Infotainment: In an illustration of the interior of the Evos concept car from Ford, vehicle displays show games, movies, and data downloaded from the Internet.
About a decade ago, Doug VanDagens, a senior executive at Ford Motor Company, raised his hand at a board meeting and asked a fundamental strategy question: Why go proprietary when the world is moving to open-source?
At the time, Ford was concerned about its Detroit rival GM. At issue was GM’s OnStar, the successful in-car communication device offering emergency alerts, stolen-car tracking, and a built-in phone for an annual fee of $199 (plus cellular-minute charges). The OnStar business had two million subscribers and an 80 percent share of the car communications services market, and it was valued at over $4 billion.
GM was raking in profits, and Ford was struggling to play catch-up. It had hired 250 people and plowed over $150 million into a spin-off called Wingcast that was building a me-too answer to OnStar. But VanDagens thought the era of closed, black-box solutions was drawing to a close. The number of cell-phone subscribers was growing quickly. So was the ability of phones to communicate with other devices. “The writing was on the wall,” recalls VanDagens, who today is Ford’s director of connected-services solutions.
After an internal battle, VanDagens was given the job of shutting down Wingcast and laying off its staff. By the fall of 2007, Ford had instead launched Sync, a system developed with Microsoft that works with drivers’ own cell phones and MP3 players. It uses Bluetooth to connect these devices to buttons on the car’s stereo and steering wheel, so that drivers can make hands-free calls or have Twitter updates read aloud. No matter how fast new models of phones are introduced, they still work with Ford cars.
Sync isn’t unique—Mercedes has a similar system, as do other automakers. All the same, Ford’s early move to a more open technology platform has given it an edge over its crosstown rival (last year, GM announced MyLink, a Sync-like infotainment package), and it has helped turn the 108-year-old automaker into the coolest technology company in the Rust Belt.
That’s important because, increasingly, digital technology sells cars. This week at the Detroit Auto Show, and simultaneously at the Consumer Electronics Show in Las Vegas, auto companies will be showing off their cars’ electronic gadgetry, downloaded movies, and music, not just their engine muscle. For most consumers, navigation systems and entertainment are now a top reason to pick one car over another.
K. Venkatesh Prasad, whose title is senior leader for open innovation at Ford, explains it this way: “The car was once a product. As customers focused more on services, leases, we evolved into a ‘services company.’ In this iPad era, we are transitioning to an ‘experience company.’” The definition of what a car is has expanded, he says. Ford, which buys many parts for its cars from third-party suppliers, now sees the Internet as an additional channel to procure components. The new mantra is “Buy it, build it, or beam it,” says Prasad.