3/8/2009 | 6 MINUTE READ

The Future At Ford?

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There are clear changes at Ford. Sure, there are the new Mustang and the direct-injection, turbocharged Ecoboost engines. But something else is going on. And whether you're a competitor or supplier, it may affect you.


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Recent-and not-so-recent-developments and announcements from the Ford Motor Company make it seem as though the company is going to be focusing on things other than, well, things like the Focus. Sure, the company's cars and trucks are going to continue to be important, but there is an overall trend toward developments of a more electric nature, as the company is rolling out everything from keys that limit the speed of a vehicle (as well as the volume of the audio system) to improved in-car connectivity, from a self parallel-parking system to electric vehicles. But in the grand scheme of things-perhaps-the cars and trucks that are ordinarily associated with the company are simply the proverbial "widgets," a term that one Ford exec used during a causal discussion about the industry, within a larger ecosystem of services. And there may be a whole new environment, driven by not only customers but legislators, to say nothing of the, well, environment.
The "car industry" isn't necessarily about cars as much as it once was.
Listen to this:
"We're on the verge of another transformation that will revolutionize our industry as profoundly and as fundamentally as the engineering and manufacturing innovations of the last century. The changes sweeping through our industry come from many sources, but they center around two: (1) advanced technology that brings lower cost and lower prices and (2) the advent of a global economy and global consumers. The two together mean that the consumer is really now in charge. Not the manufacturer. Not the banker. Not the retailer. But the consumer.
"And it's a different kind of consumer. The younger generation enters a culture that the automobile no longer dominates as it once did. The younger generation still wants to drive but what really excites them most likely involves computer, software, the Internet, and the latest films or entertainers from Hollywood."
Those are words spoken by a Ford executive, a CEO, no less. But a CEO of 10 years ago, Jac Nasser, on February 10, 1999.
Yet those remarks are prophetic, or at least indicate that even though the people behind some of the desks may have changed, some things don't. Like thinking about the connected consumer.
Listen to this:
"We must focus on that which is valuable, compelling and that which offers our customers to be one with the world and truly live one's life. A life without boundaries between work and play, between friends and co-workers, and between home and office . . .
"Yes, we are a car company, but we are learning to think like an electronics company when it comes to bringing fresh, new and innovative technologies and products to market. And we know that we will be most successful in bringing true innovation to customers if we work with the best technology experts like many of you here with us."
That's Alan Mulally, present Ford president and CEO, on January 8, 2009. Whereas Nasser's remarks were presented at an auto show, Mulally was making a keynote address at the Consumer Electronics Show (CES). Among the companies that he was referring to as those with which Ford is working include Microsoft (www.microsoft.com), Tellme (voice portal; www.tellme.com), airbiquity (data-over-voice technology; www.airbiquity.com), Telenav (directions on the system network and on-board; www.telenav.com), and INRIX (traffic, directions, maps, and alerting; www.inrix.com) for the SYNC system.
See any familiar automotive suppliers on that list?
Listen, once again:
"Think about this: Nokia and Apple have opened online application stores. Blackberry has captured 50% of the smart phone market, and is now letting users download applications. Within the first six months after its introduction, iPhone users downloaded 100 million applications. The total now stands at 300 million. We have already begun developing a set of APIs [application programming interfaces] that will allow SYNC to access and control the applications our customers are down­loading to their phones and other devices.
"By working with application developers and the wireless industry, an entire world of applications will be available via SYNC. Imagine being able to access Internet radio services such as Pandora scrolling from playlist to playlist through control buttons on your steering wheel. Think about how excited young drivers would be if they could access their most recent messages on social networking sites such as Facebook and MySpace through simple voice commands."
That's Doug VanDagens, Ford's director of Connected Services, also at CES. Realize that he's talking about all of those apps and the access to Facebook in a car. Note that he's referencing companies like Nokia, Blackberry and Apple, not GM, Toyota and Audi.
Listen to the sound of commerce:
"By this fall, we will have one million SYNC-equipped vehicles on the road, which is no great surprise, when you consider that SYNC-equipped vehicles are selling twice as fast as non-SYNC equipped vehicles on our dealer lots."
That's Derrick Kuzak, Ford group vice president, Global Product Development, at CES. Given that Ford, Lincoln and Mercury sales were down 20% in 2008 compared to 2007, the fact that SYNC is measurably moving metal is undoubtedly playing large in the considerations at the corporation about the importance of electronics.
Listen a last time:
"Today, I am happy to announce our new partnership with the leading electronics retailer Best Buy. They are helping us build awareness of SYNC and providing tech support with their Geek Squad."
That, again, is Mulally at CES. Best Buy (www.bestbuy.com) is usually about Samsung and Sony, Netgear and Nikon. Ford? But there are, of course, the cars. Yet these are becoming different, too.
One of the parts of a car that has long been semi-sacrosanct is the powertrain. Yet in its announcement of a lithium-ion battery-powered small car for North America in 2011, Ford revealed that it is collaborating with Magna International (www.magna.com) to help bring this car to market; it also stated that it is working with the Tanfield Group of the U.K. (www.tanfieldgroup.com) to provide battery-electric versions of the Ford Transit and Transit Connect commercial vehicles for Europe.
The goal to bring these vehicles to market quickly and affordably (the plan calls for a full battery electric van-type commercial vehicle in 2010; a full battery electric passenger car in 2011; and next-gen hybrids, including a plug-in, by 2012), Ford has decided that it is necessary to not only work with familiar automotive suppliers like Magna, but even those that many in the industry aren't familiar with, like Tanfield.
There is the Ford Active Park Assist system based on ultrasonic sensors and electric power-assisted steering for parallel parking. There is the Blind Spot Information System and Cross Traffic Alert, also based on sensors. There is the MyKey ignition key that allows limiting the top speed of a vehicle to 80 mph and the audio volume to 44% of total via simple programming.
All of these things are based on things other than the conventional mechanisms that are typically associated with cars.
The implications of this are as simple as they are wide-reaching. Going forward Ford-and other vehicle manufacturers-are going to be differentiated more by their electronics array and offerings than by horsepower. The suppliers that they are working with-and not just on things like SYNC-are probably more familiar to attendees of the Consumer Electronics Show than the North American International Auto Show.
This is not to say that the conventional suppliers are necessarily going to fall by the wayside.
But ask yourself this: What is the relevance of a conventional supplier during non-conventional times?