Just a few days ago, a sliver of news slipped out that went mostly unnoticed, except for a mention here and there.
Ford announced an investment in Pivotal, a big data and cloud-based software platform company, to further enhance its software development capabilities and deliver new features to customers more quickly.
The press release, circulated by Ford, is heavy in jargon.
Ford CEO Mark Fields said: “Expanding our business to be both an auto and mobility company requires leading-edge software expertise to deliver outstanding customer experiences. Our investment in Pivotal will help strengthen our ability to deliver these customer experiences at the speed of Silicon Valley, including continually expanding FordPass — our digital, physical and personal mobility experience platform.”
Such semantic retreads will make most eyes roll. Yet this is big news for anyone keen on the future of the car.
Pivotal is the golden child of the Federation, EMC’s conglomerate of companies.
If the vision of the third platform — a future where everything is powered by a foundation of cloud infrastructure — holds true, the Federation wants to be the glue in several of those layers.
Michael Dell shares this vision, which is why he is buying EMC for $67bn, and essentially rescuing his own company from technological extinction.
But much of what EMC offers can also be found from rival vendors. This is where Pivotal is a bit more unique. Built under the leadership of Paul Maritz, the technology veteran who made VMWare (also part of the Federation) an enterprise household name, Pivotal is building the operating system layer of the third platform.
The emerging arms race in the operating system space is increasingly around cloud readiness. Microsoft had been stabbing at this with Windows 10, as well as its upcoming Server releases, and it is a fundamental cultural shift for the company that its latest CEO, Satya Nadella, has brought to the table. Not surprisingly, he used to be the head of Microsoft’s cloud and enterprise divisions.
But while Windows and its peers are trying to bring the old into the new, Pivotal is betting on building cloud platform paradigms from scratch, based on an open-source platform and infrastructure software such as Cloud Foundry and OpenStack.
This has attracted buy-in from General Electric, one of Pivotal’s founding investors. Now it has been joined by Microsoft and Ford.
Microsoft’s reason investing in Pivotal is obvious: Pivotal’s flavour of Cloud Foundry works well on Azure, Microsoft’s cloud platform.
Pivotal also works on Amazon Web Services and Google’s cloud. Pivotal’s goal is to be the operating system of the cloud world and it makes sense for Microsoft to have skin in that game.
But Ford’s hefty $182m investment in Pivotal speaks volumes for the car manufacturer’s ambitions. By way of comparison, GE’s investment was $105m and Microsoft’s somewhat less.
Ford is already a bit of a technology dark horse. It has been using virtual reality for over a decade to design its cars and was perhaps the first major car manufacturer to approach the connected car through its Ford Sync ecosystem. Ford has also been unusually open to all connected car players and even positions itself as a connected car software alternative: Toyota plans to use Ford’s SmartDeviceLink to add connectivity features to its cars.
What can be read into Ford’s Pivotal investment?
It lays to rest any doubt that Ford wants to shift from being a car company to a technology company, essentially drawing closer to what Tesla is than the rest of the car market.
Ford’s rhetoric may suggest it is doing this to simply develop software a bit more easily in the cloud, but that is just icing on the cake. The company already put credence to that in late 2015, when it announced a development partnership with Pivotal.
One could argue that Ford is taking a leaf from GE’s book: the 124-year-old company has become a case study for how to embrace modern technology and data cultures, the real “Uber” of the modern age.
If viewed through that prism, this investment is a landmark deal. It demonstrates Ford’s big picture: the future of the car industry is not just about putting four wheels on the road anymore.
Car companies need to evolve or risk being rendered the dumb platforms on which other technology companies will thrive.
Ford’s $180m is all about getting in early before companies such as Pivotal balloon into the next tech behemoths, so it too can ride the crest of the next technology wave.
- James Francis is a freelance writer whose work has appeared in several local and international publications