With gasoline hovering around $3-$4 a gallon, and no relief in sight, the horsepower era is officially over. If you watch a football game on any given Sunday and the inevitable parade of car commercials, you will notice the not-so-subtle change that has taken place. With the exception of truck ads, there is nary a mention of horsepower, engine displacement, or 0-to-60 times. Instead, automakers are emphasizing comfort, fuel efficiency, and toys. And my, what toys there are. There are GPS units that tell you how to get where you’re going, and even give real-time traffic updates. There are gauges that measure tire pressure and tell you when you’re low on air. There are all manner of electronic nannies: Sensors that warn the driver when they’ve drifted out of their traffic lane; cameras that provide a rearward view to assist the driver while they’re backing up or parking; even systems that park the vehicle for you.
As pervasive as this trend has become, perhaps the biggest change isn’t how you operate the vehicle, but what you do once you’re in it. With Americans spending more time on the road, cars have become living rooms on wheels, complete with multi-screen entertainment systems, gaming consoles, and Internet access on the go.
Surprisingly, one of the innovators in this area is Detroit’s Ford Motor (F), which has made quite a splash in recent years with its industry-leading MyFord Touch system, which allows wireless control over the vehicle’s entertainment system. Based on the Sync technology Ford co-developed with Microsoft (MSFT - Free Microsoft Stock Report), the unit works in concert with smartphones, such as Apple’s (AAPL) iPhone or handsets running Google’s (GOOG) Android operating system using the Bluetooth universal standard. Nuance Communications (NUAN), a maker of speech-recognition software, has been integral to the project’s success, since its products facilitate MyFord’s voice activated features.
In-car Wi-Fi—which gives the vehicle’s occupants a wireless Internet connection—represents another trend. Several automakers have jumped to take the lead, including Ford and its premium Lincoln nameplate, General Motors’ (GM) upscale Cadillac brand, and Subaru, which is part owned by Toyota Motors (TM).
However, automakers aren’t the only ones aiming to capitalize on this technological trend. Indeed, companies as disparate as microchip giant Intel (INTC - Free Intel Stock Report), graphics card manufacturer NVIDIA (NVDA), and salesforce.com (CRM), a maker of management software, are trying to get in on the action. Another likely beneficiary is DTS (DTSI), which specializes in entertainment technology products and services. Traditionally a maker of home-based systems, the company has been branching out into new markets in recent years, and has begun to offer Blur-ray-enabled devices to the automotive sector. Though a relatively small part of DTS’ operation, car-based entertainment is one of its fastest-growing segments.
To illustrate the promise of in-car “infotainment systems”, a wide array of companies came together in 2009 to form GENIVI, a non-profit alliance that aims to speed the acceptance of car-based technology. GENIVI ushered in a new era of cooperation between carmakers such as Germany’s BMW, South Korea’s Hyundai, Jaguar (owned by Tata Motors (TTM)), as well as GM and Japan’s Nissan (NSANY). It also brought together auto suppliers including Delphi, Visteon, and Bosch. Finally, and perhaps most crucially, the alliance called on some of the tech sector’s biggest players to work together in the interest of streamlining the development of in-car products and services. Names here include Intel, NVIDIA, South Korean giant Samsung, and industry heavyweight Cisco (CSCO - Free Cisco Stock Report).
With families increasingly on the go, cars are becoming mobile living rooms. For better or worse, that trend is bound to accelerate, with in-car entertainment systems, gaming consoles, and even Internet access becoming de rigueur. Companies that innovate and push the boundaries of car-based technology should reap the rewards for years to come.
At the time of this article’s writing, the author did not have any positions in any of the companies mentioned.