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Ford Long

by SignalFactory   ·  February 2, 2021 | 10:10:42 UTC  

Ford Long

by SignalFactory   ·  February 2, 2021 | 10:10:42 UTC  

Ford and Google are entering a six-year deal that will make the tech giant responsible for much of the automaker’s growing in-vehicle connectivity. Google will also provide cloud computing and other technology services.

The partnership announced Monday is designed to streamline Ford’s operations and accelerate an ongoing $11 billion restructuring plan. It marks a major shift for the automaker, which has spent hundreds of millions of dollars annually in recent years to develop and maintain such systems.

It will also give Google a new marquee customer for its cloud computing technology, which lags behind rivals Amazon and Microsoft in market share and shows how Google is willing to use assets such as its mobile dominance to help build its cloud business. The deal is not exclusive, allowing the companies to use other clouds or existing Ford data centers.

Shares of Ford jumped as much as 8.6% during intraday trading late-Monday morning. Shares of Google’s parent company, Alphabet, were up about 3%.

Under the deal, Ford and Lincoln vehicles will sport Android, Google Assistant, Google Maps, and Google Play starting in 2023, and Google’s cloud will enable other types of services. 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.

Google will also help Ford use artificial intelligence in areas such as supply chain logistics and manufacturing, the companies said.

The partnership is the most recent change for Ford under Jim Farley, who has restructured the automaker’s operations and management team since becoming CEO in October. The company’s stock is up about 60% under his tenure.

Despite automakers like Ford spending significant capital to develop such systems, consumers have moved toward using Google’s Android Auto or Apple’s CarPlay programs while driving, according to industry groups such a J.D. Power. The programs mirror phone apps on in-vehicle infotainment screens, providing a more familiar interface for drivers.

Ford’s largest crosstown rival, General Motors, announced a deal in 2019 to integrate Google’s voice assistant and app ecosystem into its vehicles beginning this year. A GM spokesman confirmed those plans remain on track.

Ford’s partnership with Google is broader than the GM-Google deal. Employees from both companies will be part of a new group called Team UpShift, which will use Google’s services and data expertise to better streamline Ford’s operations and create a more seamless experience for customers, Farley said.

Farley said Ford analyzed several companies before choosing Google. He said the automaker specifically liked Google’s cloud services – an increasingly important technology for automakers as they begin updating vehicles remotely. Cellphone providers have remotely updated products for years; however, automakers (other than Tesla) have been slow to adopt such practices.

Farley compared the company’s opportunity to retain customers through in-car connectivity to cellphone providers and services such as Amazon Prime becoming so integrated into people’s lives that they remain with a certain brand or product. Such services include predictive maintenance, apps, and data utilization to allow companies to interact with customers more regularly after they purchase a vehicle.

A cloud win for Google:

The more Google can expand in cloud computing, the less it must lean on advertising, a business that showed vulnerability in 2020 when an 8% annualized decrease in Google advertising sales caused Alphabet’s first-ever revenue decline in the second quarter of 2020.

Google aspires to become a larger force in the cloud market, where Amazon held 45% share and Microsoft had 18% in 2019, leaving Google with 5%, according to estimates from technology industry research company Gartner. In the third quarter of 2020, Google parent Alphabet said cloud revenue, including contributions from Google Workspace productivity software, was $3.44 billion, or 7% of revenue, while Amazon’s Web Services cloud division generated $11.60 billion in revenue.

Ford has a history with the other two cloud vendors. Years ago, the company used Microsoft software to power its Sync in-car communications system, but after consumers encountered technical issues, Ford in 2014 switched Sync to BlackBerry’s QNX.

In 2015 Ford committed to using Microsoft’s Azure cloud to deliver software updates to vehicles, and Ford agreed to a multi-year deal with Amazon Web Services in 2019. Ford and Google did not immediately make clear exactly which cloud computing services from Microsoft and AWS would be replaced by Google services instead.

Ford Long (Buy)

ENTER AT: 11.30

T.P_1: 12.09

T.P_2: 12.80

T.P_3: 13.59

T.P_4: 14.00

S.L: 9.76

Ford
Ford
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