The tech industry is no longer restricted to screens of traditional computers and smartphones, as things that were "dumb" are starting to get connected to the internet in this Internet of Things-evolving world.
Ford is a carmaker from the U.S.. The century-old company is entering a strategic partnership with Google, in which the automaker wants the tech giant to replace its in-car infotainment system with Android. Here, the partnership allows Ford to tap into IoT, through Android-powered devices that are baked directly into its cars' interface.
At the same time, Ford also named Google as its cloud provider.
The partnership also allows Ford to take advantage of Google Cloud’s artificial intelligence (AI), machine learning (ML), and data analytics capabilities to modernize product development, supply chain logistics, manufacturing, employee training, and allow vehicles to receive real-time notifications related to maintenance requests and trade-in deals.
According to Ford's announcement, the partnership that will begin in 2023, will see "millions of future Ford and Lincoln vehicles at all price points will be powered by Android, with Google apps and services built-in."
Ford and Lincoln vehicles.
At this time, Ford uses Sync as its in-car communications system.
The interface allows users to access Google’s Android Auto, which lets drivers run Android apps on their vehicles’ screens via their Android smartphone. Sync also offers Apple CarPlay for its iOS users.
With the partnership, Ford wants to replace that Sync interface, with Android fir the main in-car interface.
What this means, Ford cars will have Google Assistant front and center, giving users the the ability to request directions or ask questions of the virtual assistant hands free.
Ford owners can also use Google Maps as their default in-car navigation service, and include everything they would expect from the app, including lane guidance, real-time traffic, and automatic rerouting if they miss a turn.
And because it's Android, the in-car system from Ford can also benefit from the Google Play Store, allowing users to download auto-specific apps including music and podcast services.
While the partnership leverages Android, the system will continue supporting CarPlay.
The six-year deal that is worth "hundreds of millions" of dollars, aims to make Google responsible for much of Ford's in-vehicle offerings and cloud communications.
The partnership that was announced on February 1, 2021 is designed to streamline Ford's operations, and accelerate its ongoing $11 billion restructuring plan. It marks a major shift for the automaker, which has spent hundreds of millions of dollars annually in years to develop and systems that are clunky and not user-friendly.
For Google, this strategic partnership should help it grow its cloud offering, which lags way behind rivals from Amazon and Microsoft.
According to estimates from technology industry research company Gartner, Amazon held 45% share of the cloud, while Microsoft had 18% in 2019. Google only had 5%.
The more Google can expand in cloud business, the more dependent it can become. Knowing that Google ad business in 2020 was declining, the partnership with Ford can help Google to lean less to advertising.
Following the announcement, shares of Ford jumped as much as 8.6% during intraday trading late-Monday morning, while shares of Google's parent company, Alphabet, were up by about 3%.
Ford CEO Jim Farley said that:
"We were spending hundreds and hundreds and hundreds of millions every year, keeping up with basically a generic experience that was not competitive to your cellphone."
Farley said Ford has analyzed several companies before choosing Google.
He said that the automaker specifically liked Google's cloud services as one of the reasons it was chosen.
"It's a tremendous opportunity. Bigger than electrification," Farley said.
"All the digital capability and conductivity and the digital ecosystem outside of the vehicle are all coming together to a loyalty model, where people will have a much more difficult time switching brands."
"We always say, 'Hey, let's look at what problems we are trying to solve for the client,' and 'How do we think more broadly about that?'" said Thomas Kurian, CEO of Google Cloud. "In some cases they want only the cloud portion from Google. In other cases, they want other aspects of Google."
Previously, Ford has also made strategic partnerships with tech companies, like with Microsoft to power its Sync, and Amazon Web Services to power its cloud.
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