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Microsoft and Toyota partner on smart-grid tech

The Japanese automaker agrees to use technology from the software giant for its smart-grid system that promises more energy-efficient living.

Toyota Motor has agreed to develop and deploy telematic services, including its smart-grid technology for running electric systems more efficiently, on Microsoft's cloud-based Azure technology.

Toyota wants to use the technology to give customers navigation and diagnostic services, much like General Motors' OnStar service. Toyota also envisions scenarios in which drivers would be able to turn on heaters or air conditioning at their home with voice commands from their car. "We'll boost the value of today's vehicles by making them information terminals," Toyota President Akio Toyoda said at a press conference today, which was Webcast.

The service, a centerpiece of Toyota's green initiative, will provide energy management technology for Toyota's electric and plug-in hybrid vehicles in 2012. Drivers will be able to choose to charge those cars when energy consumption is lowest and prices are cheapest. "We must find a planet-friendly way of using energy," Toyoda said. Toyota hopes to roll out a more advanced platform to handle a wider variety of applications globally by 2015.

Microsoft's Steve Ballmer Microsoft

The new technology will be tested as part of the Toyota Smart Center pilot program, currently running in Japan. The trial gives consumers detailed information about energy consumption in their cars and homes so they can manage their use more efficiently. Toyota has said it believes such smart-grid systems can help reduce carbon dioxide emissions by 75 percent.

The deal calls for the two companies to invest a total of $12 million in Toyota Media Service, a Toyota subsidiary that will provide digital information services to Toyota's car customers.

The deal gives Microsoft a marquee customer for its Azure technology, which provides companies the ability to offer applications as a Web-delivered service. And it's not just Toyota that will take advantage of the technology. The car maker intends to open up the service to other developers who could create services of value to drivers. "Getting the platform right opens a lot of opportunities," Microsoft Chief Executive Steve Ballmer said.

For Microsoft, the deal moves the company further into the automotive business. The software giant has already partnered with Ford for its Sync in-car connectivity system that lets drivers access their phone and music device with voice commands. It also helps Microsoft expand its drive into smart-grid technology. Just Monday at the Fortune Brainstorm Green conference, Microsoft's Chief Environmental Strategist Rob Bernard told CNET that since consumers and utilities have not taken up its Hohm energy-monitoring application as hoped, the company is increasing focus on electric-vehicle charging.

Related links
• CES: Toyota aspires to be app king
• Microsoft tries plan B with Hohm energy app
• Microsoft's Windows Azure turns one

Neither Ballmer nor Toyoda offered up much detail for the kinds of scenarios that might be available. There was some broad discussion about energy-monitoring applications, and some speculation about GPS services that could reroute drivers based on traffic. But whatever is ultimately offered, Toyoda acknowledged that consumers will foot the bill. "To a certain extent, we will have to ask customers to shoulder the expense," Toyoda said.

Toyoda expects the new technology to work in concert with the Entune service, which Toyota unveiled at the Consumer Electronics Show in January. That service allows drivers to use voice commands to buy movie tickets, make restaurant reservations, and listen to music. With the technology created by the Microsoft partnership, Toyoda said, "we will be able to offer much broader applications for Entune."

This post was updated throughout at 2:45 p.m. PT with additional information from a press conference.