Special Coverage

Convergence

DETROIT – Despite popular perception, the marriage between Ford Motor Co. and Microsoft Corp. to create the auto maker’s Sync entertainment system was not a blockbuster partnership brokered by two industry icons named “Bill.”

Instead, says Ray Gage, manager-business development at Microsoft, it was a pair of engineers from the auto maker and software developer chatting over coffee in a nondescript Redmond, WA, conference room.

“It just sort of blossomed from there,” Gage tells the Convergence Transportation Electronic Conference here.

It was months later when Ford Chairman Bill Ford Jr. and Microsoft Chairman Bill Gates revealed Sync during presentations at the 2007 North American International Auto Show in Detroit and Consumer Electronics Show in Las Vegas, respectively.

Sync allows hands-free mobile-phone communication and other wireless information transfers, such as music downloads and email.

Gage uses the germination of Sync to illustrate how the auto industry continues to move from an OEM-supplier relationship based on price and on-time delivery to a more collaborative model.

The partnership between Ford and Microsoft, which Gage characterizes as “board and deep” today, was born out of necessity and did not mature entirely smoothly.

“Automotive companies and software companies typically don’t go well together,” he says. “Software was always seen as something you needed to make hardware work.”

But in the years preceding Sync, Ford knew consumer perception was that it trailed in vehicle connectivity, Gage recalls. At the same time, Microsoft was struggling to gain a foothold in the auto industry with its booming electronics content.

The AutoPC effort designed to bring Microsoft’s Windows software application to vehicles failed, earning the moniker “Clueless in Seattle,” Gage says. “So it was a necessary evil (but) an atypical partnership.”

The collaboration encountered its share of challenges, he adds. Ford was accustomed to the terms and conditions it shared with automotive suppliers, while Microsoft was used to a different set of procedures.

“We had to break a lot of rules, break a lot of policies to make this partnership work,” Gage says.

For example, the partnership started with Microsoft’s terms and conditions, which represented a major concession by Ford. But then Microsoft later made an important concession of its own by allowing Ford exclusive license to Sync.

“When we first took that to the Microsoft lawyers, they (said), 'No way are we going to do this,’” Gage says. “But we wrote the rules and the policies to make it happen and scale the partnership.

“I can go through dozens of examples like that,” he adds, citing user-interface sourcing issues, intellectual-property ownership and protection, warranty and branding.

“Big rocks had to be moved to make the partnership work from a commercial perspective,” Gage says. One key element was Ford’s decision to make Sync technology standard equipment on its vehicles.

Gage calls the decision “a big risk and a big gamble that paid off,” with the help of an aggressive marketing campaign by Ford and branding and public relations muscle from Microsoft through its properties, such as Web-portal MSN.com. “A good collaborative effort on the marketing side,” he says.

Engineers also collaborated closely to build a base product Ford and Microsoft could develop over time. The auto maker recently announced new capabilities, such as 911 Assist and vehicle-health reports, and will reveal newer features at Convergence in 2009.

Microsoft, meanwhile, intends to grow the Sync platform for other OEMs.

Today, the partnership between Ford and Microsoft boasts strong fundamentals, leveraging each company’s strengths, Gage says. The relationship includes oversight of executives, as well as continued engineering and co-marketing efforts.

What’s more, the collaborative low-cost technology is bringing more and younger buyers to Ford’s showrooms, while providing Microsoft the opportunity to make hay in the auto industry.

Says Gage: “We legitimized ourselves as a good supplier to the auto industry, and you’ll see our footprint grow.”