Ford, Qualcomm Joining Forces
Ford Motor Co. and wireless communications giant Qualcomm Inc. on Monday announced a joint venture to provide telephone, Internet and other digital services to virtually all Ford vehicles by 2004, in a move that aims to undercut General Motors Corp.’s dominance in auto-based wireless services.
The venture, tentatively named Wingcast, will directly challenge GM’s OnStar unit, which has been providing wireless emergency and concierge services since 1996, and will itself offer Internet access and hands-free phoning later this year.
“We’re expanding the definition of personal mobility and linking it to personalization of cars and trucks,” Ford Chief Executive Jac Nasser said from the No. 2 auto maker’s headquarters.
Wingcast’s partners view automobiles as the next frontier of computing--literally Internet portals on wheels. Data will be exchanged between vehicles and home computers, hand-held personal data assistants or Web-enabled cell phones.
The service aims to connect “anybody, any device, any time, the way you want it, the way you need it,” said Harel Kodesh, a former Microsoft Corp. vice president of consumer appliances who will be chief executive of Wingcast. “We want to transform the car into one of the most prominent nodes on the Internet.”
Ford and Qualcomm hold stakes in Wingcast, but executives declined to provide further details about the ownership structure. The company will probably go public in a few years, said Brian Kelley, president of ConsumerConnect, Ford’s electronic commerce unit.
Wingcast is structured as a company--rather than an internal unit of Ford, as OnStar is at GM--so that it can gain a partner with industry-leading technology and be pushed to turn an eventual profit, Kelley said. Like Qualcomm, it will be based in San Diego.
The service will cost $9 to $29 a month, depending on the options ordered. By comparison, OnStar charges $17 a month for its basic service of emergency notification when air bags deploy and satellite location of vehicles, and $33 for premium service that includes navigation instructions and concierge services such as making restaurant and theater reservations.
Wingcast is projected to be in 1 million Ford vehicles in 2002, 4 million in 2003 and 9 million in 2004. Nissan Motor Co. has agreed to offer Wingcast services in its Infiniti luxury cars, and Ford is talking with other manufacturers about supplying Wingcast, Kelley said.
Analyst reaction was mixed.
“The strategy Ford has announced is impressive in that it includes a first-rate technology partner, proposes a portable, upgradeable service and a steep ramp-up of installations,” John Casesa, Merrill Lynch’s senior auto analyst in New York, wrote Monday in a research note.
“On balance, this is good news for the stock,” Casesa wrote, adding that he expects that by 2004, GM and Ford should be neck and neck in multimedia communication with autos, a field known as telematics.
But Michael Ward, an auto industry analyst with Salomon Smith Barney in New York, expressed skepticism: “Time will tell if this concept of telematics works at all,” he said in an interview. “Right now it’s a huge investment. GM and Ford are losing a great deal of money, with no real revenue stream for two to three years.” He noted that both Ford and No. 1 auto maker GM are heavily subsidizing Wingcast and OnStar.
Ford shares gained 44 cents to close at $46.56 on the New York Stock Exchange, and Qualcomm rose $2.50 to $64.94 on Nasdaq.
