Why Ford Is Like Apple

"Um, dude," you're probably saying, "Ford (NYSE: F  ) isn't even on the same planet as Apple (Nasdaq: AAPL  ) . Apple is a brilliant technology company on the bleeding edge of coolness, run by the iconic Steve Jobs. Ford sells cars made by sweaty union guys, and it's run by some dude who used to be an airplane engineer. What a dumb headline. What are you thinking?"

Bear with me for a minute. Technology -- Apple's kind of technology -- is becoming more and more important to cars, and in this space, Ford is a leader. In a sense, Ford -- and several other automakers -- are like Apple, rushing to develop and maintain an edge in technology that's considered cool.

I'm not talking about technology like super-efficient turbochargers and fancy shock absorbers, though that's important, too. Ford and the other big-league automakers incorporate technology from some of the same companies you'll find in the iTunes App Store -- and that technology has proved to be a huge selling point.

The importance of Ford's tech push
If you've driven a Ford lately, you've probably been introduced to the automaker's SYNC system, a music/info/connectivity system that falls under the increasingly important "infotainment" label. SYNC was developed using a Microsoft (Nasdaq: MSFT  ) platform and Sony's (NYSE: SNE  ) Gracenote system, and it does ... well, it does a whole lot of stuff, ranging from the usual Bluetooth phone tricks (including some not-so-usual ones, like reading your text messages aloud) to syncing with your iPod and iTunes, to GPS functionality from TeleNav (Nasdaq: TNAV  ) . Much of it is voice-activated, so it can be used more safely while you drive -- though safety advocates have expressed some concerns about SYNC.

SYNC has been a big win for Ford, attracting more youthful buyers to cars like the Fiesta. As an option on nearly every Ford model, alongside other high-tech features like Sirius XM's (Nasdaq: SIRI  ) satellite radio and traffic information systems, it's driving profitable upgrades across the product line. Earlier this year, Ford said that SYNC was "critical or important to their decision to purchase" for 32% of customers surveyed.

That's a huge number, and it hasn't gone unnoticed by Ford's competitors. General Motors is mounting a big push to turn its OnStar system into a SYNC competitor; it's expected to introduce a number of SYNC-like features in the near future, including an app that would allow for integration with Facebook, according to a Bloomberg report. Think that's a step too far? Ford has already announced that SYNC will allow for on-the-go Twittering before too long.

How about Wi-Fi? Providing Wi-Fi in a moving car is a complex technological challenge, and it's something that Tesla Motors (Nasdaq: TSLA  ) has been touting for its upcoming Model S -- but several of the major automakers have already gone there. San Francisco's AutoNet Mobile provides in-car Wi-Fi systems to several automakers, including General Motors and Chrysler, who in turn market them as dealer-installed accessories.

So why is Ford not like Apple?
It's interesting to contemplate the idea of an App-Store-like feature for SYNC, in which users could install new and updated functionality in their cars over time. But that points out one of the biggest ways in which Ford's technology is not like Apple's: As auto analyst Jim Hall said in a recent Detroit News article, Apple doesn't care -- or at least doesn't need to care -- whether your iPod is still working or technologically relevant four years from now. People who really like the technology will update their devices every year or two. After all, it's only a couple of hundred bucks.

But cars are a different story -- while Ford's product folks might enjoy contemplating a world where people buy a new Focus or Mustang every year to get the latest version of SYNC, that's not reality. The cutting-edge infotainment system in a car you buy today has to be useful and at least somewhat relevant five years from now -- and that, along with safety concerns, limits the risks that automakers are willing to take with these systems.

That means it's unlikely that your car's technology will ever be as compelling as that in the most cutting-edge phones, from Apple or anyone else. But as Ford's experience has shown, infotainment technology can drive sales in a big way -- and will continue to drive sales going forward.

Read more of the Fool's global auto coverage:

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor John Rosevear owns shares of Apple and Ford, which is probably what led to this article's somewhat goofy headline. Microsoft is a Motley Fool Inside Value recommendation. Apple and Ford are Motley Fool Stock Advisor choices. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Microsoft. You can try any of our Foolish newsletter services free for 30 days with no obligation. The Motley Fool has a bleeding-edge disclosure policy.


Read/Post Comments (15) | Recommend This Article (36)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 10, 2010, at 8:39 AM, JoeandChuckP wrote:

    Sync is readily upgradeable, and free, at SyncMyRide.com

    That helps keep Sync up to date and fresh.

  • Report this Comment On September 10, 2010, at 12:24 PM, terder wrote:

    In the W-Fi paragraph you failed to mention Ford's impressive new ability to download vehicle/customer-specific SYNC and MyFord Touch software components wirelessly to vehicles so-equipped with wi-fi receivers as they travel down the assembly line.

    http://online.wsj.com/article/SB1000142405274870450420457544...

  • Report this Comment On September 10, 2010, at 12:39 PM, TMFMarlowe wrote:

    @JoeandChuckP, yes indeed and that's a good point. The issue is more one of aging hardware than software -- people will be daily-driving SYNC-equipped 2010 Mustangs etc 10 years from now, and at some point the updates won't be able to do much for them.

    @terder, it's not that I "failed to mention" it, it's that the Fool only gives me a certain number of words at a time, and not everything fits. :-) Thanks for posting the link.

    John Rosevear

  • Report this Comment On September 10, 2010, at 2:06 PM, Schwaggz wrote:

    in addition to all that, you have a USB port in your center console, which i was able to hook up a 250 GB USB-hard drive and i now have every song i've ever downloaded in my car.

  • Report this Comment On September 10, 2010, at 2:49 PM, SevenOneHands wrote:

    Now I'm not saying that Apple stock is about to take a nose dive, but I am saying that based on the company's current earnings it is really overpriced. This overpricing is the result of the public's infatuation with all things Apple. I mean think it about everyone from your uncle to your barber knows about Apple and think that the stock is a good buy. This has resulted in the stock being priced way higher than its market value because people keep buying it and that drives the price up. Now would you pay $20,000 for a car that was only worth $10,000? No you wouldn't and neither would anyone else with any level of common sense, but yet people are tripping all over themselves to buy Apple stock even though it's selling for way more than it's worth. That's why the smart money isn't just buying the stock. They are instead actively trading it. But what's the difference?

    ----------------------------------

    Money without intelligence is like a car without a road.

    http://www.intelligentinvestingtips.com

  • Report this Comment On September 10, 2010, at 4:14 PM, jstern3201 wrote:

    what about apple is overpriced? a foward P/E could be a low as 14. For the most innovative company that has continually beaten estimates, apple at 260 is still a deal. Once the shorts are the minority, this stock will continually rise.

  • Report this Comment On September 10, 2010, at 6:42 PM, bobcollins wrote:

    Is Nuance technology part of the Sync system? anyone know?

  • Report this Comment On September 11, 2010, at 7:20 AM, TMFMarlowe wrote:

    @bobcollins: Yes, NUAN provided SYNC's voice recognition engine. See here:

    http://www.nuance.com/news/pressreleases/2010/20100715_MyFor...

    Thanks for reading.

    John Rosevear

  • Report this Comment On September 11, 2010, at 10:53 AM, scanlin wrote:

    Ford also makes a good buy-write (covered call) candidate. With F at 11.79 (Sep 10 close) you can sell the Oct 12 call for 43 cents. No earnings risk before expiration. Annualized return of 38% if not called, and 56% if called.

    MikeS

    http://www.borntosell.com

  • Report this Comment On September 13, 2010, at 2:26 AM, baldheadeddork wrote:

    "Apple is a brilliant technology company on the bleeding edge of coolness, run by the iconic Steve Jobs. Ford sells cars made by sweaty union guys, and it's run by some dude who used to be an airplane engineer."

    I know you're not saying this is your opinion, John. But someday, someone will have to explain to me how Ford and their sweaty union workers are so uncool compared to a parasite like Steve Jobs who make his money like this:

    http://www.bloomberg.com/news/2010-06-02/foxconn-workers-in-...

  • Report this Comment On September 13, 2010, at 8:46 AM, TMFMarlowe wrote:

    @baldheadeddork... it was a joke, of course, to frame the point I wanted to make. But to your point, I don't think we can blame Foxconn on Jobs or assume that that's a problem unique to Apple's suppliers. Lots of folks are interested in Apple (love 'em or hate 'em), so that's where the media attention goes, but I'd be really surprised to hear that problems like these are not far more widespread than has been reported in the Western media.

    John

  • Report this Comment On September 13, 2010, at 5:34 PM, ikkyu2 wrote:

    Be honest with you, for the pitch you're making, BMW has great advantages over Apple. BMW takes great pains - and pays great licensing fees - to insure their iDrive seamlessly interfaces with as many generations of iPods, iPhones, and other Apple products as possible. Plus, you can drive down to your local BMW dealer - because you're covered under an all inclusive warranty - and request that the latest software update be put on your iDrive unit.

    Try that stunt at a Ford dealer and see where it gets you.

  • Report this Comment On September 13, 2010, at 6:35 PM, TMFMarlowe wrote:

    @ikkyu2: I had BMWs for years. All I'll say to you is this: Good luck to you when that warranty runs out.

    John Rosevear

  • Report this Comment On September 20, 2010, at 11:25 AM, SocialRespInvest wrote:

    Ugh. I am glad that Ford has invested in more efficiency (not the subject of this column) but am not thrilled about wi-fi and other distractions.

    I have never been a big car fan, preferring trains, and now I imagine the roads full of swerving cars driven by texting teenagers, especially on Saturday nights. Rather than enabling dangerous driving, I definitely would rather invest in building a public transportation infrastructure.

    Any ideas re which companies to focus on to do that?

    Acela already has wireless internet; and you don't have to look at the road at all. I realize that the car companies ripped up many streetcar tracks and so not everyone is able to go were they want by train, but if more did there would be more convenient schedules, and more amenities.

  • Report this Comment On September 22, 2010, at 10:22 AM, ak36 wrote:

    How is SYNC different from what is available in Acura's or other luxury cars? Everything SYNC can do has been available in other cars for more than 5 years now. So FORD is just making it available in all it cars but not so ground breaking. I might be wrong but I believe so does Mazda and most of these features if not all are available on Hyundai as well.

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