Microsoft's CarPoint, Ford May Announce Alliance Today

From Reuters

Microsoft Corp.'s MSN CarPoint online car-buying service today maynounce an alliance with a major manufacturer, probably Ford Motor Co., industry sources said Friday.

Microsoft President Steve Ballmer may make an announcement at a media event in San Francisco regarding CarPoint and a major auto manufacturer, a Microsoft spokeswoman said. She declined to discuss the nature of the alliance or identify the manufacturer, but one industry source said it was Ford. Ford representatives declined to comment.

Ballmer caused a stir this month when he was quoted as saying Microsoft might sell all or part of CarPoint. The company later said it was committed to keeping CarPoint as a core part of its MSN Internet portal site, and the Microsoft spokeswoman said no sale or spinoff was imminent.

Computer industry analysts also said a major structural change was unlikely to be announced today with Microsoft's new Internet group chief Richard Belluzzo scheduled to outline his strategy to reporters at a briefing in Seattle on Thursday.

CarPoint is among the leading sites in the rapidly growing online automotive market, which already generates leads that account for 2.7% of new cars and trucks sold for personal use, according to J.D. Power & Associates.

Chris Denove, consulting operations director for the research firm, estimated that by next year 5% of new cars would be sold through an online service.

"Within a few years, technology will allow somebody to literally walk into a virtual dealership and order a vehicle right from their home," he said. "That is obviously of concern to dealers, who have a large investment at stake."

Franchise laws prevent manufacturers from selling directly to consumers, protecting dealers and online services, which generally get a fee for customer referrals.

While Ford and other manufacturers have been trying to develop cohesive Internet strategies, consumers and dealers find the independent online services preferable to those run by manufacturers, according to J.D. Power research.

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