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IBM, BMW Take Telematics for a Spin

IBM has teamed up with high-performance auto manufacturer BMW Group to work on loading cars with software as the industry gradually but surely shifts toward telematics .

The agreement is part of BMW's new Automotive Software Foundry (ASF), a business play with IBM joining as the main customer. The components cover the entire software lifecycles of autos, including software design, development, testing, integration with automotive production, management and maintenance.

Under the agreement, for which financial terms were not disclosed, BMW will gain new technology to define and control how embedded software and electronic content is used to design, develop, manufacture, and service future vehicle generations. In procuring IBM's help, BMW hopes to be a leader in the arms race to equip cars with software and electronic content to be used in automobiles of the future.

But more than just teaming on software code and devising content, BMW and IBM want to help draft a software development system based on open standards that BMW can rely on to serve its suppliers and service arms. This is because the companies believe it is important to shepherd the entire telematics lifecycle of a vehicle. IBM and BMW will also work on getting finished products to market faster, as well as push the envelope of innovation.

Discussed in many circles as a technology darling for the last few years, the telematics market has been slow to take off despite attempts by software giants such as Microsoft to take a leadership position in the potentially fruitful niche for Web enabling cars with software and content. Many industry analysts have predicted telematics as revolutionizing the automotive industry, but a lack of standards and full endorsement by the manufacturers and additional software companies have slowed the development of telematics.

Microsoft Windows CE .NET 4.2, the fifth version of the company's telematics software platform, pipes real-time weather alerts, driving directions and other information over in-car computing devices. This package features native support for support voice- and data-enabled Bluetooth and the Microsoft .NET Compact Framework. Interestingly, Microsoft's CE operating system was placed in BMW's new 7 Series in March 2002.

Research group Instat/MDR said revenues from telematics hardware and subscriptions to Web-based telematics services will rise to almost $12 billion by 2006, with a compound annual growth rate of 66 percent. The research firm said the growth rate for Internet-based telematics subscribers will spike in 2004, as telematics services will be offered in an increasing number of vehicles and as consumer awareness of service benefits grows. But, according to In-Stat/MDR analyst Cindy Wolf, the telematics market is fragmented.

"All players in the telematics industry face opportunities and challenges as they attempt to deliver convenience services to vehicles for which consumers are willing to pay," said Wolf. "The opportunities for new revenue streams from airtime minutes, service subscriptions, and content delivery are confronted by the challenges of integrating diverse technologies in a timely manner and in an affordable package."

In partnering, BMW and IBM hope to take telematics out of the doldrums and into the limelight.

"Our goals with ASF are to help BMW Group keep and strengthen its technology leadership in the field of automotive electronic and software development, speed time-to-market, and help BMW Group drive innovation by improved management of the increasingly complex software and electronic content in cars," said Janette Beauchamp, general manager of IBM's Global Automotive Industry.