- The Washington Times - Friday, November 3, 2000

An auto industry that doesn't care how many cars and trucks it sells each year?

Hard to imagine, but Scott McNealy insists that is the future as electronic systems take over the automobile and as car manufacturers recast themselves into a dot-com mold designed for better appeal to new-economy investors.

Mr. McNealy is chief executive of computer giant Sun Microsystems, which is pushing to get more of its devices into future cars and trucks. He has a vested interest in seeing automakers embrace microprocessor-based technology. Yet anyone who attended the "Convergence 2000" conference on automotive electronics in Detroit last month may find it hard to argue with the Sun chief's views.

That's because automakers are scrambling to jam in enough high-tech content to make vehicles as much communications devices as modes of transportation. Within the next few years, cars are expected to pack in enough electronics and "telematics" to diagnose their own mechanical problems, order replacement parts and schedule service appointments nearly all by themselves.

"We could even alert the driver that tire pressure is low, outside temperature is high and that he is driving at too high a speed," Mr. McNealy said, alluding to factors that may have contributed to the recent Ford-Firestone tire recall that's linked to 160 deaths worldwide. "Wouldn't it be nice to know those conditions exist?"

Low on gas? Vehicles will use their Internet connections to shop around for the most convenient fueling stations with the lowest prices. Hungry? Car systems will hunt for area restaurants and check on seating availability.

The hard part is getting there from here, and it will require a big shift in industry thinking. Automakers will have to transform themselves from manufacturers into Internet service providers, Mr. McNealy said.

"Someday at General Motors or Ford, it won't be how many cars you've sold, it will be how many million customers you've signed up [for Internet service]," he said.

"If I were [Ford Chief Executive Officer] Jac Nasser or [General Motors CEO] Rick Wagoner, I would be starting to ask, 'How many vehicles do we have in our service provider directory?' He who has the largest [customer] directory wins" on Wall Street, Mr. McNealy adds.

To prepare for that shift, automakers have to become "more dot-com-like," Mr. McNealy urges. That includes engineering a cultural change that puts greater emphasis on Internet usage in day-to-day operations.

"You've got to dot-com your business so you know how car buyers will want to access the Internet," he tells auto executives.

That even could mean auctioning cars to the highest bidder over the Web rather than setting firm wholesale prices, Mr. McNealy suggests. He says DaimlerChrysler is losing millions by selling its hot PT Cruiser to dealers at list rather than charging what the market will bear.

"There is no price list for pork futures or Beanie Babies," Mr. McNealy said. "Why on cars? That's so last millennium."

The question is whether auto executives, dealers and even consumers are ready for the 21st century.



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