Toyota Confirms Existence of Social-Media Bubble

Like pretty much every company in the universe these days, Toyota (NYSE: TM  ) is planning to get friendlier with its customers by setting up a new social network for Toyota cars and their drivers called Toyota Friend.

The network, which is meant to connect cars, owners, dealerships, and the company, creating a pool of online resources where valuable information like maintenance and customer services can be found, adds momentum to a strong trend growing among auto manufacturers. Toyota is definitely looking to make a mark in dashboard telematics.

May the salesforce be with you
Toyota's new venture on the social networking front will be in partnership with salesforce.com (NYSE: CRM  ) , a major player in the cloud computing business. The network, which will debut next year, will be available on Toyota electric vehicles and hybrid plug-ins. This network will enable users to post messages in real time. This could mean easy accessibility of information such as engine diagnostics and energy usage for everyone who drives a Toyota hybrid or electric vehicle. Or, it could just mean a bunch of annoying, relatively meaningless notes for someone at Toyota's headquarters to sift through.

Machinations
Toyota's strategic alliance with salesforce comes at a time when the company is gearing up to face stronger, more technologically savvy competition. It's been doing so for a while now.

In fact, this announcement comes in the wake of a similar announcement that Toyota is partnering with Microsoft (Nasdaq: MSFT  ) in the field of dashboard telematics to provide in-car advanced digital communication systems for Toyota vehicles. The project relies on hardware and software systems that are built into the cars and will work on Microsoft's cloud computing platform, Azure.

Among Toyota's rivals in the business, one of the earlier adopters of telematics include General Motors' (NYSE: GM  ) OnStar that allows the user to unlock doors remotely and make calls from the car itself. There is also the Sync, which was manufactured by Microsoft for Ford (NYSE: F  ) .

How is this different?
The dashboard telematics that will be offered at Toyota showrooms next year are allegedly different because Toyota's telematics allow cars to connect with each other, share information remotely, and allow for optimum usage of power from their in-car batteries.

Apart from all this, Toyota's goodie bag contains more telematic-based in-car services such as access to the Bing search engine and other information services such as restaurant reservations.

The big push
Overall, Toyota looks poised to push up sales of its eco-friendly vehicles by using in-car technology as a selling point. While sales of electric vehicles and hybrids have been suffering due to high costs, additional technological features such as dashboard telematics could give some boost to the lagging sales figures. But then again, if consumers don't have the capacity to pony up $35k+ for a new shiny ride, what difference does an intelligent dashboard or an arm-chair microwave make? A deep-fryer built into the sun-visor still isn't going to help me make monthly payments on the car.

Fool's take
If you have the money and are in the market, these new technologies help make a new Toyota look appealing. As an investor, I think it's reasonable to suggest that these technologies should spur a whole new wave of innovation within the industry.

But, as with all new technologies, getting traction in the market takes time. In the initial phases, several new players enter the game, but only a few live long enough to stabilize their situations. While early entrants have the first-mover advantage, there is no telling who will emerge as the market leader in the auto/technology industry. So, investments on these fronts will require closer scrutiny but could pay real dividends later.

Arunava De does not own shares of the companies mentioned in this article.

The Motley Fool owns shares of Microsoft and Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor, Microsoft, salesforce.com, and General Motors. Motley Fool newsletter services have recommended creating a diagonal call position in Microsoft. Motley Fool newsletter services have recommended creating a short position in salesforce.com. Motley Fool newsletter services have recommended shorting 1. 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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