Ford Motor Co. has tapped a former Apple Inc. executive who was crucial to implementing the technology company’s subscription services model to head up the automaker’s own push to grow its software and services subscriptions.
The Dearborn automaker said Monday that Peter Stern, who served as vice president of services at Apple for more than six years before leaving his role in January, is now the president of the newly-formed Ford Integrated Services unit. In that role, he’ll report directly to CEO Jim Farley and oversee a team tasked with developing, launching and marketing software-enabled digital and physical services for all of Ford’s product lines.
That will include building out the business tied to Ford’s BlueCruise hands-free highway driving system as well as services related to productivity and safety/security; overseeing new physical services; and leading services marketing and Ford Next, a unit focused on new technology businesses whose leader is involved in a domestic violence case. That executive, Franck Louis-Victor, remains on leave from the company.
“This is transformational, because the cornerstone of our Ford+ plan is creating incredible customer services and experiences enabled by great hardware and software,” Farley said in a statement. “There’s simply no one in the world better able than Peter Stern to build this strategically vital part of our business.”
Earlier this year, crosstown rival General Motors Co. also hired a former Apple executive to head up its software business.
Stern has a bachelor’s degree in music and English from Harvard University and a juris doctor degree from Yale Law School. He became a member of both the New York and Connecticut bars, according to information provided by Ford.
He started his career at management consulting firm McKinsey & Co. before joining Time Warner Cable, where he served in numerous roles. At Apple, Stern ran services including Apple TV+ and Sports, iCloud, Apple News, Apple Books, Apple Arcade, Apple Fitness+ and Apple One. He also led marketing for all Apple services.
On a call with media and analysts Monday, Stern suggested that Ford could follow a similar “playbook” to that of Apple, which generated more than $79 billion from its services business last year.
“My focus here is going to be on creating customer experiences that feel like magic,” he said. “Experiences that are so helpful, simple and intuitive that they seem obvious in retrospect. And when we do that right, we’re not only going to elevate the customer experience, we’re also going to deliver significant incremental revenue and high margins. This is going to translate into meaningful shareholder value creation.”
Meanwhile, Ford reports having 550,000 paid software and services subscribers, about 80% of which are commercial customers. Farley has touted such services as a major opportunity for Ford, and automakers across the industry are hoping to convince customers to pay for subscription services beyond their vehicle purchase to provide a source of recurring revenue as they make the costly transition to electric vehicles.
Farley said Monday that Ford’s existing subscription services business is generating margins of more than 50%: “We’re in the hundreds of millions of dollars now in revenue with very healthy margins. We expect to 10x that in the coming years, just based on the growth we see.”
At Ford’s Capital Markets Day in May, executives estimated that connected features related to partial autonomy, charging software, safety and security, and fleet and operator productivity could total $1,500 in addressable annual revenue opportunity per vehicle.
Stern pointed to BlueCruise, Ford’s hands-free highway driving system, as well as safety and security services as areas where there are opportunities for Ford to tap into additional revenue streams. In a move aimed at expanding access to BlueCruise, Ford on Monday announced it was installing the system’s hardware standard on 500,000 vehicles for model year 2024 and giving buyers additional options on how they sign up for it.
Asked about consumer wariness over shelling out money on yet more subscriptions, Stern pointed to his experience at Apple, which he said amassed over a billion subscriptions after drastically expanding its services portfolio during his tenure there.
“I really would not view this as nickel and diming our customers,” he said. “The opportunity that we have is to deliver significant ongoing value to our customers, and when we do that right, customers will sign up — not only for individual a la carte services, but I think we’ll also create bundles of services that make it really easy for customers to get the most out of their vehicles and to have a safer, more convenient, more productive experience in the car.”
Still, Farley emphasized that Ford does not intend to charge customers for features that many consider standard at this point, such as heated seats: “The place where we have the right to improve people’s lives and to charge for it is when the vehicle data uniquely allows us to create services. That needs to be said, because our industry is littered with bad choices about subscription services.”
jgrzelewski@detroitnews.com