Ford, Qualcomm Form Wireless Firm
Monday, July 31, 2000
By Todd Nissen
DEARBORN, Mich. (Reuters) - Ford Motor Co. (F.N) on Monday unveiled a partnership with wireless phone technology firm Qualcomm Inc. (QCOM.O) to put Internet, entertainment and safety services into vehicles, joining General Motors Corp. (GM.N) in the race to convert cars into rolling information portals.
Known as Wingcast, the new company will start putting wireless products into Ford vehicles in late 2001. By the end of 2004, the No. 2 automaker envisions almost all of the more than 7 million new cars and trucks it currently produces a year featuring the services.
Ford officials expects Wingcast to charge consumers a beginning monthly fee ranging from $9-$29. The price and level of service, as well as the marketing name, will vary depending on the Ford Motor brand that sells it.
"What we would like to do is build the car into one of the most prominent nodes on the Internet," said Harel Kodesh, a former Microsoft (MSFT.O) vice president who was named president and chief executive officer of Wingcast.
Qualcomm shares, which have been beaten down from a year high of $200, were up 2-8/16 to $64-15/16 on Nasdaq. Ford rose 1/2 to $46-5/8 on the New York Stock Exchange.
Ford has already taken a small step toward outfitting new cars and trucks with the burgeoning "telematics" services that wed telecommunications and information technology. The telematics market is forecast to soar to $42 billion by 2010 from $1 billion in 1998, according to International Data Corp.
This fall Ford will begin offering security features, voice-activated Internet access and wireless telephone service on some of its luxury Lincoln vehicles in the United States and Ford Focus small car in Europe.
But the automaker is behind rival GM, which is preparing to make its OnStar system available across most of its fleet with the 2001 model year this fall. No. 1 automaker GM expects to have more than one million OnStar subscribers by the end of this year, putting it two years ahead of Ford's venture, according to analysts.
Ford and Qualcomm officials on Monday would not offer details of Wingcast products. In general, they said users will get access to safety systems like those that alert police if an air bag deploys. There will also be navigation aids, hands-free telephone and Internet access, as well as connection to entertainment programs that are streamed into the vehicle.
Merrill Lynch analyst John Casesa said it is unclear to what extent Ford will match the OnStar live-person assistance that makes restaurant reservations or summons tow trucks.
Also unknown is what wireless telephone company will provide the phone service. Ford has an agreement with Sprint Corp. (FON.N) that runs out next year.
Nissan Motor Co. Ltd (7201.T) agreed to offer Wingcast services, initially on its Infiniti vehicles. Ford Vice President Brian Kelley said Wingcast is talking with other automakers as well.
Wingcast will be available initially in North America over cdmaOne, Qualcomm's code division multiple access (CDMA), digital wireless networks. Advanced offerings using high-speed wireless data will become available as third-generation cdma2000 and WCDMA networks roll out.
Although it is behind OnStar in subscribers now, Dain Rauscher Wessels analyst Jonathan Lawrence said the technology from Ford/Qualcomm will be more flexible in the long run than the OnStar hardware.
Wingcast will be based in San Diego, where Qualcomm headquarters are located. Shareholders are Ford, Qualcomm and Cartell, a Romulus, Mich. equipment supplier. Investment details were not released, but most analysts said Ford is the likely majority shareholder.
In addition to Kodesh, who was vice president of Microsoft's consumer appliance unit, top management includes Ford Vice Chairman Wayne Booker, who was appointed chairman.
Unlike GM, which has no short-term plans to spin off OnStar, Wingcast is being set up immediately as a separate company that will eventually go public, Kelley said. That should give it the flexibility to draw on other outside relationships, officials said.
Deutsche Banc Alex. Brown analyst Rod Lache said Wingcast could be worth up to $10 a Ford share when it is taken public, probably in 2002. But it is not expected to affect Ford's stock price until more details are out.
Wingcast will eventually have about 300 employees, drawn from Ford, Qualcomm and from outside the companies.
Meantime DaimlerChrysler AG's (DCX.N)(DCXGn.DE) Mercedes luxury unit offers an emergency notification service called Tele Aid that has 130,000 subscribers. Tele Aid will be expanded for 2001. A spokesman for the Chrysler group said telematics is a "high priority," but declined to elaborate further.
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