Ford Could Lose This High-Tech Battle

The popular MyFord Touch "infotainment" system is now available in nearly all Fords, including the big Super Duty pickups. Photo credit: Ford Motor Co.

It's easy to see this trend coming: Cars of the future are going to be much more interconnected than they are now.

It's also easy to see this coming: The demand for in-car data connections will likely boom once automakers show us more of the possibilities.

Ford's plan to jump on these trends involves tethering, improving the ways in which your car links to and interacts with your smartphone. It will build on the company's MyFord Touch system, which is already popular with customers - and profitable for Ford.

That seems to make a lot of sense. But is it really the best way for Ford to be going?

GM is making a much more elaborate move
I raise this question because Ford archrival General Motors is unfolding a very different approach to this challenge.

Before joining GM's board in the wake of the company's 2009 bailout, CEO Dan Akerson had spent much of his career in the telecom industry. Naturally, when he later took the automaker's top job, GM's future plans for in-car wireless connectivity were very much at the forefront of his mind.

GM already has some in-car connectivity with its OnStar service, which provides safety services and navigational help to owners who choose to subscribe.

But that's just a 2G connection. What Akerson envisions is apparently much, much more extensive. Lately, we've been seeing some signs of what that vision looks like.

One way or another, in-car data is about to get very big
GM announced back in February that starting with model year 2015, vehicles equipped with OnStar capability (which is most of the cars and trucks GM sells, at least in the U.S.) would come with embedded 4G LTE connectivity.

In the U.S. and Canada, the connections will be delivered via AT&T ; GM expects to announce providers in other parts of the world later this year.

GM hasn't said exactly what they plan to do with this vastly increased bandwidth. But Akerson has dropped some hints, suggesting vastly increased in-car entertainment options - as well as, possibly, in-car advertising.

Akerson clearly sees this as a major revenue opportunity for GM. If he's right - and remember, he has extensive experience in this area - is Ford setting itself up to miss out?

Ford bets on your smartphone instead
Reports have suggested that Ford thinks consumers will object to paying for more than one data plan. Why not get the data via folks' smartphones, the argument goes, since they're already paying for that connection?

There's some merit to that argument. But at the same time, it's worth noting that there's a precedent for people paying to upgrade their in-car entertainment options. Your humble Fool is one of millions who pay well over $100 a year to hear SiriusXM's satellite radio service in their cars.

If people are willing to pay that much for what is essentially a bunch of radio channels, is it reasonable to guess that they'd be willing to pay, say, $200 a year for a service that brought them in-car TV or movies or games? (Or maybe more to the point, a service that brought these features to the kids in the back seats?) Along with real-time traffic and navigation updates?

It's a big question. At least right now, I can't blame Ford for taking a more conservative approach. But I have a feeling that GM's plan is going to work out pretty well - and unless the Blue Oval has another plan up its sleeve, that could leave Ford scrambling to catch up.

There's good reason to think that Ford still has big growth opportunities ahead. We've outlined those opportunities in detail in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, here it is -- click here to get started now.

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Motley Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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