hard drives, the industry is on the lookout for content that appeals to drivers and passengers. With this potential for a near-captive audience at stake, the automotive market has just started to heat up.

According to a recent survey of online users by Jupiter Media, only 4% of respondents were interested in personal content (news, sports, etc.) in the car and only 19% were interested in national satellite radio services (which are being marketed extensively). That may not bode well for the immediate future of specialized in-car content, but it hasn't stopped the automobile industry from tackling this nascent market.

General Motors was among the first car makers to introduce wireless services in the car when they started their OnStar service in 1997. It is the largest service of its kind in the world, but it still hasn't had the success GM hoped. "GM is still pushing OnStar by putting it into more and more vehicles. In the beginning they tried to position the service as the be all and end all where it would check email and make dinner reservations, but now they are promoting it as a sort of insurance policy. If your air bags engage, OnStar is notified automatically and they send help to your location using GPS technology," says Mark Fitzgerald, senior automotive industry analyst at Boston-based Strategy Analytics.

Unfortunately, these and other similar services never really caught on with consumers. Part of the problem, according to Paul Hansen, publisher of the Hansen Report on Automotive Electronics, is that the automobile industry is competing with the portable device industry (cell phones, Apple's iPod, etc.). "If you can carry the portable device in the car, it may negate the requirement for that capability being installed in the car, which would essentially rob the car maker of that extra revenue," Hansen says.

One area that is already being exploited in the car is back seat entertainment where DVD players, which might include individual monitors, keep the children entertained. Hansen says this trend has developed over the last three to five years. DVD-based Global Positioning Systems (GPS), which provide directions, are increasingly finding a place on the dashboard. Fitzgerald says that the trouble with current systems is trying to keep them up-to-date. "Right now, GPS systems use DVD-ROM to store map information. This system is difficult to update and owners need to buy new ones every couple of years. With a hard drive, you could download the most recent maps in real time through satellite radio or other wireless means," Fitzgerald says. What's more, the same hard drive could be used to store other content, like music.

Hansen says Japan is at least eight years ahead of the U.S. in GPS technology. "In Japan, digital map data is stored in the vehicle on a hard drive. Over the last two years, every major maker has also been embedding music into that hard drive." These trends could mark the next wave of content in the car, but in the mean time, the ubiquitous iPod is forcing car manufacturers to find ways to incorporate this into car designs. "BMW is the first to make a nice docking unit for the iPod. You plug the iPod into a docking station in the glove compartment and your music plays on the stereo system. You can control the iPod using switches on the steering wheel," Hansen says. In addition, you can choose from among several playlists, but you cannot access the iPod interface, which require access to Apple's proprietary protocols and would involve licensing fees, something the car industry wants to avoid. If the popularity of the iPod continues, the car industry may have little choice but to work with Apple to make this happen.

So why doesn't the car industry simply develop a hard drive and market its own music service? According to Fitzgerald, while hard drives have become relatively inexpensive for desktop PCs, they are still very expensive for cars, and developing a hard drive for the extreme temperature conditions of a car has not been an easy task. That hasn't stopped some after-market firms from trying. Among these is PhatNoise, maker of a semi-portable car hard drive that comes in 20-80 GB models and includes a USB cradle for downloading content from your PC. You then plug the hard drive into the car where you can play music. Prices vary depending on the make of your car, but they run in the $900 range—more for larger capacity drives. With this price, car hard drives are not going to gain mainstream adoption any time soon.

Thus far, consumers have shown little interest in custom content such as traffic information. As Hansen points out, once a service like that reaches critical mass, then everyone is being told about the same alternate routes so they cease to be very useful. Future content services could include remote diagnostics where your car's computer communicates with a central office server. Whenever you need service, you are informed about the nature of the problem and where the closest dealer is.

For now, though, it looks like the industry will continue to develop back seat entertainment systems and look for ways to integrate existing portable devices into cars. There may be a future for car-specific content, but for now it's a market that still is trying to find its footing.