Ford Said to Drop Microsoft for BlackBerry QNX in Syncing – Bloomberg

Posted: Monday, February 24, 2014

Ford Motor Co. (F), struggling with in-car technology flaws, will base the next-generation Sync system
on BlackBerry Ltd. (BBRY)’s QNX and no longer use Microsoft (MSFT) Corp.’s
Windows, according to people briefed on the matter.

Using QNX will be less expensive than licensing Microsoft
technology and will improve the flexibility and speed of the
next Sync system, the people, who asked not to be identified
because the decision hasn’t been made public, said Feb. 22. Ford
has more than 7 million vehicles on the road with Sync using
Microsoft voice-activated software to make mobile-phone calls
and play music.

The switch may help Ford, the second-largest U.S.
automaker, address customer complaints about malfunctioning
technology systems and touch screens that have hurt it in
surveys by J.D. Power & Associates and Consumer Reports. For
BlackBerry, it’s a vote of support for a company that lost 95
percent of its value from mid-2008 to November and saw the
collapse of a proposed $4.7 billion buyout.

“This would be a huge infusion of trust and confidence to
have BlackBerry and QNX expanding into a Ford,” Thilo
Koslowski, auto analyst for researcher Gartner Inc. in Santa
Clara, California, said yesterday. “This is really the crown
jewel in BlackBerry’s crown and could make the rest of the
company shine as well.”




Photographer: David Paul Morris/Bloomberg

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Photographer: David Paul Morris/Bloomberg

Ford Motor Co. F-150 Atlas concept truck interior is seen during the 2013 North American International Auto Show in Detroit.

Since becoming BlackBerry’s CEO on Nov. 4, John Chen cited
software such as QNX and the BlackBerry Messenger service as
assets he will look to capitalize on. Predecessor Thorsten Heins
spoke often during his tenure for the potential of QNX to play a
role in machine-to-machine settings such as cars interacting
with parking meters.

Ford Quality

Dearborn, Michigan-based Ford has said the quality of its
vehicles has been “mixed” each of the past three years and
fell short of its plan to improve those results in 2013. CEO
Alan Mulally was said to be a candidate to become Microsoft’s
chief until early this year,

Improving Sync is crucial for Ford to draw car shoppers who
are increasingly looking to be connected at all times. In-vehicle technology is the top selling point for 39 percent of
auto buyers, more than twice the 14 percent who say their first
consideration is traditional performance measures such as power
and speed, according to a study by the consulting firm Accenture
released in December.

“We do not discuss details of our work with others or
speculate on future products for competitive reasons,” Susannah
Wesley, a Ford spokeswoman, wrote in an e-mail.

Peter Wootton, a spokesman for Redmond, Washington-based
Microsoft who works for Waggener Edstrom, declined to comment.
Paul Leroux, a spokesman for QNX, declined to comment.

Customer Surveys

Ford and Lincoln ranked Nos. 26 and 27 out of 28 brands in
Consumer Reports’ annual auto-reliability survey released in
October. While the Lincoln luxury line matched the industry
average in J.D. Power’s Initial Quality study in June, the
namesake finished 27th out of 33 brands.

Technology companies are competing to win business from
automakers as in-car technology becomes an increasingly
important selling point. Google Inc. announced an alliance with
General Motors Co., Honda Motor Co., Hyundai Motor Co. and
chipmaker Nvidia Corp. in January to bring the Android operating
system to cars. Apple Inc. is working with Bayerische Motoren
Werke AG, Daimler AG’s Mercedes-Benz, Nissan Motor Co. and
others to introduce its iOS operating system to cars with
devices such as the iPhone.

QNX Users

BlackBerry’s QNX Software Systems can be found in cars made
made by Volkswagen AG’s Audi unit and BMW, according to its
website. QNX and Microsoft are the main suppliers of automotive
operating system software, according to researcher IHS iSuppli.

BlackBerry, at the time named Research in Motion Ltd. (BB),
bought QNX Software Systems for $200 million in 2010. In
addition to its presence in cars, QNX technology is used to
manage nuclear-power plants and by the U.S. military for
unmanned aerial drones. Its customers include Cisco Systems
Inc., General Electric Co. and Caterpillar Inc.

The switch would be a significant blow to Microsoft’s
automotive software business because Ford is by far its biggest
customer, said Gartner’s Koslowski. Microsoft also has software
in Kia Motors Corp., Fiat SpA models, Nissan and BMW models,
according to its website. Getting into the Ford system will
expand QNX’s industry leading position for automotive
entertainment operating systems, which Koslowski said he
estimates is as high as 70 percent.

Integrating Systems

The operating system in the car entertainment system has
become more of a commodity and now added functions are more
important, he said. QNX has done a better job of integrating
compatibility with other operating systems such as those from
Apple, Google and included emerging Internet standards, he said.

“You have to look at it more from a perspective of how
much functionality do I get for what price and really move your
investment budgets to other areas that become much more
strategic for creating differentiation,” Koslowski said. “The
industry is realizing it has to do a better job to create a
unique experience for its customers.”

To contact the reporters on this story:
Craig Trudell in Tokyo at
ctrudell1@bloomberg.net;
Jeff Green in Southfield, Michigan at
jgreen16@bloomberg.net

To contact the editors responsible for this story:
Young-Sam Cho at
ycho2@bloomberg.net;
Jamie Butters at
jbutters@bloomberg.net

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