Automakers Trail in the Great Gizmo Race

'It sells cars"
Ford's hands-free Sync communications system is available across a wide spectrum of Ford and Lincoln vehicles, either standard or as a $395 option. Sync lets owners plug in their iPhones or other Bluetooth-enabled phones and enjoy the otherworldly experience of having their e-mails and text messages read to them by an automated voice. Ideally, drivers keep their hands safely at 10 and two o'clock on the steering wheel.

"The other reason we're pursuing this technology," Hall adds, "is because, obviously, it sells cars."

Automakers have a long tradition of innovations that have little to do with engines, wheels and sheet metal. In the mid-1950s, Ford introduced what it called Signal-Seek Radio, a feature that allowed car radio listeners to glide silently from station to station, minus the static, searching for content as they drove. The feature became known as Town & Country because the automaker gave drivers a choice between searching for only local radio stations (in town) and searching across a wider geography for more remote stations (country).

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Car radio versus mobile music
But technology keeps advancing. And when it does, automakers rarely seem to keep the upper hand.

General Motors was instrumental in introducing satellite radio to drivers a decade ago with its investment in XM Satellite Radio. More than 20 million vehicles across the auto industry now have the special radios that receive the merged satellite systems of Sirius XM. As with cable TV, subscribers pay monthly fees to listen.

This summer, some automakers are eagerly awaiting the introduction of the second generation of Sirius XM radio, dubbed Sirius XM 2.0. But the market has evolved.

Drivers are turning in droves to cloud-based entertainment content, such as Pandora. Pandora is an Internet program that plays music tailored to an individual listener's taste. Pandora can be enjoyed by anyone with an Internet-connecting cell phone, free.

And Pandora is the tip of the iceberg for mobile music. Internet radio stations now stream music and news all over the world in endless variety, through laptops and smart phones, for free. According to Arbitron, more than one out of four Americans age 12 and above now listen to online radio.

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Solution: A blank screen?
A consortium of German manufacturers, including BMW, Volkswagen, Audi and Daimler, has a new proposal that is sort of an "if you can't beat 'em, join 'em" solution.

Their technology is called Terminal Mode. Terminal Mode is what the tech crowd refers to as a "platform," like Ford's Sync. But instead of spending r&d money to design what goes into the platform, Terminal Mode would be little more than a blank screen.

Drivers would plug in their own devices, and through Terminal Mode, the outside devices would become the vehicle's onboard gizmo center. Navigation, music, e-mails, weather alerts, Angry Birds, downloadable TV shows could all be projected into the car through the vehicle's audio speakers, onto a neutral screen.

But hurdles remain.

First, Terminal Mode cannot handle all types of phones. So like the Toyota customer vexed by the Venza port, there will be those left out. Second, a blank screen does not a Mercedes make.

"Mercedes takes a great deal of care in deciding what its interiors look like," says IHS' Magney. "With Terminal Mode, it would just look like your iPhone, whatever the particular iPhone screen looks like. And there would be no real difference in what that screen looks like in the Mercedes or the same screen in a mass-market car.

"I'm not sure customers are going to be happy with that."

Can automakers and their r&d staffs win this war?

"No one's going to throw in the towel," Magney predicts. "The OEMs have to stay on top of all this stuff. If they don't, they will risk losing out to more technologically advanced companies."