Palm takes a back seat in cars

First spin in voice-activated car Michael Orr, CEO, MobileAria (7/11/01)

When MobileAria's service launches later this year, it will require a laptop--instead of a handheld computer--to access e-mail, driving directions, traffic information and calendar/address book data. And even though Palm is one of the start-up's three main backers, Palm's personal digital assistants (PDAs) have moved into the background of MobileAria's efforts.

"There are as many people using laptops in their cars as PDAs," MobileAria CEO Michael Orr said, while showing off a prototype of the system in a demo car. "For technical reasons, (we can) get off the ground quicker using laptops."

MobileAria's service will draw on the laptop, not only to provide information such as contacts and calendar but also to run the voice-recognition software licensed from Lernout & Hauspie. Although L&H faces well-publicized financial woes, Orr said it still has the best technology in the business.

Initially, MobileAria planned to run its service in conjunction with a device from car parts giant Delphi that allows a Palm handheld and cell phone to work together using voice commands. Delphi also provided an initial investment to launch MobileAria, with the Mayfield Fund being the third investor.

MobileAria does plan to add support for the Palm OS next year, but it will also add support for Microsoft's Pocket PC OS shortly thereafter.

"We're agnostic," Orr said. "Palm invested in us as a venture, not to tie us up."

A Palm representative did not immediately comment.

When MobileAria does add support for the Palm, it will still require an additional computing device to act as a go-between, Orr said, noting that the Palm is not powerful enough to do the voice recognition and other work required for MobileAria's service to work.

For now, MobileAria is focused on getting its laptop-based service launched by year's end, though the kickoff will resemble a test more than a massive commercial unveiling.

"It's going to be a tight launch," Orr said. "We don't want 20,000 people who aren't terribly happy. We want a few hundred people who are thrilled."

MobileAria will target real-estate agents, salespeople and service workers who are on the road a lot, such as plumbers and electricians. Initially, sales will be limited to customers in the San Francisco Bay Area, and the company will require its early customers to answer surveys about their experiences.

MobileAria has not revealed pricing, but Orr estimated it will be in the range of $20 to $40 a month. The up-front costs will vary but are somewhere around $300 to $500, given that the service requires a Bluetooth-enabled cell phone and laptop card.

For another $150 up-front, a global positioning system (GPS) can be added. Although it isn't required, the satellite-based locator is a significant aid to several of the features, including getting traffic information or driving directions.

With just 45 employees, Mountain View, Calif.-based MobileAria is looking to prove that its system works and then look to others--either partners, new backers or a buyer--to market the system on a broader scale. The company said it is looking to raise more money and is talking with new potential partners.

Others ready to hit the road
Other companies also have their sights set on the in-car communications market. Last fall, Sun Microsystems teamed with General Motors' OnStar unit in a bid to make Java technology the computing standard for the automotive industry. Microsoft, Intel and IBM have also announced projects aimed at bringing their computer technologies into cars.

However, the intense interest related to in-car electronics and services, known in the industry as telematics, appears to have slowed along with the overall car market, said analyst John Casesa, who follows the automotive industry for Merrill Lynch.

"In this increasingly difficult environment, $20 to $40 a month is a lot of money on top of a new car payment," Casesa said. "That $20 didn't sound like a lot of money last year. But the way the economy has turned, it sounds like a lot of money today."

Even selling into the enthusiast market could be a challenge, he said.

"I wouldn't be surprised if people want these services, but I'm not sure they are willing to pay for them," Casesa said.

He added that explaining the value of the service will require a significant advertising campaign, which MobileAria doesn't have the resources to mount on its own.

"It's going to take some real marketing to get that story out," he said.

One of the companies MobileAria has talked with is GM; MobileAria is eager to supply GM's OnStar with its technology. OnStar is now available on most GM, Lexus, Acura, Subaru and Audi vehicles.

MobileAria's technology differs fundamentally from that of OnStar. MobileAria allows people to read e-mail or get directions directly from their laptops through secure Internet connections in their cars. By contrast, OnStar requires people to register their preferences through the Internet and then go through GM's servers to retrieve e-mail or surf the Web when they're on the road.

It's unclear whether the start-up will partner with OnStar, which is by far the largest provider of dashboard communication services. In addition to significant technological challenges, a partnership between MobileAria and a division of the world's largest carmaker would face major cultural hurdles. Executives at both companies are aware of the potential for miscommunication and frustration.

"The start-up philosophy is to iterate that mistakes are OK; you just try to do it better next time," Orr said of MobileAria's attitude. "At GM, mistakes could mean millions of recalled cars. So when GM says, 'You've got bugs,' we say, 'Yeah, so what?' To us, it looks like they're moving too slowly. To them, it looks like we're totally out of control. It's like we're from different planets."

News.com's Rachel Konrad contributed to this report.