Ford's master plan to enter transportation services rests on software prowess

Ford has made great strides on the software front, but the next act of its master plan may ride on its ability to develop applications quickly and integrate them with a bevy of players.
Written by Larry Dignan, Contributor

Ford CEO Mark Fields made the case that the automaker is better suited to play in the transportation services and software market than ever before and lead what the company expects will be a "breakthrough year" that will "change the way people move."

How well Ford delivers on those grand plans will largely depend on how well it can develop software and collaborate with major technology players.

The big picture from the Ford keynote at CES 2016 revolved around its "smart mobility" plan, which aims to reposition the company for the digital era. The technology buckets for Ford now include mobility, connectivity, autonomous vehicles as well as a data driven customer experience. Ford outlined results from various experiments in transportation started last year. The company will focus on flexible use and ownership and multi-modal transportation.

Speaking at CES 2016, Fields outlined the challenges for the auto industry: Consumer attitudes, urbanization, air quality and other cultural changes. Fields said the disruption facing the auto industry is ultimately an opportunity. "We're completely rethinking how we approach the business with one foot in today and one foot into tomorrow," said Fields, who said Ford has to think about what the world looks like in the years ahead.

Also: Microsoft refines auto strategy with productivity, cloud twist

Ford will continue to focus on design, servicing and manufacturing, but the future largely rides on software and services. "We're proud to be an automaker, but beginning this year you're going to see us change more rapidly," said Fields, who said Ford will work on transportation services in the year ahead. Ford and rivals garner little to no revenue from transportation services--taxis, auto sharing etc.

McKinsey in a report this week said that the bulk of auto industry growth will come from transportation services and recurring revenue. Here's what Ford will have to navigate via McKinsey.

Credit: McKinsey

So far, Ford may be the best positioned to be a proactive player in the changing landscape. Compared to its rivals, Ford has made a bevy of key software moves as part of its broader mobility strategy.

In 2015, Ford set a course to become a more agile software developer, become interoperable with more tech providers and utilize big data and cloud computing as it develops autonomous vehicles. Ford's general theme is that tech can improve its customer experiences.

At CES 2016, Ford outlined the following:

  • A plan to sponsor a developer challenge to create drone-to-vehicle software that could be used in industries such as agriculture, construction and emergency situations. The developer challenge is being sponsored by Ford and industrial grade drone maker DJI. The drone-to-vehicle system would use Ford SYNC AppLink or OpenXC. CNET: Ford challenges developers to build a drone-to-vehicle system
  • Plans to pair SYNC vehicles with smart home systems and products such as Amazon's Echo and Wink. At CES 2016, Amazon and Ford highlighted how Echo could start a Ford vehicle as well as provide key data. Ford also highlighted how Amazon's Alexa, the brain of Echo, could open a garage door and turn on the TV. The SYNC-Echo integration will be available later this year. "This is a great example of Ford working with other innovation leaders," said Fields. See: Alexa, is my garage door closed? Ford wants your car to talk to Amazon Echo
  • A move to triple its autonomous vehicle fleet and speed up testing of on-road sensors and software. The software will create 3D models and precision mapping courtesy of the data thrown off from auto and radar sensors. Ford will have a dedicated team focused on autonomous cars and develop a stepping stone approach to integrating the technology into its autos.
  • Adoption of the automaker's open source SmartDevice Link, which is app interface software. The key point here is that Ford created software for its own use and now has developed a standard that also powers its AppLink software. QNX and Toyota have adopted the software and Honda, Subaru and Mazda are looking into it. See: Toyota leads automaker pack adopting Ford's open source entertainment software
  • AppLink will add Apple's CarPlay and Android Auto to SYNC. The move highlights how Ford's secret sauce is the middleware and integration with the vehicle. The front-end can be bring your own depending on whether you're an Android or Apple person. See: Now Ford brings Apple CarPlay and Android Auto to Sync 3 vehicles

Couple those moves with December's announcement that Ford will partner with Pivotal Software to adopt Cloud Foundry and the company's big data suite and it's obvious that the automaker has to speed up its software efforts. At the time, CIO Marcy Klevorn said "as we grow to become both an automaker and a mobility company, having leading software development expertise is critical to delivering at the speed consumers expect."

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