Microsoft hopes to SYNC up with the auto industry. The software giant's high-tech infotainment system has been one of the few big success stories for Ford Motor Co. this past year, drawing in the sort of high-tech-savvy buyers who might normally steer over to an import brand.

Now with Ford about to lose its brief exclusive on the SYNC system, Microsoft is ready to make a major push into the auto industry, the Detroit News reports. The Washington-based software company "will announce a massive new investment in its automotive business unit," the paper reports. And it has tapped Detroit native and Microsoft veteran Tom Phillips to head the operation.

"We know that things are tough for the auto industry, but it's the perfect time to make this investment," said Phillips. "There are new customers coming into the market and they are looking for new experiences."

There's been a general trend toward increasing the level of electronics in the average car. High-line manufacturers, such as BMW, with its complex iDrive system, can have more than $10,000 in silicon-controlled systems, ranging from engine, chassis, and safety controls to navigation and in-car entertainment. Even low-end vehicles are being offered with high-tech hardware.

Part of the challenge is to come up with technology that not only offers a wide array of features, but that is also easy to use. BMW has been repeatedly faulted for the complexity of iDrive, and plans a complete remake of the system shortly. Microsoft, however, has won kudos for SYNC, which offers the driver a variety of ways to issue a command, including one of the best voice control systems on the market. Ford recently launched a second-generation SYNC system that adds such features as traffic and weather, along with the ability to track restaurants, movie schedules, and gas prices.

Using SYNC as a come-on in its entry-level sedan, Ford has reportedly driven up the average transaction price on its Focus by $1,000 over the past year. As it expands availability, he automaker expects to sell about 1 million vehicles equipped with SYNC by the end of 2009.

But as with much of the technology provided by outside suppliers, manufacturers like Ford are generally granted limited exclusivity. And Microsoft is already beginning to license the SYNC system to other manufacturers, including the Korean upstart Hyundai, which expects to bring its own version to market within the next several years.

When the South Korean carmaker Hyundai recently announced plans to introduce a Microsoft-based navigation and communications system into its cars, it underscored the dramatic transformation of today’s automobiles. While they may remain, at their most fundamental, mechanical devices, the modern car has become an electronic center, with digital technology controlling everything from the engine to the backseat entertainment system.

Indeed, the biggest area of growth is in information and entertainment technology, sometimes dubbed “infotainment” or, if you prefer, "telematics.” These days, many cars feature more high-tech features than your typical home or office, and the trend seems all but certain to continue.

That’s why a new study by ABI Research forecasts that just navigation devices and systems alone will generate sales of $62 billion by 2012. "Despite disappointing sales levels in the first quarter of 2008 and profit warnings issued by TomTom, Tele Atlas and SiRF, the navigation market still faces a bright future," Dominique Bonte, ABI Research principal analyst, told the trade publication, Telematics Update. "The current decrease in sales has to be seen as a logical reaction following the extraordinary sales growth during the fourth quarter of 2007, especially in the United States."

Good news for Hyundai, Toyota, BMW, and Ford (its new SYNC system, in a Lincoln Navigator, shown above)? Not necessarily. Millions of Americans are forgoing the built-in systems these manufacturers sell – often at prices running to $2,000 – in favor of portable navi units, some of which are available for less than $200. There are dedicated navigation systems, like TomTom's, and now even gaming devices and phones with built-in GPS hardware.

So what’s a carmaker to do? It could depend on two things, acknowledges Alan Hall, a spokesman for Ford Motor Co.: either drop prices or add significant functionality. (Or both, we’d add.) It’s a growing bit of conventional wisdom that factory-equipped navi systems will have to drop to perhaps $500 to $700 to keep consumers ticking off that box when they order a new car.

Ford’s SYNC is commanding around $1,900 in the 2009 Escape crossover, yet sales are booming. That’s because the Microsoft-programmed system features not just navigation, but a multifunction audio package, with a 10GB hard drive and an incredibly intuitive voice interface. Want to find the nearest burger joint while driving cross-country? Just say, “I’m hungry.”

But as analysts note, such technology isn’t the exclusive property of automakers like Ford, at least not for long. Traffic and even weather, as well as detailed points-of-interest lists and voice control, are all showing up on portable devices.

The pot of gold is huge. The question is, who will be able to claim it?