(FORTUNE Magazine) – Sometime in October, if the last remaining software bugs can be worked out, the first personal computer for use in an automobile will go on sale. Manufactured by Clarion, best known for its high-end stereo equipment, and powered by Microsoft's Windows CE operating system, the AutoPC fits into the slot on the dashboard usually occupied by the radio. It has no keyboard or mouse; instead, it is designed to recognize simple voice commands that, say, control the car's stereo, and to use an electronic voice for such functions as giving highway directions and reading address-book entries. An infrared data port allows the unit to exchange data with a palm-sized PC, like Casio's Cassiopeia. The basic system costs $1,299, plus installation. Add a wireless FM receiver, and you can have your E-mail read to you while you motor down the road.

Now that PCs have invaded the office, home, and shirt pocket, cars seem to be the next logical place to boot up. "Fifteen years from now, car computers will have the same acceptability as car stereos," says Ganesh Moorthy, Intel's general manager of appliance and computing. In theory, a car computer would enable people to stay in touch with the outside world, use real-time traffic information to find the fastest route to a destination, and even monitor the mechanical functions of the car. In the event of an accident, the computer--if it survives intact--could transmit the car's exact location and summon emergency workers.

The notion of making the automobile a node on the information highway excites big thinkers. "To be connected with the outside world visually and verbally is something people want," muses industrial designer Martin Beck, who studies the role of personal computers in society. "What better place than in a car? You have to be there for a certain period of time, so why not make good use of it?" And couldn't that make for a lot of business? Some 50 million new cars and trucks are sold annually worldwide. Equip just 10% of them with a $1,000 computer, and you've got a $5 billion market. Says Motorola vice president Robert Denaro: "Eventually, it is huge. The big question is how huge and when."

Precisely. While electronic equipment--including integrated circuits that control airbags, engine functions, and antilock brakes--now accounts for more of a car's total cost than the steel and plastic, the success of car computers is anything but a sure bet. For starters, there are technical questions: Will an auto PC prove durable enough to survive the rugged environment of a car? Will voice commands suffice for exchanging complicated information with the computer? There are also safety issues: Pay too much attention to the urgent E-mail you just received, and you might slam into the rear end of a slow-moving truck.

Then, of course, there's the big question: Who really needs these things? Asks Bruce Leichtman, director of media and entertainment strategies for the Yankee Group, a Boston research firm: "What's the inherent benefit? Is there anything I can do with my PC that I can't already do with a car phone?" Analyst Tom Rhinelander at Forrester Research in Boston agrees. "The auto PC is technology in search of a problem. Who would want to spend money on this outside of the Sharper Image crowd?"

Such objections haven't dampened the enthusiasm of either computer makers or auto manufacturers. Says Herb Pike, a project manager at Hewlett-Packard's R&D labs: "Everybody is looking at that huge market and asking, 'How can I get a piece of that pie?'" The two industries are teaming up to test wired-car concepts. Sun Microsystems, IBM, and Netscape have joined with General Motors' Delphi parts division to stuff a customized Chevrolet Blazer full of electronics using Java software. Not to be outdone, Microsoft has formed partnerships with Intel and Ford's Visteon parts unit to promote the use of Windows CE in a concept vehicle with the unwieldy acronym of ICES (for information, communication, entertainment, safety, and security).

The Sun/IBM/Delphi/Netscape "network vehicle" would look at home in the Jetsons' garage. The driver views navigation and a plethora of other data in a color display projected onto the windshield in front of him, while back-seat passengers watch TV or peruse the Net via signals collected by a flat satellite antenna in the roof. A touch screen in the center console controls such functions as audio, climate control, and cellular phones. The Intel/Microsoft/Visteon supercar is similarly stuffed. "Our strategy is to get all this into the marketplace so consumers can get comfortable with it," says Lori Markatos, a Visteon engineer. "We know there is apprehension about computers out there."

Car buyers have a history of rejecting new technology that they find complicated, unhelpful, or expensive. They vetoed talking dashboards as gimmicky and intrusive, and nixed seat belt-ignition interlocks as inconvenient. Touch-screen controls introduced on a 1986 Buick Riviera were widely criticized as dangerously distracting and never spread to other makes. Active suspension and four-wheel steering failed because, at $1,000 or more, the benefits didn't match the price tags. And trip calculators, which, among other things, figure out how far a car can go before running out of gas, showed up on only 5.1% of early 1998 model cars. Car buyers like their electronic gizmos simple. Electronic key fobs, those handy devices that unlock doors and release the trunk, were introduced on luxury cars a few years ago and now appear on more than 50% of new cars (see table).

Fear of complexity may help explain the biggest technology fizzle of recent times: satellite navigation systems. These devices use global-positioning satellites to locate a car on a street map and then provide block-by-block directions to a destination. About 1.5 million were sold worldwide last year, but the vast majority went to Europe, where cars--not commuter planes--are still used for long-distance intercity travel, and to Japan, where city streets twist and turn past buildings whose numbers are assigned without regard to location. Only some 10,000 systems were sold in the U.S., where the highway network is simpler--and where car owners can think of better ways to spend several thousand dollars.

The big question is whether consumers will find a compelling reason to buy a car computer. "The real issue is finding the killer app," says Robert Enderle, an analyst with the Giga Information Group in Santa Clara, Calif. Some observers believe electronic phone books that can program a car phone will be the most popular. Others think accessing E-mail on the road is the key. Still others figure entertainment for passengers is what counts. Microsoft product manager Perry Lee, who has been working with Clarion, estimates that the AutoPC will spend half its time doing nothing more exotic than running the sound system.

But let's say the driver finally figures out what to do with his expensive new car computer. The next big question is whether or not he'll be able to communicate his desires to the device without getting so distracted that he runs off the road. Cell phones have already been implicated as a cause of traffic accidents, and scientists at the University of Michigan Transportation Research Institute figure that any task requiring the driver to take his eyes off the road for more than a few seconds is a hazard. So forget about trying to simultaneously juggle steering wheel, keyboard, and mouse. Instead, Clarion and other manufacturers will rely on voice activation software. The AutoPC due this fall will respond to 200 or so voice commands. Ford's Visteon has been working on a more sophisticated system that uses a microphone built into the steering wheel that can screen out road and engine noises. The company plans to offer it as an option in a 1999-model-year car, so far unidentified; the system will tune the radio, manage the climate-control system, and dial numbers on your cell phone.

Still, as techies know well by now, voice activation is no panacea. Try slowly repeating "Radio tune 101.1," or "CD play disk 2, track 4" in a loud, clear voice to get the idea. Listening to a computer talk back to you in machine-speak can be even more aggravating. "One of my fears is that the AutoPC might turn out to be another Apple Newton," says HP's Pike. "The speech technology could be like the handwriting-recognition feature: It's very attractive, sets high expectations, and then doesn't deliver."

For now, in other words, the AutoPC is a possibly superfluous device with potentially inadequate technology. It also may be too expensive. Says Robert Schumacher, director of Delphi's Mobile MultiMedia Business Group: "The computer has to be affordable. To get significant penetration, it has got to be under $1,000. That is true on almost anything you roll out on a car, and that is probably true with this." Even $1,000 represents 5% of the price of an average car--about what a customer will spend for a high-end stereo or a sunroof. Clarion executives concede that the high price of the AutoPC--close to $2,000 fully loaded--probably consigns it to a limited market in the next few years.

Nevertheless, the computer-in-a-car may well have a future. Like the Newton, it may morph into a successful product, the automotive equivalent of the pocket-sized Palm III. Since automakers will hold off on installing computers themselves until the concept is proven, most early sales will be made by accessories dealers. Manufacturers will watch to see which features are most popular and adapt their devices accordingly. But if traffic information and E-mail are all that drivers decide they are willing to pay for, a cell phone and a radio may be all they need.

As computing becomes more sophisticated, its potential for use in cars will expand. Some visionaries say that what we now think of as a PC will eventually be reduced to a plastic "smart card" with a magnetic strip that can be carried in a wallet. The wonder card would serve as the ignition key to start the car and then adjust the seats and mirrors, choose a radio station, program the cell phone, and select a driving route. At your hotel room, the card could be swiped through a terminal that transforms the TV set into a computer monitor linked to your office network. Insert the card into another terminal at home, and all the data on it would be updated.

Sounds nifty. But forecasting the future of the wired car is a little like predicting the evolution of the PC two decades ago. Before the invention of the spreadsheet, the PC seemed to have no future in the office, and its only value appeared to be for storing Christmas card lists and recipes at home. Now most of us can't live without one. It seems inevitable that the functions of the computer and the needs of the driver will eventually intersect, but exactly where and when remain big unknowns.