Ford And Google Sign Deal For In-Car Connectivity And Cloud Services - Reviews
"Google is expected to assist Ford with everything from in-car infotainment systems and remote, or over-the-air, updates to using artificial intelligence."
Ford and Google are signing into a six-year agreement that will make the tech giant responsible for much of the rising in-vehicle connectivity of the automaker. Google will also offer cloud storage and other technology services.
The collaboration reported on Monday is designed to streamline the operations of Ford and accelerate an ongoing restructuring plan of $11 billion. This represents a significant change for the automaker, which in recent years has invested hundreds of millions of dollars each year designing and maintaining such systems.
The cloud computing technology, which lags behind rivals Amazon and Microsoft in market share, will also give Google a new marquee customer and demonstrate how Google is able to use assets such as its smartphone dominance to help develop its cloud business. The contract is not exclusive, making it possible for enterprises to use other clouds or existing Ford data centers.
Ford shares jumped by as much as 8.6 % during late-Monday morning intraday trading. Google's parent company's shares, Alphabet, were up about 3 %.
Under the agreement, Android, Google Assistant, Google Maps and Google Play will be available for Ford and Lincoln vehicles beginning in 2023. For instance, Google said " Ford is looking to use the tech giant's cloud to enable a system for sending customers messages about maintenance or trade-in opportunities" .
In areas such as supply chain management and manufacturing, Google will also help Ford use artificial intelligence, the firms said.
Ford CEO Jim Farley: Partnerships are key
Under Jim Farley, who has restructured the operations and management team of the automaker since becoming CEO in October, the collaboration is the most recent move for Ford. Under his tenure, the company's stock is up around 60 %
"One of the most important parts of our strategy is to partner," Farley told CNBC. "That means that we have to get out of the business of doing generic things that we do not add value, like navigation systems and a lot of the in-car entertainment experience."
He added, "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 the deal is worth "hundreds of millions" of dollars, but declined to provide a specific number.
According to industry groups such as J.D. Power, customers have moved towards using Google's Android Auto or Apple's CarPlay programs when driving, despite automakers such as Ford investing substantial capital to build such systems.
Ford's partnership with Google is larger than the contract between GM and Google. Employees from both firms will be part of a new community named Team UpShift, which will use the services and data resources of Google to streamline Ford's activities better and create a more seamless customer experience, Farley said.
A cloud win for Google
The cloud business win for Google is one that should have been picked up instead by either Amazon or Microsoft.
The more Google will succeed in cloud computing, the less it has to rely on ads, a company that showed weakness in 2020 when Alphabet's first-ever revenue decline in the second quarter of 2020 was triggered by an 8 % annualized decrease in Google advertising revenues.
According to reports from technology industry analysis firm Gartner, Google aspires to become a greater force in the cloud market, where Amazon had 45 % share and Microsoft had 18 % in 2019, leaving Google with 5 %.
Ford and Google didn't immediately make clear exactly which Microsoft and AWS cloud computing services would instead be replaced by Google services.
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Rahul Shrestha
