Microsoft stepped up its presence in car software today, announcing a new computerised system that allows drivers to monitor their vehicles’ carbon emissions and gives them advice on how to tweak their driving to make it greener.

The move comes as Microsoft eyes the growing market for onboard car computers — ranging from driving diagnostics engines to hands-free entertainment and communications systems.

In particular, the world’s largest software group is eager for its car-focused Windows CE operating system — specially designed for devices that have small amounts of data storage — to mirror the success of its larger brother: the Windows system that is run on 90 per cent of the world’s personal computers.

Martin Thall, general manager of the Automotive Business Unit at Microsoft, said: “People expect to see Microsoft products in their office, and, increasingly, in the living room through products such as the Xbox. The auto market is an obvious extension of that.”

The sector was a focus of Bill Gates’s keynote address to the Consumer Electronics Show in Las Vegas this year, where Microsoft announced a tie-up with Ford.

"It's got to be simple, with safe ways to get the driver involved," the Microsoft co-founder said. "We've been investing in this for some time."

Mr Thall added that Microsoft was looking at the possibility of hooking cars up to the internet — possibly though wireless WiMax networks — but added that patchy coverage and costs have so far proven prohibitive.

He said: “I think we will see basic internet connectivity, but it's not going to be pervasive in the next couple of years.”

Unveiled today at the Frankfurt Motor Show, the EcoDrive system, developed by the world’s largest software company in tandem with Fiat, collects data on a vehicle’s efficiency, which can be downloaded from a dashboard socket to a personal computer via a USB key — a miniature data storage device.

Using the system, a driver can determine the carbon dioxide emitted for each trip.

The system will also analyse a driver’s style and make recommendations on how to make it more environmentally friendly and cost-efficient.

The tool is the latest to be developed by Microsoft for Fiat’s Blue&Me onboard car system, which is based on the technology giant’s proprietary software.

Microsoft is also investing heavily in Telematics – systems that provide information and services to cars using telecommunications. Analysts have estimated that the market will be worth more than $40 billion (£19.6 million) by 2010. It has also been forecast that more than half of all new vehicles within seven years will be equipped with technologies that will connect them with the outside world.

Microsoft, for instance, has suggested it will soon offer systems that parents could use to keep track of vehicles driven by their children, with the car sending a text message home if it leaves the area or drives over 70 mph.

Ford’s Microsoft partnership – dubbed Sync and slated for release on the Ford Focus this autumn – follows an aborted stab at similar technology in the mid-1990s by the carmaker through a joint venture with Qualcomm, the mobile-phone chipmaker. Executives say the earlier venture failed because of a lack of demand from drivers and shifting technology standards.

The company is betting that appetite will be keener in the web 2.0 age, where users increasingly expect to interact with hardware, Mr Thall said.

Last month the software firm also announced a tie-up with Siemens, the German engineering group, to develop communications, information, entertainment and navigation products for vehicles.

The first Siemens VDO Automotive product based on Microsoft software is expected to go into production in 2009.

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