Ford Battles GM at Consumer Electronics Show, Turns to Apple

Last Updated Jan 5, 2010 2:04 PM EST

LAS VEGAS -- The traditional rivalry between General Motors and Ford (F) plays out on a high-tech stage at the Consumer Electronics Show here this week, as both car companies announce updated versions of their competing in-car communications systems, GM OnStar and Ford Sync.

The details are set to emerge later this week, but Ford has already revealed that it is turning increasingly towards Apple (AAPL) for new applications for an updated version of its system, even though Ford Sync was originally developed exclusively in partnership with Apple archrival Microsoft (MSFT).

GM is keeping its announcement under wraps until a press preview for CES tonight, but GM is chafing to steal some of Ford's thunder at CES. Ford CEO Alan Mulally gives a keynote speech to kick off CES on Thursday, Jan. 7.

Ford is also officially mum about the details on the latest version of Ford Sync until Thursday, but even a partial switch to Apple is a significant change.

Doug Vandagens, director of the Ford Connected Services Solutions Organization, said in a recent press preview that with so many Apple iPhone customers customizing their phones with Apple, Ford was bound to go along with the trend. "Nobody else has an App Store," he said.

The change cuts both ways. An exclusivity agreement between Ford and Microsoft, which gave rise to the first version of Ford Sync, has expired. Ford Sync debuted in 2007, starting with a new version of the Ford Focus.

Ford continues to work with Microsoft, but it has taken in new partners like Apple to develop compatible features for a second generation of Ford Sync. At the same time, Microsoft is also free to develop Sync-like features for others.

Fiat (FIATY.PK), for instance, already has a feature developed with Microsoft with some similarities to Ford Sync, which Fiat calls "Blue&Me." There was less potential conflict between the Fiat and Ford systems when Ford Sync was first introduced, because Fiat wasn't present in North America, except for its ultra-exclusive Maserati and Ferrari brands.

But Chrysler came under Fiat's control last year. Within the next few years, Fiat is planning to offer much higher-volume brands like Alfa Romeo and the Fiat brand itself in the U.S. market. It may not be long before there will be dueling Microsoft-developed features for both Ford and Fiat in the United States.

Even though the relationship is no longer exclusive, Ford intends to continue using the Microsoft operating system for Ford Sync. Ford also retains exclusive rights to the Sync brand name, said Jim Farley, Ford group vice president, global marketing.

"We have exclusivity in the sense that we started a long time ago," Farley said.

"We have a lot of resources invested in it, and no one else can say that. We also have exclusive use of the name, of course, and the relationship with Microsoft has gotten to be very fundamental. You don't just wake up and duplicate all that," he said.

Farley said in a recent interview that Ford Sync is a competitive advantage. He said Ford will keep adding new features to Ford Sync to maintain its momentum. For instance, Ford this year is adding features like 911 Assist in case of an accident, similar to one of rival OnStar's key features; vehicle health reports, which keep an eye on service intervals and how well the engine is performing; plus turn-by-turn directions.

Unlike the General Motors OnStar system, Ford Sync uses the owner's cell phone to deliver directions, without the need for an expensive in-car navigation system. In turn, GM maintains that OnStar is safer, because a portable cell phone has to be recharged and it can be lost or damaged in an accident.