Car buyers soon won’t just be kicking the tires, but also the wires . . . in the operating systems of new high-tech vehicles.
Schaumburg-based Motorola Inc. will be supplying much of the electronic brainpower to link cars to locator satellites, emergency services and even the Internet.
Joseph Guglielmi, executive vice president of Motorola and president of its Integrated Electronic System Sector, is the man behind the wheel of the company’s burgeoning “telematics” business. Telematics is the term for advanced electronic systems in cars.
“The car is turning into a fairly advanced computer system,” Guglielmi said. “We probably have today 70 to 80 percent share of that [telematics] marketplace, primarily in Europe and North America.”
As part of a major restructuring 18 months ago, Motorola created IESS by combining parts of other business units, including automotive electronics, the separate telematics technology, embedded computers and portable energy systems.
Motorola’s telematics unit is one of the brightest spots in its business, which with the exception of some recent market downturns affecting tech stocks and its Iridium satellite phone disaster, has done well after the reorganization under chairman Christopher Galvin.
Motorola’s leadership will be presenting its results at the company’s annual meeting on Monday.
Earlier this month, IESS reported its results separately for the first time. The telematics business has outdistanced the corporation’s annual growth rate of 10 percent by doubling over the past year. It is projected to continue to do so for years ahead.
Stephan Beckert, a director of the wireless group with Strategis Group, the Washington, D.C., telecommunications consulting firm, said of Motorola’s telematics business: “They rule the roost now. They are suppliers to all the major auto companies. But there is no way on earth Motorola can retain its current market share. The only way is down.”
He expects Motorola’s dominance eventually to be challenged by “the usual suspects,” such as Nokia , Ericcson and Siemens , Motorola’s rivals in the mobile phone market. In addition, he said telematics systems will become a popular add-on by after-market manufacturers.
Still, even with competition, Motorola can expect to be the leader for years ahead.
“The market will grow strongly,” Beckert said. “But there is no doubt that telematics will become standard within five years.”
Beckert said telematics will grow to $1.7 billion and 11 million subscribers in 2004 from $40 million and 200,000 subscribers in 1999.
Mention Motorola, and most people think first of cell phones or computer chips.
But Motorola has had a 70-year romance with the automobile. The company started out making voltage regulators for cars and then became a pioneer with the once-tricky technology of car radios. Motorola takes its name from “Motor Victrola.”
The radio and auto links have remained throughout the years, even as the company, in the face of Japanese competition, dropped its car radio business in the 1950s. Motorola engineers still refer to mobile phones, once known as car phones, as radios, which of course they technically are.
Motorola has kept its hand in making sensors, controllers and other high-tech systems for cars for engine controls, air bags, electronic seats, air-conditioning and lighting systems and now telematics systems, which combine phone and Global Positioning System technologies.
Guglielmi, who joined Motorola in 1995 after running Taligent Inc., a Silicon Valley joint venture of Apple , IBM and other investors, said, “Cars in the mid-range and above can have about 60 computer chips. The electronics value in the car is going up 2 1/2, three times the rest of the value of the car–the basic cost of the car.”
In 1996, Motorola and Ford Lincoln’s RESCU system became the first emergency messaging system in cars in this country. Since then, Motorola has worked to develop OnStar with General Motors , TeleAid with Mercedes-Benz , Communicator with Infiniti , Assist with Jaguar and other systems.
Telematics services offer roadside assistance, stolen-vehicle notification and remote door lock controls. If the air bag deploys, a response center will be notified automatically.
He said telematics for emergencies already are standard on high-end vehicles and can include concierge services such as finding a route and locating restaurants or automated tellers.
“You’ll see [telematics] options which you wouldn’t have seen a year ago being offered on mid-range cars in 2001,” Guglielmi said. “Several years later you’ll see it as an option on low-end cars. Ultimately, in 2003-2004 we’ll see it in the affordability model that will allow it to be available on most of the vehicles.”
Prices for telematics already are dropping. Systems now can be purchased for under $700, with monthly subscription fees of less than $20. That compares with hardware costs of $2,000 and monthly subscriptions of $30 or more two years ago.
Safety has driven the market so far, but customized access to information is considered important to future growth.
Guglielmi said voice-recognition will be an important part of the new technologies: “When you are in the car to drive, it will be hands on the wheel, eyes on the road, ears on the Internet because we’re going to be using voice technologies rather than sight technologies to connect you to the Internet.”
Motorola in January introduced the prototype of the iRadio , or Internet radio, at the Consumer Electronics Show and is now trying to get automakers to sign on.
“If you love the Knicks in New York, and you want to hear the broadcast, you can have that TV station played in your car,” Guglielmi said. You’ll be able to get The Wall Street Journal , or maybe the Chicago Sun-Times, read to you on your way to work. We’re starting to load up the system with content people will want to hear.”
He said the iRadio also will follow voice commands to allow the driver to check on e-mail, get stock updates and trade shares while rolling down the highway, and also check sports scores. It will link to pagers, personal digital assistants and favorite bookmarks on the Web.
“We can marry the best of the Web with this radio,” he said. “Using voice technology will make the experience a safe one. You’ll be able to move your worlds to you as you go from office to car to the home.”