Enterprise death watch

I can’t help but feel that this month’s cover story might strike some readers as somewhat oddly timed.
Enterprise death watch
By Imthishan Giado
Mon 24 Nov 2008 04:00 AM

I can’t help but feel that this month’s cover story might strike some readers as somewhat oddly timed.We’re going in-depth with Ford’s new Sync system which – on paper, at least – promises to integrate the office environment into the car like no other system. The tie-up with software giant Microsoft hooks phones directly in the audio system, allowing drivers to interact through voice only and have text messages read to them while on the move.

It’s the first collaboration between a major IT firm and an automobile organisation to work on an open platform to develop applications – it should be big news. Unfortunately, Ford has been recently grabbing headlines for all the wrong reasons.

CEO Alan Mulally has just returned empty-handed from Washington where he went jointly with the heads of the other Big Three automakers to – there’s no other way to describe it – beg for a share of the enormous US$700 billion dollar bailout fund for the US economy. It certainly needs it – the firm recorded a third quarter loss of $129 million and a scarcely-believable $8.7 billion in losses in the previous one.

Ford’s troubles are of course, well documented. The company persisted with its flawed product mix of gas guzzler SUVs and pickup trucks well past their heyday in the 1990s. Investments in the small car sector only started to gain traction last year when the firm was forced to acknowledge that record fuel prices were now factoring heavily into buyer decision-making. Ford was in the midst of a recovery strategy this year that centred around smaller, ‘Crossover’ SUVs and small cars – but the devastating impact of the credit crunch has left it reeling.

Ironically, it may be its investment in cutting-edge technology that ultimately enables Ford to escape the Chapter 11 fate that awaits other US domestic automakers. While GM and Chrysler are desperately trying to alter their product mix to catch with Japanese competitors who have been ahead of the curve for decades, Ford scored an unlikely hit with its unassuming Focus coupe, which offers the Sync system as an option for $395. Sales of the vehicle are up 20% this year and many dealers have attributed to the presence of Sync which is slated to be available across its model range by next year.

There might be a hint of light at the end of the tunnel. But if Ford survives its current predicament, it will not be because it makes the best cars. It will be because its product offers consumers – and by extension, enterprises – with something that is not available with the competition, something which provides added functionality for a nominal cost.

If you’d like an idea of where this story can lead if Ford ignores market indicators, just take a look at Motorola. The mobile titan once ruled the handset market with its popular range of devices, but last quarter recorded a loss of $397 million. Like Ford, it made two crucial errors.

First, it put all its eggs in the aging RAZR platform for consumers – because it was cheap to produce and remained wildly popular in the US – while overseas rivals built products that enterprises from around the world would integrate with their systems and could be customised to their specifications. When the American market started to contract, the firm was left without a single viable enterprise product.

Secondly – it’s much vaunted collaboration with Apple failed to provide a device that clicked with consumers. Motorola was left with the much-vilified ROCKR, while Apple went on to create the iPhone – which is now breaking out of the consumer space and starting to threaten Research In Motion’s BlackBerry stalwart in the enterprise messaging market.

So Ford – if you’re listening – take note: Talk to your customers – not just in the US – when they tell you what they want. Pursue innovation, even if it seems expensive during a recession. Have an alternative ready for when your Sync exclusivity agreements ends later this year.

And above all, don’t ignore the ability of technology to transform the nature of your century-old business. It may well be the only avenue you have left.

Imthishan Giado is the deputy editor of Arabian Computer News.

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