Since its arrival several years ago, Ford's (NYSE:F) SYNC voice-activated "infotainment" system has mostly been hailed as a good thing. But MyFord Touch, the touchscreen system that Ford created to build on SYNC's initial success, has generated tons of complaints and clobbered Ford's quality rankings.
The irony is that MyFord Touch has been a big success for Ford in terms of sales -- Ford says that over half of its new models are sold with the MyFord Touch options package. That has given Ford's profits a nice boost. But the complaints have piled up: It's buggy, it's hard to use, and no less an authority than Consumer Reports has suggested that it could even be a safety hazard, because its flaws could distract drivers.
This has turned into a huge headache for Ford. Ford has made huge improvements to the quality of its cars and trucks over the last few years. Most experts now rate them on par with the best Japanese brands -- except for the flaws in the MyFord Touch system, which consistently costs Ford big in the quality rankings.
Ford has repeatedly tried revising and updating the MyFord Touch software, but the complaints persist. Now, as Fool contributor John Rosevear explains in this video, Ford is preparing to take more drastic action: Dumping the Microsoft (NASDAQ:MSFT) operating system that powers SYNC and MyFord Touch in favor of a proven system from, of all companies, Blackberry (NYSE:BB).
A transcript follows the video.
John Rosevear: Hey, Fools, it's John Rosevear. It looks like Ford is finally taking big steps to upgrade its SYNC and MyFord Touch systems. Bloomberg reported earlier this week that Ford was planning to dump the current operating system it uses for SYNC, which is made by Microsoft, in favor of a rival system called QNX, which is made by a company that is owned by BlackBerry, and we've since seen reports from several other outlets, including The Wall Street Journal, that seem to confirm this.
Now, this is great news for BlackBerry, which has seen huge declines in its smartphone business, and it's a blow for Microsoft, but what I really want to talk about is what it means for Ford. Over the last several years, Ford has made huge strides in upgrading the quality of its vehicles. We've gotten to the point where a Ford Fusion or Focus is fully competitive with Toyota and Honda, which is just huge, given where Ford was a decade or so ago. But this system, the MyFord Touch system, has really held Ford back in overall quality rankings, with reviewers like Consumer Reports. Ford and Lincoln ranked 26th and 27th out of 28 in Consumer Reports' most recent reliability survey, and this system had a lot to do with that.
Ford's current line of cars and trucks are very very good, but the bugs in this system drive people nuts. They say it's glitchy, it's hard to use, its poorly laid out, and Consumer Reports has even said that it's kind of a safety issues because it distracts drivers.
Now, on the one hand, Ford sells a ton of these things. SYNC is the voice-activated system, and MyFord Touch adds the touchscreen interface. A Ford spokesperson told me today that for 2014 model year vehicles sold so far, 94% had SYNC and 51% also had the MyFord Touch system. And I'll tell you that these packages are very profitable for Ford. They add a lot of profit to every sale.
So Ford has two huge incentives here: First, they want their big quality gains to be recognized. They don't want this glitchy system holding them down in those rankings, because a lot of buyers take those rankings very seriously, and it's surely costing Ford some sales. Second, they want to sell these systems on as many Fords as they can, because that means big profits. So obviously it's in their best interest for Ford buyers to really love these systems, and find them easy to use, and show them off to their friends, and so forth.
This QNX system is already used by Audi and Porsche and BMW (NASDAQOTH: BAMXF) and Acura, so Ford will be in good company here, and apparently it's a lot easier to integrate with things like Apple's (NASDAQ: AAPL) iOS and with Android. Reports say that they're planning to roll it out in 2016. One question I haven't seen answered yet is whether current Fords that have the Microsoft system will be able to upgrade, but I'll see what I can find out on that front.
Thanks for watching, and Fool on.
John Rosevear owns shares of Apple and Ford. The Motley Fool recommends Apple, BMW, and Ford and owns shares of Apple, Ford, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.