Automakers Turn to Silicon Valley to Meet Increasing Demand for Automotive Consumer Electronics

Major automakers are teaming up with Silicon Valley startup companies to help them develop new cars and trucks that satisfy consumers’ increasing appetite for new, innovative technologies.

According to Jim Hall, a principal in the Birmingham, Michigan-based consulting firm, 2953 Analytics Inc., Ford, General Motors and Toyota are all counting infotainment technology to help them build their brands and capture market share.

Ford Motor Company recently approached Stitcher, a San Francisco-based technology company, about integrating its new software into the automaker’s popular Sync application. Stitcher’s CEO, 35-year-old Noah Shanok, said he was apprehensive about bringing such different corporate cultures together. “We thought we might have been like aliens,” he said of their first meeting.

However, Shanok said, “It became quickly clear when talking to the leadership at Ford that we were smart people looking at problems together.” Ford has since added Stitcher, a program that lets users create a custom talk-radio channel, to its Sync voice-controlled infotainment system.

Ford’s Sync system has become so popular with consumers since its introduction two years ago, that customers cited it as critical to their buying decision 32% of the time. The system has also helped Ford increase its profits on models where it is offered as a $395 option. On Ford’s higher-end models, Sync is now a standard feature.

Jim Hall said that although there are currently a number of frontrunners in the contest for technological supremacy, the battle rages on, with no clear winner. “The company that can accommodate as many different mobile devices as possible, and integrate them in the car,” says Hall, “they’re the guys who are going to win long term. But it’s a very difficult job.”

For automakers, the stakes are high and missteps can be costly both financially and in terms of brand image.  Unlike most smartphone apps that can be rolled out quickly and fairly inexpensively, similar automotive- adapted technology has higher development costs and must have a longer service life.

Hall asked, “Do you think Apple cares if your iPod works four years after you buy it? With a car, you have to.”

Safety is another concern automakers must consider when developing new infotainment apps for their vehicles. Designing apps that give motorists all the high-tech functionality they demand without distracting them from the job of driving is a delicate balancing act and it is not without its critics.

A number of consumer protection groups, including the National Safety Council, have raised concerns about the proliferation of automotive infotainment technologies. Dave Teater is a senior director for the National Safety Council whose 12-year-old son was killed in an auto accident involving another driver who was using his mobile phone at the time. Teater said, “Any automaker who’s making it easier for the driver to do those things is probably doing a disservice to the driver, and the rest of the motoring public.”

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