Has Microsoft Found a Winning Formula?
Gates & Co. have tried--and failed--to port their OS onto the dashboard. But a cheaper, stripped-down version might just get there yet.
By Andrew Tilin

(Business 2.0) – The next big thing in car electronics isn't big at all--which is why some analysts think it's going to be a huge hit. After limited success selling operating systems with complex navigation technology and razzle-dazzle graphics, Microsoft has gone a different route, developing a low-cost platform that simply gives drivers what they really want: the ability to make hands-free calls, play digital music, and get directions via satellite. The new approach could divert a healthy share of the vehicle infotainment market--estimated to reach $6 billion by 2010--to Redmond.

The key to the new Windows Mobile for Automotive is its simple architecture. Instead of "embedding" the OS in a car's central computer system, the setup is a simplified package of hardware and software--think souped-up car stereo--that relies heavily on the gadgets most consumers already own. Hook up your MP3 player to the exposed USB port, then use voice commands to pick your tune. Meanwhile, Bluetooth technology connects the system to your cell phone, which also serves as the car's GPS conduit, with directions spoken through the speakers. "Our design philosophy was pretty basic," says Mark Spain, the director of Microsoft's automotive business unit. "We thought, when a driver walks up to her car, the right things should just happen."

The plan was also to make the system cheaper than the current alternatives. The OS debuts in Europe this month as an option on the Fiat Punto; for about $200, buyers will get the Bluetooth-enabled voice-command system and hands-free phone capabilities. Next fall, for about $350 more, Fiat-owned Alfa Romeo will offer the USB-equipped radio and real-time traffic and navigation services. That's a bargain compared with the thousands buyers now spend to have such features built into their cars. "Within five years," says Thilo Koslowski, a VP at Gartner, "the auto companies won't have much success selling embedded navigation systems."

While Fiat will ultimately offer the OS in 23 different models, the technology isn't currently slated for any cars Stateside. Ford, for one, is testing the system but has yet to make a decision. But because the new setup's hardware and software are 80 percent standardized--and thus could cut manufacturers' development costs--it's not far-fetched to assume that Detroit will come around. "This simpler system is the right way to go," Koslowski says. "Microsoft finally understands how it can really add value." Sounds like music to Bill Gates's ears. -- A.T.