soupsoup:

davidporter:

Apple closes in on Microsoft, finally.   Fantastic.

Though the curves look to be converging on this graph, it’s important to point out that there is some $80 Bn on market cap separating the two.  Not exactly chump change…

For a while now, I’ve been waiting patiently for some technology company to make a splash in the automotive sector by improving the car’s information technology, communication and entertainment capabilities (“infotainment”). Yes, we have satellite radio and a GPS navigation has become a standard feature, but otherwise cars are way behind relative to what personal computers and cell phones can do.

The reality is that in the future we will think of cars not so much as mechanical machines but as computers that move.  With each new model year, more and more sensors, microchips and software are added to the car to improve everything from safety to entertainment.  Yet, progress has been hampered in this market because each automaker builds these so-called “infotainment” systems on their own.  As a result, they end up duplicating R&D costs, thus limiting the amount of progress we can make.

So far, Microsoft the only large software company that has really made a dent in this market, has been interested in this space for some time and has a partnership with Ford that allows customers to have Microsoft Sync preinstalled.  I haven’t used Sync, but I see a few glaring problems right off the bat:

• No touchscreen: Sync doesn’t include a large touchscreen that someone can manipulate.  Instead, the hardware is nearly identical to what Ford and other automakers already were producing in vehicles.
• Limited use cases or potential to expand it: The lack of a screen severely limits what someone can do with Sync and also severely cripples the potential uses of it.
• Existence of better solutions: There are already better solutions then Sync on the market: smartphones.  The iPhone blows Sync away and even less capable phones are feature competitive.
• Built in: The biggest problem with Sync is that it’s built in and cannot be easily upgraded by the consumer.  People don’t buy new cars nearly as frequently as the technology behind Sync will improve, so this isn’t a good strategy.

It doesn’t seem like Microsoft is even doing all that much to promote Sync, instead relying (as it always does) on its hardware manufacturers to market the software for them.  That seems to have worked well in the computer world where the operating system is nearly inseparable from the physical computer, because most customers can’t use the latter without the former.  But people have been driving cars for a long time before computers and chips began being included.  Plus, does anyone really believe GM or Chrysler to be capable of explaining (let alone building) a quality infotainment system?  No really…

Here’s where I see a huge opportunity for Apple to shake up yet another industry desperately in need of leadership.  Apple’s iPhone has been a colossal success (obviously) and people do use them a lot in cars, however, the small screen size makes it difficult to perform a number of tasks safely.  Enter the rumored tablet…

Try this idea on for size: what if Apple made a kick ass tablet computer that could be easily mounted in the car?  Let’s just say that this tablet has a larger screen, a larger virtual keyboard, runs a similar version of the iPhone OS, has wifi and 3G through a wireless carrier, can download the same apps as the iPhone, and can essentially do everything else the iPhone can albeit in a bigger form factor.

Better still, what if Apple struck deals with the automakers whereby they built cars in the same way that Bose builds the sound dock—it’s useless unless you have an iPhone/iPod to plug into it—and then Apple builds the infotainment system that plugs into it?

Were the automakers to do this, they would substantially decrease their R&D spend because they wouldn’t have to worry about an entire component of the car.  Instead they would focus on their core competency: mechanical systems necessary to drive and steer the vehicle.  This strategy would also compel the automakers to adopt a modular design, allowing for rapid replacement of infotainment systems as the technology evolves (which it does at a far greater speed then that of people upgrading their cars), and allowing consumers to upgrade their infotainment systems without buying a whole new car.

Cool as this would be, practical as it sounds, we likely won’t see it anytime soon.  The automakers have entrenched unions that cripple management’s ability to innovate and an aversion to anything “not invented here” that will make change difficult.  If any of them has the guts to pursue such a strategy, I think it’d be a great step in the right direction.  Otherwise, we’ll likely see such a strategy adopted by a company like Tesla or Fisker which has an Ethos if innovation and is free of the burdens native to the Big Three automakers.