Mobile Technology: Ford's Next Growth Catalyst

| About: Ford Motor (F)

At the 2013 Consumer Electronics Show (CES) in Las Vegas, Ford (NYSE:F) launched the first open program for the development of mobile applications in the automotive industry. The Ford Program Developer will provide software developers with information and tools needed to integrate their programs to Ford's SYNC multimedia system. The goal is to encourage the creation of innovative experiences within a vehicle using voice commands and other system resources. Below, I will discuss how this move towards mobile applications will help Ford to get an edge over its competitors and become more profitable.

Ford Invites Developers to Test Mobile App Platform

Ford is the first automaker in the world to launch an open program that allows software developers to work through a direct interface with the vehicle to create applications that enhance the driving experience, using the SYNC connectivity system. This attracts the attention of investors because it is an innovative technology and car enthusiasts always try to look for mobile apps that can work from within the vehicle.

According to Hau Thai-Tang, Vice President of Engineering and Global Product Development at Ford, the Ford Developer Program brings a radical change in the way Ford innovates and add value to vehicles throughout its period of use. A recent survey by Nielsen showed that more than half of mobile phone owners in the United States use some type of smartphone and two-thirds of new handsets are enabled to run applications. Worldwide, there are over 1 billion users of smartphones, and the population of smartphone users is expected to double by 2015. More than 55 billion apps have been downloaded in major digital markets and American users have an average of 67 apps on their devices.

With that in mind, Ford is opening a new market for its new cars. If the technology of smartphones can be fully adapted, the company will have a competitive advantage over its rivals.

Frost & Sullivan showed that one out of every five drivers use apps while driving, without any connection to the vehicle. The SYNC offers connectivity and voice control for cell phones and digital music players via Bluetooth or USB. Already, the AppLink is a voice activated interface that allows the driver to control cellular applications without the need to handle the device. Launched in 2010, SYNC AppLink is the most advanced system of its kind and includes popular services like Pandora, Stitcher smart radio, NPR, iHeartRadio and custom browser Scout.

All these releases indicate a preference towards using applications that are not related to driving but still used while driving. Ford is helping developers to use its SYNC and AppLink to create more applications that can be used without having to remove one's hands from the steering wheels.

Ford spoke to a group of developers invited before the launching of its software development kit (SDK) documentation and technical support systems focused on creating new apps for AppLink. The system has more than three dozen public applications, platforms compatible with Apple (NASDAQ:AAPL) iOS and Google (NASDAQ:GOOG) Android, and is now open to all developers for testing.


Nissan (OTCPK:NSANY) will launch the new generation Tiida (sold in the U.S. as Versa Hatchback) during the upcoming Detroit Auto Show. The model is based on a concept car 'Invitation', whose prototype was shown publicly during the Geneva Motor Show 2012. Nissan currently does not have an active developer program for mobile applications.

The markets of Brazil and southern Europe affected the sales of PSA Peugeot Citroën (OTCPK:PEUGY), which fell 16.5% in 2012, according to data released by the company in a statement. The PSA has sold 2.9 million cars in 2012, including auto parts, compared to 3.5 million in 2011. The decline was 8.8% if one considers only the vehicles. The company noted that markets in France, Spain, Italy and Portugal were the ones with the worst income.

Not even the crisis in the European market was able to dim BMW's (BAMXF.PK) sales, which grew by 10.6% last year compared to 2011. During the period, the German automaker sold 1.85 million vehicles worldwide. The three brands that make up the portfolio of the group, BMW, Mini and Rolls-Royce, registered record sales, the company said in a statement.

Hyundai (OTC:HYMLF) revealed that its best-selling i30 model surpassed 100,000 sales a year. The new i30 is produced at Hyundai's plant in the Czech Republic and recently won a place in the final selection list for the European Car of the Year 2013, becoming the first Hyundai model to be in the final vote on a premium European car show.


Ford has a market cap of $51 billion and an enterprise value of $128 billion. Its profit margin is high at 13.35%, and has a huge revenue of $132 billion. Certainly, Ford is taking the right step by inviting developers to test applications for mobile platforms using its SYNC sdk. By creating applications that helps people to remain social and mobile more often, Ford will increase the number of cars sold and will also make money from the applications that are sold in app marketplaces. The potential for revenue is huge and investors should certainly take notice of that.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.