Consumers’ Drive for High-Tech Rides Shifts Into High Gear

LAS VEGAS, Jan. 6, 2005 — According to a new survey, consumers are ready to embrace James Bond’s car of the future today — and the majority of them trust a software company such as Microsoft to be their co-pilot.

Results of the survey, conducted by StrategyOne on behalf of Microsoft Corp.’s Automotive Business Unit and announced today at 2005 International CES, revealed that consumers ranked James Bond’s gadget-filled Aston Martin DB5 as their favorite famous high-tech car, followed by KITT from the 1980s TV series “Knight Rider” and the Batmobile. In addition, if consumers could give their high-tech car a voice, their top choice would be former 007 Sean Connery’s famous Scottish brogue. Their second choice would be that of actor James Earl Jones’ Darth Vader.

As more cars with telematics — the term used to describe high-tech features that combine automotive, computing and wireless technologies — make the leap from the big screen to dealer showrooms, findings of the study show that the majority of the Americans surveyed (60 percent) would trust a software company such as Microsoft to develop their cars’ infotainment system over an automotive manufacturer (27 percent). Thirteen percent said they would prefer another type of company or were undecided.

Consumers Demand Better, More-Affordable Systems

According to Telematics Research Group Inc., in 2004, 66 percent of automotive brands offered some form of in-car infotainment system in one or more of their models. When respondents to the StrategyOne survey for Microsoft were asked to select which features they desired most, they selected the following:

  • Nearly half (49 percent) of all consumers surveyed expressed a wish to use their current cell phone hands-free through a Bluetooth®
    or other wireless connection to their car audio system.

  • More than 50 percent of consumers aged 18 through 24 said they wanted an easy, inexpensive way to connect and play digital music, movies or games from the road.

  • More than two-thirds of those surveyed would like their navigation system to alert them to traffic trouble in the area and reroute them around congestion. More than half of respondents would like this “smart” navigation information delivered to them over the car’s speaker system.

However, many new-car buyers are finding it difficult to add these options to the vehicle they purchase. Seventy percent of consumers surveyed said either a telematics system was not offered on their vehicle, or the specific feature they desired was not an option. In addition, nearly half of those surveyed said these features were too expensive.

“Our goal is to remove cost and availability barriers so all drivers and passengers can experience a safer, more seamless way to communicate, access location-based information and enjoy digital entertainment on the road,” said Marty Thall, general manager of the Automotive Business Unit at Microsoft.

Microsoft Embraces Consumer Demands

With more than eight years of experience in the automotive industry, Microsoft’s telematics platform is helping deliver the features consumers most want in their cars. Automakers can now offer their customers reliable and affordable in-car infotainment solutions based on the Windows®
Automotive operating system with the following features:

  • Advanced speech technology. Drivers can focus on the road ahead by using Microsoft’s powerful speech technology to get personalized traffic updates, place a phone call, ask for driving directions or even play digital music.

  • PDA and cell phone integration. Bluetooth technology wirelessly connects a driver’s Bluetooth enabled cell phone and PDA to the vehicle’s electronics system, allowing drivers to make and receive calls by speaking, receive meeting reminders, and access important information through the car’s audio system.

  • Digital entertainment support. Microsoft’s telematics platform provides support for digital music, movies and gaming to keep passengers entertained during long road trips.

  • Web services. Drivers can experience personalized, voice-controlled Internet access to Web services such as MSN®
    Autos that can help them avoid traffic jams, get the latest headlines or find the closest gas station with the lowest prices.

  • Customized navigation. Taking a wrong turn is a thing of the past with the Microsoft® voice-controlled navigation system. Drivers can find points of interest or get turn-by-turn directions with the help of Global Positioning System (GPS) and MapPoint®

  • Hands-free phone. Drivers need never again take their eyes off the road when they want to make a call. They can enjoy a hands-free phone conversation while behind the wheel without the distraction of manually dialing a number.

  • Remote diagnostics. Drivers are alerted to potential car problems and maintenance updates, potentially improving their car’s performance over its lifetime.

“Microsoft’s telematics platform and Windows Automotive operating system make it possible for automakers to implement telematics across their model lines,” said Telematics Research Group lead analyst Phil Magney. “As more automakers respond to consumer demand for telematics features, Microsoft’s approach has the potential to provide a low-cost telematics solution that can be customized to deliver a variety of applications and services.”

According to a recent Forrester Research report, “Microsoft has put together an offering that meets consumer expectations of functionality, ability to upgrade and cost, while meeting auto engineering’s demand for safety, ruggedness and integration.” The November 2004 report, titled “Why Microsoft Will Win the Telematics Race,” can be purchased at .

Survey Methodology

StrategyOne, on behalf of Microsoft, conducted a nationwide telephone survey of 1,051 American adults aged 18 years and older that focused on their attitudes toward, and behaviors regarding, in-vehicle telematics and technology.

About Windows Automotive

Windows Automotive is an automotive-grade operating system that allows developers to quickly create powerful in-car computing solutions. It offers flexibility, with a choice of computing platforms, hardware peripherals and software components, as well as a large community of experienced developers for Windows CE. Currently, drivers and passengers can experience Microsoft technology in 25 preinstalled and aftermarket devices from 13 world-class automakers and suppliers including Acura, BMW, Citron, Clarion Co. Ltd., DaimlerChrysler, Fiat, Subaru, Honda, Hyundai, Mitsubishi, NexTech, Toyota and Volvo.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software,

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