Body of a car, brains of a PC

Software is becoming the new competitive weapon in the car market, and Big Blue is working to build a "network on wheels." Poll: Most wanted car tech

Car buyers usually compare things like horsepower, mileage and warranties. But increasingly, the most important parts of a new car are also the least visible: software.

The self-parking Lexus LS 460 has already shown that sensors, cameras and software can get a car to parallel-park itself. Automakers are now gearing up to include more automated driving features for even the most budget models. And further down the road, the computerized car will become part of an even larger network of highway communication.

As car systems get more complex, automakers are looking to the tech industry for help in translating their designs into working software and hardware, according to both carmakers and analysts.

That's why technology specialists like IBM--with decades of software experience--are investing in the automotive industry and the companies that serve it. The potential payoff could be grabbing the driver's seat in a market worth billions of dollars. Poll

Gadgets take the wheel
What high-tech feature are you most excited about having in your next car?

Automated parallel parking
Internet access
Collision warning/automatic braking
DUI detection/prevention
GPS navigation
Lane drift warning
Real-time traffic info
Syncing for mobile/music device

View results

"All the features you see--adaptive cruise control, autopark, lane departure warning--those are all driven by software," said Patrick Milligan, senior manager for in-vehicle software development at Ford Motor.

"Complex-software development is now increasingly critical to (automotive companies') success in innovation and competitive advantage," according to a June report by research firm Illuminata on IBM's plan to acquire Telelogic.

Automakers spent 35 percent of their IT budget on software and 12 percent on third-party services in 2006, according to an October 2006 AMR Research survey of senior automotive IT managers from 52 automotive companies with a presence in the United States.

Today's average vehicle contains an estimated 1,450 euros ($1,997) worth of software code, about 9 percent of the showroom price. That percentage is expected to increase to 15 percent in the coming years, according to a 2006 report from Strategy Analytics.

For those reasons and more, IBM sees automotive computing as its next frontier, said David Petrucci, automotive solutions leader of IBM Software Group.

"We are trying to change our relationship with the automotive industry and working to become a more direct participant...both with car companies and components manufacturers," Petrucci said.

And IBM, which in the past may have been slow to enter new markets, isn't wasting any time when it comes to the auto business. In 2003, Big Blue launched data retrieval software based on XML that can be used by cars to communicate with the road and other cars around them. In 2005, it signed a $125 million deal with the United Arab Emirates to develop a vehicle telematics infrustructure that uses that technology. Last year, the company signed a partnership with Magna Electronic to design software for the company's smart-car parts.

The company's biggest move came in June, when it announced a $745 million deal to acquire automotive technology powerhouse Telelogic, a Sweden-based company that makes software development and management tools.

One of the hottest areas in automotive technology is the development of a standard "car operating system." Just as computer operating systems, such as Microsoft's Windows Vista, allow multiple applications to communicate with one another, an automotive operating system enables different driving systems--from fuel injection to brakes to power steering to power windows--to work together.

A standard operating system that pervades multiple car brands would make it easier for developers, component manufacturers and automakers to incorporate more-sophisticated driving systems, like self-parking, into multiple car models.

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