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Ford, Qualcomm team up
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July 31, 2000: 1:52 p.m. ET
Carmaker, wireless services firm to rival GM's OnStar in vehicle telematics
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NEW YORK (CNNfn) - Ford Motor Co. and Qualcomm Inc. announced a joint venture Monday to deliver wireless services to automobiles.
The move marks Ford's first foray into an area known as telematics, which brings services such as voice communication, Internet connection, entertainment and navigation and safety assistance to vehicles. Officials at Ford (F: Research, Estimates) made a commitment in January to bring voice activated Internet access to all new Ford vehicles within two-to-three years.
Ford rival General Motors Corp. (GM: Research, Estimates) already offers a selection of telematics services through its OnStar unit.
Unlike the joint venture announced Monday, OnStar is a wholly owned part of GM and has been available in vehicles for several model years.
 The automakers are driven partly by desire to continue to sell services to customers on an ongoing basis after they buy the car. They believe that such continued revenue flow from customers can help lift their stock multiples from current low levels.
But despite growing demands for wireless communication, some experts question whether a system linked to a vehicle will ever be truly competitive.
"I'm uncertain whether consumers will flock to this," said Bruce Belzowski, senior research associate at the office for the study of automotive transportation at the University of Michigan. "From a manufacturer's point of view, I see it as a nice strategy to generate continuing income directly from consumers. But it's unclear to me that the value proposition for millions of owners is there."
The revenue that can be collected depends upon the level of service desired by the drivers. For example the OnStar system includes call centers that can be reached with the push of a button in the vehicle and can provide a driver with information on directions or nearby services, such as gas stations or stores.
It can also notify the call center automatically if the airbag is deployed in an accident and send help to the vehicle without a response from the driver. It does not provide direct Internet connections yet, but such service is planned.
GM officials were not immediately available for comment on Monday's announcement. After introducing the service in luxury models, it will be available in any GM vehicle for model year 2001.
 The company has targeted a million customers of its OnStar service by the end of the year, and eventually sees $1 billion in annual revenue from the service. But whether it is ever a major profit center for GM or other automakers remains to be seen, said David Healy, analyst with Burnham Securities.
"There's a lot of other ways besides OnStar to communicate from car and find your way," said Healy. "I really think the strategy is being forced on the automakers, to respond to the other automakers. But I don't see the service as a reason to buy or not buy an auto stock."
OnStar and the Qualcomm-Ford venture, called Wingcast, effectively will be rivals in the race to secure brand-name recognition in the emerging mobile-commerce market.
Both companies are reaching out to other automakers as well. OnStar is to be available in Honda and Acura vehicles beginning with the 2002 Acura RL luxury sedan sold in the United States. As part of Monday's announcement, Ford announced an agreement with Nissan to bring Wingcast services into certain luxury vehicles at an unspecified time in the future.
In addition to being a major provider of wireless phones, Qualcomm is already a leading in onboard computer and communications systems used by the U.S. trucking industry, helping to keep track of location, fuel usage and other statistics needed by trucking companies,
Qualcomm stock rose on the news, adding 2-5/8 to 65-1/16, while Ford edged up 1/8 to 46-1/4 in early trading.
Wingcast will be based in San Diego, where wireless communications company Qualcomm (QCOM: Research, Estimates) already has headquarters.
 Wingcast's chief executive will be former Microsoft Corp. Vice President Harel Kodesh, who was in charge of Microsoft's wireless initiatives until his departure this year. Before joining Microsoft in 1992, Kodesh oversaw development of wireless products for the mobile data division of Motorola (MOT: Research, Estimates).
"Harel Kodesh's combination of expertise and vision coupled with strong leadership capabilities will help propel Wingcast's success," Ford Vice President Brian Kelley said. "Harel is uniquely qualified to deliver a new class of telematics services that will set the standard for integrated mobile information services for the automotive industry."
Kodesh told CNNfn Monday that Wingcast would look at providing the information through a variety of devices such as traditional cell phones and hand-held computers. He said the interface with the information would be made simple enough that it will not distract drivers' attention while driving.(441KB WAV) (441KB AIFF) 
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Ford
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