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Detroit gets help in Silicon Valley

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BLOOMBERG NEWS / JAN. 7, 2007
Ford Motor Co. President of the Americas Mark Fields, left, presents the Sync system during a Ford news conference at the North American International Auto Show in Detroit.

When Ford Motor Co. came to Noah Shanok’s San Francisco startup about using his technology, he expected it to be like meeting strangers from another planet.

"We thought we might have been like aliens," said Shanok, the 35-year-old chief executive officer of Stitcher, whose software lets users collect talk-radio programs on one custom channel. "It became quickly clear when talking to the leadership at Ford that we were smart people looking at problems together."

The meeting, which led Ford to add Stitcher to its voice-activated Sync entertainment system, typifies Detroit automakers’ new approach to technology. Ford, Chrysler Group LLC and other car companies are counting on Silicon Valley to help boost sales and shake off their image as slow adopters of innovations. That means working with startups on iPhone-style apps, adding staff in the Bay Area, and giving drivers freer range over the software and hardware that go into their cars.

The three biggest sellers of vehicles in the U.S. –General Motors Co., Ford and Toyota Motor Corp. — are all banking on so-called infotainment technology to help them gain market share, said Jim Hall, principal with consulting firm 2953 Analytics Inc. in Birmingham, Mich .

While Ford has been selling Sync for three years, the company stepped up its focus on technology as it tried to pull out of the recession. Ford buyers cited the Sync system as critical to their purchase 32 percent of the time, the company said in January. The technology, available as a $395 option on some models, also helps make cars more profitable. It’s standard on higher-end vehicles.

"The winner on this ain’t known yet," Hall said.

"The company that can accommodate as many different mobile devices as possible, and integrate them in the car — they’re the guys who are going to win long term. But it’s a very difficult job."

It’s harder for automakers to take risks with car software than with smart-phone apps, because people keep their vehicles longer — and their lives depend on them. Infotainment technology, which lets customers use social networking, search for nearby businesses and access the Internet, also has to be designed to avoid distracting drivers.

"Do you think Apple cares if your iPod works four years after you buy it?" Hall said. "With a car, you have to."

Correcting a glitch in an iPhone app usually just requires a software update. Fixing a flaw in a vehicle can cost millions, require a recall and damage a company’s reputation. Toyota is trying to burnish its image after recalling more than 8 million vehicles for defects linked to unintended acceleration.

"The car is an expensive phone," said Sal Dhanani, co-founder of Sunnyvale, Calif.-based TeleNav Inc., a maker of software for global positioning systems on mobile phones. TeleNav is working with Ford to handle navigation on Sync.

Ford has been touting its new technology features in commercials, showing drivers customizing touch-screen buttons to get directions, portable music and text messages. Getting to this point took the company at least a decade, said Doug VanDagens, director of Ford’s Connected Services Solutions.

"We had all kinds of stodgy and frumpy management," VanDagens said. "At best, we were a fast follower with regard to technology."

 

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