Tech Realignment? Maybe Not

The biggest news coming from the dealer-management system vendors at the National Automobile Dealers Assn. convention last month is that there was no news.

The big question mark concerns Microsoft. Dealers whose contracts with their current DMS vendors are nearing an end, were emailing me before NADA asking me for an update of where Microsoft is in its entry into the market.

Microsoft cancelled a planned interview with John Reed, its director of automotive retail systems on the eve of the Ward's/Dixon-Hughes DMS panel at NADA citing the fact there was no news to talk about.

However, during the panel Reed mentioned a pending distribution agreement with a major player while hinting at a couple of other significant announcements. Reed declined to elaborate any further.

A quick look at potential partners gives an idea of who likely players might be.

ADP: Although ADP uses some of Microsoft's technology, a partnership in the DMS arena is a stretch — but not out of the question.

The fact is, Microsoft, if it ever does find a way into the DMS market, would be a tough competitor for ADP. So why make it easy by partnering with it?

Reynolds: There's not much chance that the partner is Reynolds as long as Bob Brockman is in charge.

JM Family Solutions could be a strong possibility. It has a strong sales force with a lot of products and sources tell me it has looked at possibly acquiring a DMS vendor in the last year. I think it's a dark horse, though. It seems to be retrenching a little bit and focusing on the solutions it has already.

Dominion is another dark horse. It has a lot of pieces but there is little to no integration between them and that is a big minus. Another big drawback is the fact that Landmark Communications, Dominion's partner, recently put Dominion on the market.

AutoSoft: The third largest DMS vendor probably is not a good fit. The CEO, Charlie Prophet, likes to play it low key and keeps his company's focused on providing a sound product for dealers.

DealerTrack: Along with JM Solutions, DealerTrack is the most likely. Mark O'Neill would like to break Reynolds' and ADP's hold on the industry and a partnership with Microsoft could be the answer.

Getting a deal done could be tough. DealerTrack already has Arkona and would have to determine whether a partnership with Microsoft ultimately would cannibalize its own solution.

Also, DealerTrack may be close to announcing a deal to provide its Arkona solution Ford Motor Co. dealers in Canada, and it's already landed the Asbury Automotive Group contract, so the question is does it need Microsoft?

The point is, Microsoft wants a partner in the DMS space, but it could be running out of options. Stay tuned.