"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.
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