January 10, 2008 / 3:09 AM / in 10 years

In-car entertainment? Bring your own, industry says

LAS VEGAS (Reuters) - Car travelers should get used to plugging in their own entertainment gear as all but luxury automakers give up a decades-long struggle to build in the latest audio and video equipment.

Industry players say automakers are getting new models to market faster than before but consumer electronics change more rapidly, meaning automakers’ efforts to lift sagging profit margins by installing fancy gadgets can backfire as they quickly pass their sell-by date.

It still typically takes three to four years to put a redesigned car on the road, compared with about nine months for a new consumer electronics gadget to find its way to market.

The car of the future will have the necessary chargers, iPod mounts, and ports for navigation and even the Internet, rather than a factory-installed all-in-one system.

”I don’t want another service provider, I don’t want another user interface, I don’t want to screw around,“ said T. Russell Shields, chairman of Ygomi LLC, owner of vehicle communications company Connexis. ”I want to get it the same way I get it in the home and in the office.

Market research firm iSuppli estimates auto electronics will grow by an average of 7 percent per year to reach more than $50 billion by 2012 from $38 billion in 2006.

Automakers get a slice of that, but as they struggle with flat sales in mature markets, they eye with envy the lucrative “aftermarket” accessories from Pioneer Corp (6773.T) or Kenwood Corp 6765.T installed in cars after they are sold.

For fear of building in duds, carmakers typically wait a year or so to see if a new device or technology takes off.

They then have to make modifications to allow for the fact that drivers should keep their hands on the wheel and not be distracted. And while a car’s buyer may own it for 10 years, even a cherished electronics gadget has little chance of surviving format shifts, such as those from tape to CD.

IMPORTANT MISTAKE

The world’s most successful consumer electronics device, the cell phone, actually began life as a radiotelephone for the car -- essentially a two-way radio connected to the landline phone system -- built by Motorola Inc MOT.N in 1946.

But today, even auto parts maker Delphi Corp DPHIQ.PK, struggling to emerge from bankruptcy after shutting plants and slashing costs, admits the car industry can no longer hope to compete with consumer electronics’ aggressive product cycles.

ISuppli automotive analyst Richard Robinson says: “I think the important mistake, an error that’s been made in the past by the guys in automotive, is to think that next-generation technology must be developed in the car.”

Their best chance is to offer connectivity for the many gadgets on the market, pleasing customers who expect to be able to use the same devices they use at home and on the street.

Jeffrey Owens, Delphi’s head of electronics and safety, said embracing the multitude of standards for wireless and other connections, while potentially confusing and costly, was the only way forward.

Ford Motor Co’s (F.N) “Sync” venture with Microsoft Corp (MSFT.O), which aims to bring computer-style connectivity to a car, and General Motors Corp’s (GM.N) OnStar navigation and hands-free calling system have given those carmakers at least a temporary advantage.

“You can uncouple the car and the infotainment product cycles and bring new technology in when it’s ready,” Owens said during a panel discussion at the Consumer Electronics Show in Las Vegas.

    Milton Beach, a product spokesman on the Delphi booth at CES, said: “We’ve found out that USB, Bluetooth and the serial jack are what have emerged as sort of standard. But there are no standards.”

    KISS AND MAKE UP

    The mainstream consumer electronics industry has traditionally been more concerned with meeting the exacting demands of its own direct customers, such as improving battery life and interoperability with wireless devices and PCs.

    With the exception of specialist firms working closely with carmakers, especially premium brands such as BMW AG (BMWG.DE), they have made few concessions to carmakers’ needs.

    But as auto makers accept the need to respond to consumers’ expectations faster, the rhetoric between the two industries has become friendlier.

    CES organizers had GM Chief Executive Rick Wagoner make a keynote speech this year, eager to hear “his vision for the growth of consumer technology in the automotive industry,” said Gary Shapiro, Consumer Electronics Association president.

    In the keynote, Wagoner said: “The auto and electronics industries go way back. At GM, we think we’ll be even closer going forward.”

    Yet the two industries have been a bit wary of each other ever since Delphi first put a radio into a Buick in 1936.

    “Remember, this was before TV, so families actually sat around and watched the radio,” Delphi’s Beach said. “It was thought that putting a radio in the car would distract drivers from watching the road.”

    Additional reporting by Kevin Krolicki; Editing by Braden Reddall

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