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The MSN-Connected Car

As Redmond looks beyond the desktop, it sees the automotive industry as a new growth engine.

At an Automotive Executive Summit today, Microsoft pitched executives of Asian auto manufacturers on the advantages of installing its technology in the car, then using more of it to connect to its branded content.

Microsoft's Automotive Business Unit (ABU) has three major initiatives. MSN Autos is a consumer portal that has information on choosing, buying and maintaining cars; it connects online shoppers with a network of dealers.

Windows Automotive, rolled out in 1998, is a telematics software platform for OEMs to create services like navigation aids, satellite radio or vehicle condition reporting. The Automotive and Industrial Equipment Industry Solution Group works with partners and ISVs to provide software for collaboration, distribution and manufacturing built on the .Net platform.

The Connected Concept Car, announced in January, is a scheme to interlink them, not unlike the way Redmond is merging other products, such as its desktop, browser and server software. Call it a Longhorn for cars, with a voice interface central command that provides the driver with hands-free access to information, entertainment, communications and services.

Microsoft brought a tricked-out Hummer H2 to the Automotive Executive Summit, held today in Laguna Beach, Calif. It's loaded with speech recognition technology, customized navigation, remote diagnostics and a Bluetooth connection to connect the car's OS to a personal wireless device such as a cell phone. If the driver wants to find a nearby gas station or get info on traffic conditions, pushing a button on the dashboard initiates a data call via the phone to MSN, which pulls the information from the Auto section and converts it to audio.

"We found consumers don't want to send a check to the auto maker for [data services]," said Peter Wengert, ABU group marketing manager. "This allows you to bring your own phone and your own minutes, but keep your eyes on the road and the hands on the wheel." Users might access free information from MSN or other Web sites; some automakers build proprietary information services on top of Windows Automotive and charge a monthly fee.

Wengert said that the Connected Car is not an attempt to entice more subscribers to MSN Premium, the paid service launched last year. He pointed out that the MSN Auto services are free.

Entertainment and safety are the only two telematics options that consumers will pay for, according to research from Strategy Analytics.

"Right now, multimedia is very strong. DVD and rear seat entertainment or satellite radio are where customers are willing to spend a monthly service fee," said senior analyst Mark Fitzgerald. Systems such as General Motors' OnStar, which let the driver summon help or automatically alert the police when the air bag is released, are too pricey for the average consumer, he said.

"People do resist the monthly payment," Fitzgerald said. "They figure, 'I already have a cell phone, that will handle 90 percent of what I need.' But hands-free dialing is huge. If you can have the Bluetooth connection make the vehicle an extension of the cell phone, that can work out well."

Kyle Solomon, Microsoft's automotive industry manager, said Microsoft looks at the automotive sector holistically and relies on partners to develop point solutions based on .Net. For example, at the Summit, Nissan demonstrated a new portal that lets dealers collaborate with the manufacturer. "We also offer OEMs the ability to host back- office systems that allow connectivity for things like in-vehicle diagnostics," he said.

Microsoft ABU technology is in 23 models made by 10 different manufacturers, according to the company. "Microsoft is definitely a strong player in the market," Fitzgerald said. With between 16 and 17 million cars sold in the U.S. each year, "providing the operating system for vehicles, plus entertainment and multimedia systems is a growth area for them."