Japan steers American autos into the future: wireless car navigation systems spread to the States.

IT'S NO SURPRISE THAT a country famous for its mystifying addresses has become a hotbed for car navigation. Now Japan's successes in wireless connectivity--the future of car navigation systems--have begun to reach the US market. Taking real-time information into the car is known as telematics, or ITS (intelligent transportation systems). Japan's ability to combine its strengths in car navigation system hardware, car manufacturing and wireless networks has given it the global lead.

Last fall, Japan became the first country to commercially launch car navigation systems with connectivity to third-generation wireless networks. Toyota's G-Book telematics service uses ear navigation hardware jointly developed by Toyota, Matsushita Electrical Industrial and Matsushita Communication Industrial. The wireless communication module was designed by Toyota, Denso and KDDI. The system utilizes KDDI's CDMA 2000 1x wireless network (launched in April 2002), which averages data throughput of 144kbps for real time traffic information and features content from the carrier's cellular data service, EZWeb. Since KDDI's new network was designed to be backwards capable with its second-generation network, its coverage is widespread and robust. Alps Electronic Co., a leading car navigation hardware manufacturer, also makes communication modules with KDDI on an Original Equipment Manufacturer (OEM) basis. The modules are featured in Pioneer's Air-Navi service, which is an add-on to the company's market-leading Carozzeria navigation hardware.

The next generation of these Japanese telematics systems will utilize KDDI's upcoming 1x-EvDO network, scheduled for launch in October 2003. EvDO data throughput averages 600kbps and will greatly decrease data costs for new and current consumers.

Previous Japanese car navigation systems stored map information on DVDs or CD-ROMs and used older generation IP-based networks through the phones of NTT DoCoMo's i-mode service (9.6kbps). The new car navigation hardware replaces mobile phones as the conduit for wireless connectivity and inserts a communication module in its place.

Telematics in Japan emerged when the Japanese government began installing the VICS (Vehicle Information and Communication System) infrastructure in the mid-90s. Over 5 million VICS-compliant navigation systems have since been sold, allowing drivers to access and view traffic and routing information on their systems via FM multiplex broadcasts (approximately 50KB/5 minutes per station), radio beacons (approx. 8KB per beacon) and infrared beacons (approx. 10KB per beacon).

Meanwhile, in the US, Japanese car navigation hardware now dominates the market. Denso and Alpine Electronics  USA (a subsidiary of Alps) are the top two OEM hardware suppliers to car manufacturers, though neither electronics company has successfully implemented a telematics service. Problems within the US telecommunications industry deserve most of the blame. "In most major cities, the traffic information is there, either through government agencies or private industry. The problem is that there is no pipe to the car," says Stephen DeWitt, vice president of brand marketing and communication at Alpine Electronics USA.

Denso was the OEM hardware partner of Wingcast, a telematics joint venture between Ford Motor Company and Qualcomm, the patent holder of CDMA technology. Ford discontinued the venture in June 2002, citing problems with the cost of Denso's hardware, lack of demand for new cellular services and a change in strategy.

Other Japanese companies in the US have failed in their efforts to find a nationwide wireless communication service to suit the needs of telematics. Clarion USA and Pioneer Electronics USA both attempted to launch aftermarket navigation products using radio receiver communication modules. The modules were designed to download live traffic information from the wireless paging network of Cue. The projects were canceled after Cue announced bankruptcy in June 2002.

The search for a reliable communications network continued. In October 2002, Pioneer and Alpine announced a project with Navigation Technologies, a map data company that provides Yahoo's US map information, and XM Satellite Radio, a satellite communications provider. Given that Honda USA is one of the main investors of XM Satellite Radio, it appears that Japan's telematics leaders are unsure of which communication platform will emerge as the winner in the US, and they are growing impatient. "We are examining other technologies to bring this information back into the vehicle," says Ted Cardenas, brand manager of mobile entertainment products at Pioneer Electronics USA.

There are other signs that Japan's telematics market is making deep inroads into the emerging US market. On the integrated circuit side, Hitachi Semiconductor, supplier of roughly 70 percent of car navigation system CPUs in Japan, can be found in many of the products of Delphi Automotive Systems, which is a major supplier to the leading telematics service in the US, General Motor's Onstar. Onstar is a voice-guided cellular service that has incorporated navigation hardware interactivity.

General Motors has over 1 million subscribers for its OnStar service, which is a cellphone service that offers voice-based navigation and emergency coverage through a driver's cellphone system. Onstar has taken its voice traffic information and combined it with a visual-based car navigation system in six of its cars and trucks.

When they were first introduced five years ago, car navigation systems were considered luxury gadgets in the US. No more: Navigation is now an option in the 2003 models of the country's two most popular cars, Honda's Accord and Toyota's Camry. The 2003 Accord has offered car navigation as an option since November 2002, and the Camry began with its 2002 model. Honda estimates 5 to 10 percent of Accord buyers in the US will opt for the systems this year, a number that will push nationwide car navigation use to new levels. Penetration of car navigation is expected to grow from 1.5 percent of all new car purchases in 2002 to 10 to 12 percent in 2010, according to a study by J.D. Power and Associates, which tracks the industry. Car manufacturers are expected to continue to push navigation systems into mainstream vehicles, says Alpine's DeWitt.

US carriers Verizon Wireless and Sprint PCS launched nationwide CDMA 2000 1x networks in 2002, and both are rumored to be planning telematics services. This is a good sign for Japanese telematics companies looking to export. As more advanced services unfold in the US, Japanese companies should find themselves in good position to continue marketing their expertise. And since exports still form the basis of Japan's economy, Americans will drive into the future with Japanese technology behind the wheel.