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April 4, 2005

USA: Microsoft’s new plan to conquer motor industry

After struggling for years to sell software for expensive automotive navigation devices, Microsoft is reverting to its classic business tactic: introduce a cheap product and expand the market.

After struggling for years to sell software for expensive automotive navigation devices, Microsoft is reverting to its classic business tactic: introduce a cheap product and expand the market.

According to Automotive News Europe, Microsoft wants to put navigation devices in the price range of practically every car buyer.

The software giant’s weapon: an in-car computer, code-named TBox, that connects the electronic devices consumers want to use in a car.

For a couple of hundred euros, motorists can get a system that provides directions, make hands-free phone calls and plays digital music on their own personal digital assistants, cell phones, iPods and other devices.

TBox does not have a screen and is controlled by two buttons on the instrument panel or steering wheel.

It also offers access to telematics services such as remote vehicle diagnostics and electronic yellow pages, which the motorist would purchase separately from a service provider.

Microsoft has found its first big TBox customer: Fiat Auto. Last year Fiat agreed to equip its vehicles with at least three versions of TBox, each with a different mix of features. It will offer the system across its model lineup of 23 Fiat, Alfa Romeo and Lancia models.

TBox eliminates the need for motorists to buy separate navigation systems.

The TBox offers basic services that motorists want, said Peter Wengert, group marketing manager for Microsoft’s Automotive Business Unit, in Redmond, Washington DC.

At the heart of Microsoft’s strategy is the software that runs TBox, called Windows Automotive.

Worldwide, 12 automakers have adopted the software for 24 nameplates, including the Honda Accord and Mercedes-Benz S class. But navigation systems are expensive, so motorists were slow to buy them. Other companies market products that allow for hands-free calling and in-car computing.

But Microsoft “has finally cracked the code with a working device that provides more functionality at a lower cost than anything else available today,” says the US consultants Forrester Research of Cambridge, Massachusetts.

Forrester predicts TBox will help Microsoft win “huge swathes” of the telematics market in the United States and Europe.

Another research firm, GartnerG2 of San Jose, California, predicts that if the low-cost TBox strategy works, Microsoft will become a player in a telematics market that is projected to generate $6 billion in sales by 2010.

Since 1995, the Microsoft automotive operation has doubled its staff. It is part of Microsoft’s fastest-growing division – called Mobile and Embedded Devices – which generated sales of $247 million in the fiscal year that ended last June.

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