The Secrets of Microsoft's Sync

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Worth Imitating

The Sync's price is low enough that rival automotive electronics companies such as Delphi, Alpine Electronics, and Denso may look for ways to replicate its more successful features. Other automakers may also be interested in Sync when Ford's exclusive 18-month deal to carry the system ends, Robinson says. Other cars sporting Microsoft's technology probably wouldn't hit the market before the 2010 model year.

Sync works not only with Microsoft's Zune digital music player, but Apple's (AAPL) iPod and players from Creative Technology (CREAF) and SanDisk (SNDK) among others. Say the name of a song, and it starts playing. Sync also controls Bluetooth-ready cell phones: Say the name of a contact, and the phone dials the number. Ford advertises the technology in a humorous commercial featuring a passenger who calls out the names of artists, such as Michael Bolton, whom the driver would rather not admit to liking.

Years in the Making

Sync builds in part on the Blue&Me system that Microsoft designed for Fiat. While Microsoft handled the design of the software and the basics of the hardware design, manufacture was handed off to Germany's Continental, the 137-year-old company, best known for its tires, that has in recent years been absorbing auto-technology operations of companies such as Siemens (SI) and Motorola.

"Microsoft has really changed the game with this product," says iSuppli's Robinson. "Most people aren't willing to pay $700 or $800 to put Bluetooth in their cars, and frankly in most cases it's not very good. This is a $400 system that connects to iPods and phones, and it works. It's going to have other manufacturers scratching their heads for a while."

The Sync system is also a big success for Microsoft's automotive business unit, which for years has been toiling away on various ideas for bringing Windows to the car, with no real successes to its credit prior to the Fiat Blue&Me system. "This isn't an easy market to be in," says Robinson. "It takes years to build up the relationships with the carmakers, but once you've done, it can be worth the effort."

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Hesseldahl is a reporter for BusinessWeek.com.