SAN FRANCISCO -- Microsoft Corp. formed a joint venture with Ford Motor Co. yesterday, creating a system that will let consumers buy "built-to-order" cars online.
The companies will use Microsoft's CarPoint online car-shopping service as a foundation of the new business.
Currently, shoppers use CarPoint to research cars, measure resale value and contact dealers for no-hassle pricing. The new service would go further, allowing consumers to buy online the specific car they want -- for the time being, only Ford models.
Shoppers will pick a car the way they buy computers directly from companies such as Dell or Compaq. Instead of choosing the size of a hard drive and the processor speed, shoppers will select among standard car options, such as color, number of doors and whether they want a compact-disc player.
Using Microsoft software, Ford will locate an existing car on a dealer lot or order a custom car built. "CarPoint is going to change the way cars are bought and sold with technology that brings together manufacturers and dealers to deliver the services and cars consumers want," Microsoft President Steve Ballmer said.
Ford now must traverse the tricky path that Compaq struggled with when it began selling online -- becoming a competitor with retailers that sell its products. Ford hopes to do that by finding the car a consumer wants, shipping it to a nearby dealership and helping forge a service relationship between the consumer and that dealer.
Ford Chief Executive Officer Jacques Nasser said the joint venture "will lead to enhanced car-buying and customer experience, helping to build a more positive relationship between consumers and dealers."
For Microsoft, the deal continues its effort to find partners for online services that are not part of its core business.
In July, Microsoft agreed to sell a piece of Sidewalk, its popular arts and entertainment guides for dozens of cities, to Ticketmaster Online-CitySearch. Ticketmaster took over the guides, adding its own ticket-selling service for concerts and movies, creating a revenue opportunity that was not core to Microsoft's business.
Like Sidewalk, CarPoint will remain a key piece of Microsoft's msn.com Internet portal site. In addition, Microsoft will power the enhanced CarPoint site with its coming Windows 2000 operating system and its SQL Server 7.0 database software.
Financial details of the Ford-Microsoft deal were not disclosed, but sources said Microsoft will hold a majority stake in the venture. Current CarPoint General Manager Lindsay Sparks will become chief executive, and the company plans to announce other equity partners -- most likely other carmakers -- in the future.
Microsoft also will continue to develop the editorial content of the site, such as product reviews. Microsoft sources insist, for example, that Ford could not get a bad review of a Taurus pulled from the Web site.
The deal reflects the changing marketplace for car shoppers. Assisted by Internet and online car-shopping services, consumers have become more educated about information such as dealer costs. That has helped drive down the cost of buying a car so much that dealers often make most of their money servicing cars, not selling them.
Pub Date: 9/21/99