Can Microsoft Leapfrog OnStar With Wireless?
By Mike Masnick, Thu Jul 15 22:30:00 GMT 2004

OnStar is the name to beat in telematics, and Microsoft has put the telematics company on its target list. Microsoft may have one not-so-secret weapon this time: wireless technology.

Whenever people talk about telematics, the conversation tends to turn to GM's OnStar. It's the clear leader in the US and has made strides in Europe where an early push by Ford, PSA Peugeot CitroŽn and Renault has recently fizzled. OnStar has worked hard to build up adoptions rates in the US, with a strategy of focusing on the safety and security aspects of the system, rather than news and entertainment. Recently, however, OnStar has shown signs of expanding that focus, while also realizing that smartphones and PDAs may represent an eventual threat to in-vehicle telematics. While only a marginal move, OnStar recently let Verizon Wireless customers share minutes via OnStar. However, OnStar may soon be forced to speed up its plans to offer "out of the dashboard" telematics, thanks to Microsoft.

Microsoft has been playing around in the telematics space for years. In 1998, it made a big splash by announcing the AutoPC offering with Clarion that ran a version of Windows CE. While it got Microsoft plenty of attention, it was a commercial flop. Microsoft, of course, is not known for giving up after a commercial flop, and has continued to refine its telematics offerings. Late last year, Microsoft started to heavily promote its automotive offerings again, and won a few deals with some automakers, including BMW, Volvo and Honda.

Today, Microsoft took one step further by announcing a deal with Fiat, which is much more involved than Microsoft's previous deals. Instead of just providing the software, Microsoft is going to work with Fiat to help design and build the design of the telematics system. To make it clear that Microsoft is looking to leapfrog OnStar's in-dash system, the announcement states that the "goal is to integrate mobile phones, PDAs and other mobile devices with Microsoft's operating system into a single platform." In other words, it's recognizing that the biggest wedge into this market is the fact that a lot of people already have smart mobile devices. Leveraging the ability to make a wireless connection to those devices might make a completely in-dash system suddenly much less desirable.

There are, of course, plenty of questions about whether or not this strategy will work. Microsoft talks up its ability to understand "customer needs," but that's from a software/GUI perspective. The in-car environment is quite different, and all of Microsoft's GUI experience might not be particularly useful at all. OnStar's decision to focus on safety and security also seems beyond Microsoft's areas of expertise. If anything, though, this very public step to move the smarts of telematics outside the dash board should inspire others like OnStar and Toyota's G-Book to start looking more seriously at ways to integrate mobile devices into their telematics systems as well. It may not put Microsoft at the top of the telematics heap, but it may push all the other telematics providers to think more seriously about wireless integration.