The long haul
While the market for in-car electronics has not exploded, analysts do see steady growth ahead. Magney predicted that within five years 36 percent of cars will connect to a wireless network. By 2010 or 2012, most new cars will have some sort of in-car communications system, Koslowski said. "The revenue opportunity is significant," he said.
Microsoft has long dreamed of ways to take its computing empire on the road. It has a long history of trying to crack the car market, dating back to a short-lived dashboard computer called AutoPC that was sold by car stereo maker Clarion. But, as in other markets where it initially struggled, Microsoft has kept at it, continuing to evolve its software and try new concepts and designs.
"It's part of the broad companywide effort to make sure that if a market emerges for software in unusual places, that Microsoft is there," said Directions on Microsoft analyst Matt Rosoff. "I think it's very similar to what they've been doing in the TV set-top box [market]. It's similar to what's been going on in the mobile phone space with Smartphone, which has finally gotten some traction."
But even as it earns praise for its persistence, Microsoft continues to face many of the same criticisms it often does -- namely that its software is too buggy to be used for things like cars and phones, which people expect to work well. And, although the company has learned to deal better with carmakers, it could still be more flexible when it comes to working with partners, Koslowski said. "That is something the company is a little bit struggling with," he said.
On the plus side, Microsoft has some natural advantages as it already dominates the market for computer software both in the home and the office -- two of the key places where people access and store information.
Also the company makes other devices, such as mobile phones and handheld computers, that could help bring information to the car. The latest version of its Windows for Automotive software supports Bluetooth connections, allowing in-car systems to tap the power of a mobile phone to access information.
"Most people have a wireless phone. A lot of people have a PDA," Rosoff said. "It makes sense for them to use these things in conjunction [with an in-car computer system]."
Koslowski said that people may be more willing to pay for a mobile system if parts of it can be taken outside the car. "Something embedded is limited," he said. "That makes it very difficult for consumers to understand."
Still, analysts don't see Microsoft being able to translate its PC dominance into a monopoly inside the car.
"It will be hard to convince car makers and suppliers and the industry to standardise on Microsoft," Koslowski said.
