"Why didn't Fordor Honda team up with Sun?"
A Web-Researched Ford in Microsoft's Future
By JOHN MARKOFF
sAN FRANCISCO -- A joint venture of the Microsoft Corporation with the Ford Motor Company, offering built-to-order automobiles via the World Wide Web, shows the potentially wrenching changes that electronic commerce is bringing in its wake.
At a news conference here Monday, Microsoft and Ford executives took pains to argue that their venture -- allowing online customers to configure their own cars and obtain detailed information on product availability -- would not displace the traditional role of the car dealer.
Built to order, with custom options. Some dealers are worried.
"This is not a world in which anyone is confused that the virtual world will replace the physical world," said Steven Ballmer, Microsoft's president. But he acknowledged that some car dealers were skeptical that the new partnership would continue to be a win-win situation for dealers as well as manufacturers.
Indeed, several dealers said they believed that Ford was quietly trying to circumvent them, pre-empting their relationship with the consumer.
"This is going to be a classic battle, but we won't back down," said Edwin J. Mullane, president of the Ford Dealers Alliance, a national organization representing 1,700 dealers, based in Hackensack, N.J.
"We'll do everything we can to protect ourselves and the consumer," he said. "The consumer has to be serviced and taken care of. These guys at Microsoft don't even own a screwdriver."
Other dealers, however, expressed optimism that there was at least as much potential for gain as risk in the rise of World Wide Web commerce.
"I'm excited about linking up with Ford," said Peter Greiner, owner of Greiner Ford in Casper, Wyo. "If we give our customers the best Internet experience, they'll tell their friends."
Under the plan outlined today, prospective buyers would enter data about their preferences online and would be referred to dealers through whom to negotiate a price and take delivery.
Some dealers are concerned that by providing more information about product availability, pricing and options, Ford may shift power from the dealer to the car shopper, effectively lowering profit margins.
In its announcement today, Microsoft said Ford had made an undisclosed minority investment in Carpoint, the car-shopping service that is one of the most popular features of Microsoft's online service MSN.
Separately, Microsoft said it had entered into an agreement with the American Honda Motor Company to license Microsoft's Dealerpoint technology, which is part of the Carpoint service. Dealerpoint is an online lead-management system to help dealers manage and respond to prospective Internet customers.
Although the Honda agreement did not include an investment in Carpoint, Ballmer said Microsoft was actively seeking investments from other auto makers. He also said that Microsoft would at some point offer stock in Carpoint to the public, but that it had not decided on the size of the offering.
The Ford-Microsoft venture on Carpoint, as it was described today, will directly link customers to Ford's manufacturing-system data base.
That feature, which will be available on Carpoint beginning in the first quarter of 2000, will transform the automobile business, according to Jacques Nasser, Ford Motor Company's president and chief executive.
"The impact is going to be huge," he said. "This is a different way of running our business."
By making information on product availability easily accessible to customers, he went on, the service will put them in charge of the transaction, and will ultimately increase customer satisfaction.
Ford and Microsoft executives also said consumer preference information that Ford can obtain through the service was a significant factor in its plans.
Nasser said such information was vital for inventory and manufacturing, as well as design decisions, and could significantly reduce manufacturing costs.
Ballmer said that Microsoft did not plan to sell data on individual customers' preferences, citing consumer privacy reasons, and that it planned to make its aggregate information available to Ford's competitors.
But Microsoft's commitment to consumer privacy was challenged by at least one of the company's major online competitors.
If Microsoft begins working with other car makers, "will Ford have access to purchase requests?" asked Mark Lorimer, president and chief executive of Autobytel, a leading Internet car site. "I don't think it's clear from what they said today."
At the news conference, Ballmer said Carpoint now generates 140,000 referrals and $600 million in sales each month. Lorimer said Autobytel generates $1.7 billion in auto sales a month based on more than 200,000 referrals.
Copyright 1999 The New York Times Company
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