Ford's dot-com bomb
Nasser's Internet fracas caused automaker to lose focus
CEO Jacques Nasser was so enamored of the Internet in the late 1990s that he set out to change Ford into a consumer products company. His game plan: Create an e-commerce group to develop products and services such as in-car communications. Then take those various units public and watch the money roll in.
Nasser could not foresee the wreck that awaited. To many, the Internet then seemed like the goose that laid the golden egg. Many industry watchers called his strategy brilliant.
To bring the vision to reality, Nasser in September 1999 named Brian Kelley to run ConsumerConnect, the umbrella unit for all Ford e-commerce activities relating to consumers globally. Kelley - a marketing whiz who Nasser brought in from General Electric to run Ford's Auto Collection dealership consolidation project - had been with Ford only three months.
Nasser's strategy did have critics.
At the Detroit auto show in January 2000, Nasser focused on ways the Internet would become an integral part of a vehicle. He and Internet portal Yahoo! co-founder Jerry Yang used the show to announce that Ford and Yahoo! were going to develop personalized services for Yahoo! Autos tailored to specific Ford vehicles.
On the product side, the 24.7 - a concept vehicle that resembled a cube with the corners rubbed off - incorporated voice controls into the instrument panel to provide news, weather, information from the Internet and more.
The problem was that some of the concept vehicles unveiled were, as described by an Automotive News editorial, "butt-ugly." The same editorial warned:
"In becoming an online consumer company, Ford risks losing its focus on creating great cars."
Ford already had pushed aside the dealers' role in the new world order, which soured relations with its retailers. Kelley and Nasser said Ford's distribution channel had to become centered on consumers, not dealers.
In the summer of 2000, Nasser's vision expanded to Wingcast, a joint telematics venture with telecommunications giant Qualcomm. It was projected to provide telematics for 1 million Ford cars and trucks by the end of 2002.
Wingcast was among the ventures Karen Francis picked up in April 2001 when Kelley was promoted to vice president of Global Consumer Services. Francis had surprised many of her auto industry colleagues a year earlier by leaving as marketing general manager of Oldsmobile to head Internet Capital Group, a Pennsylvania company that funded Internet startups. But the business was losing money, and Francis wanted to get back to the auto industry.
Francis would have the job about 15 months. She was a Nasser hire. With Nasser's departure in October 2001, coupled with Ford's revelation three months later that it lost more than
$5 billion in 2001, it was only a matter of time before Francis and many of Nasser's money-draining e-business ventures were gone.
In the end, the promise of profitability was overshadowed by the realities of the moment. Ford ended up writing off about $50 million for a stake in Internet Capital Group.
Despite Ford's $100 million investment in Wingcast, the unit became a cost-cutting target under Ford CEO Bill Ford's turnaround plan and closed in June 2002.
Some Ford-funded e-ventures survived. Among them: FordDirect.com, an online buying service with Ford and its dealers. Though Ford does not reveal sales or profit figures for the venture,
it does say that more than 2,800 dealers are using the service.
It also says that dealers sold more than 100,000 vehicles using FordDirect.com in 2002, its first full year of operation nationwide.
The dot-com era didn't turn Ford into that consumer products company Nasser dreamed about. But it did teach the automaker an important lesson: Building cars and trucks is what matters most.
You can reach Chaz Osburn at firstname.lastname@example.org.