Transcript: Ex-Apple VP Peter Stern on what he will do at Ford
Ford announced that it has hired Apple’s Eddy Cue lieutenant, Peter Stern, to lead its services team. Stern is the man who helped Apple build its own multi-billion-dollar services empire, and now works at Ford. The auto firm hosted a media briefing to explain the news, what follows is a hastily prepared transcript of what was shared.
Mark Trevih, Ford’s Chief Communications Officer:
“Thanks so much for joining us today for this conference call. Hopefully you’ve seen by now the news of the newest addition to Ford’s senior leadership team. Pleased to have with me on the call today our CEO, Jim Farley, as well as Peter Stern, who I just mentioned is joining Ford today as President of Integrated Services. After a few remarks from Jim and Peter, we’ll have time to take a few questions. I know there’s a lot of hot topics going on in the industry, but we’re going to stay focused on this leadership announcement for this call, if you guys don’t mind. So, with that, let me turn it over to you, Jim.
Jim Farley, Ford CEO
“I’m really excited about this news from Ford. You know, when we first developed Ford Plus two years ago, we laid out a vision to transform the company from just a hardware company to a hardware, software and services company. And Doug Fields and the leadership team are now well along the way of landing our first software enabled vehicle, which will be coming out in conjunction with our second cycle EVs. And we’re not going to stop at the EVs. We’re actually going to ship that advanced electric architecture with our ICE vehicles as well like F-150 for scale. That install base is going to be huge. And we are already shipping Blue Cruise 1.3. The second software ship is our productivity software for Pro. And we’re on the eve of announcing and deepening the development of our safety and security software.
So, we are like in really good shape with our platforms and we are well in our way of scaling our software business.
That’s why I’m so pleased to announce Peter Stern’s arrival at Ford at this very moment. He’s a very special leader and his accomplishments at Apple are truly remarkable.
He was a driving force behind the launch of Apple’s portfolio of services that most of us all use everyday Apple News, Apple TV Plus, Arcade Fitness Plus, MLS Season Pass, Apple One, it goes on and on. He headed marketing for all of Apple services including the App Store, App Card, Apple Play, Apple Music, Apple Podcasts, which I’m completely addicted to personally, and Apple Max. He also oversaw Apple’s ad business during the period of rapid growth.
Before joining Apple, this is very important. In 2016, Peter was at Time Warner Cable as EVP and Product Chief, People and Strategy Officer Leader.
This is transformational for Ford because it’s the cornerstone of the Ford Plus plan
At Ford, Peter will be president of Ford Integrated Services, which will lead the P&L and the delivery and the creation and marketing of valuable software-enabled services and customer physical experiences across Ford, Blue, E, Pro, and Lincoln.
He starts today.
And Peter reports to me. I know he plans to build out a world-class team that can maximize the potential that we’re just seeing. The Blue Cruise, as I mentioned, Ford Pros, productivity software, safety and security features, and that’s really frankly just the beginning at Ford.
He will also lead services marketing, the whole go-to-market piece, the new physical customer experiences, and of course, Ford Next. This is transformational for Ford because it’s the cornerstone of the Ford Plus plan.
Everyone is so focused on the EV transformation, but I keep saying the biggest change in our industry is to go to a digital product and physical services. That intersection is why Peter Stern is at the company. There is simply no one on the planet better able to lead this than Peter Stern. He is just an incredible, capable person. I’ll turn over to Peter.”
Peter Stern, President of Ford Integrated Services
I’m gonna take a few minutes to talk about why I’m so excited to be here at Ford.
In my career, I’ve been lucky, as you said, to have worked at a media industry leader, followed by a tech industry leader, during periods of rapid change and significant growth, in both cases, driven by services. And at both companies, the transformation resulted in the creation of a lot of shareholder value.
From where I sit, the auto industry will change more in the next five to 10 years than it has in the last few decades combined. Now it’s going to be centered around great customer experiences that’s going to create tremendous opportunity for services delivered by Ford across our entire product lineup.
We’re experiencing a dual transformation in our industry. As you mentioned, Jim, toward the fully network vehicle and also from ICE to EVs. And as we undergo these transitions, the basis for differentiation are shifting from the vehicle alone to the integration of hardware, software, and services.
I’m so excited by the wide array of services that we’re going to be able to launch to enrich people’s lives and help Ford Pro customers transform their operations and their experiences. For us, that’s things like safety and security, peace of mind, productivity, and of course, the service of autonomy, which represents the most radical transformation to the experience of driving since driving itself.
‘Experiences that feel like magic’
My focus here is going to be on creating customer experiences that feel like magic, 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.
We call this group integrated services rather than just services because it’s a team effort involving all of us here at Ford. And we’re going to succeed when we activate our large and growing installed base. We’re going to give back as well, building sustained, always on relationships that strengthen Ford’s connection with its customers and our differentiation in the marketplace. And that’s going to result in better pricing and even more vehicle sales.
So, with Ford’s history of democratizing transportation, its forward-looking ownership, the best in-class engineering team, and our collective commitment to the Ford Plus plan, companies better positioned than we are to win and I consider myself truly fortunate at this pivotal moment to become part of the Ford family. I look forward to getting to know all of you on this call in the media and analysts at the appropriate time and look forward to sharing exciting news in the years to come.
Cherry picked responses to media questions
Stern:
“I think we have a tremendous opportunity to build on Ford’s existing success in the pro space where we’re already delivering a number of productivity solutions that customers value and safety and security services, I believe, are a significant untapped opportunity for the company and to improve the user experience.”
Trevih:
“We are shifting from having the software, P&L go to market and input the engineering team and the physical services from the three auto business into one separate P&L unit. It’s a really big move, and we’ve studied this very carefully. It’s the right time to do it because Blue Cruise is really maturing quickly. And we just passed half a million subscribers for all of our software. It’s 50% margin, and it’s growing at 15% a quarter. So, it’s now time to really make this a complete professional integrated effort across all three businesses.
“The ambition for the business, you know, we’re in the hundreds of millions of dollars now in revenue with very healthy margins. As I said, the gross margin is over 50 percent. And we expect 10x that in the coming years, just based on the growth we see. The biggest force multiplier, as Peter said, is going to be the FMV for electrical architecture, which we ship in the 25-26 timeframe. And that will be the time when Ford takes back its embedded electrical architecture and ships its first fully software-enabled vehicle with our own software. And that will be the time when we really see Peter’s work accelerate.”
Stern:
“Of course, Doug (Fields) and I knew each other at Apple. The company operates as sort of one integrated whole. And I greatly admired him and his work. Here at Ford, the best description of our relationship will be that we will be tied at the hip. Doug will be leading the technology and the vision for EVs. I will be leading the services vision and the product direction and the business P&L around services. And so we will be together often and extremely close.
Stern:
“I really would not view this as nickel and diming our customers. 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.
We’re going to be able, for example, with BlueCruise, over time to give significant time back to our customers and that time has enormous value, not measured in nickels and dimes, not measured in single dollars, but a lot more than that. When we talk about pro services, I know your focus was on retail here, but when we talk about pro services, we have very rational customers who are doing a calculation every day about how much money they can save by making smart investments in the vehicle. So, on both sides, retail and pro, we have the potential to deliver substantial value. And I’ve done this before.
I did it in the context of a media company where people worried about whether we would ever break $100 per month in average revenue per user. And that was in the rear view mirror pretty quickly because of the value we delivered.
We did it again at Apple. When I joined, we had two subscription services, iCloud and Apple Music, and relatively low penetration for both. When I left, we had over a billion subscriptions from our customers. So, we know the playbook. We have some great ideas about the services that we need to offer, and I’m confident about their value.”
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