Ford buys small software startup to bolster 'connected car' offerings

The sign at a Ford dealer is pictured in Lakewood, Colorado September 4, 2013. REUTERS/Rick Wilking

DETROIT (Reuters) - Ford Motor Co has bought a five-year-old software company for less than $10 million in a move the No. 2 U.S. automaker hopes will beef up its in-car connectivity that is critical to winning over younger, more affluent buyers.

The acquisition of Ferndale, Michigan-based Livio will also help promote the automaker’s method of connecting smartphones with the vehicle as an industry standard, which will help speed the pace of app development, Ford said on Thursday.

“With the acquisition, Livio now has the ability to advocate Ford’s contribution of SmartDevice Link as a standard,” Paul Mascarenas, Ford’s chief technology officer, told reporters. “That, I think, is a big opportunity.”

The deal comes ahead of an expected boom in cars that can connect with drivers’ smartphones. Ford expects sales of such cars to grow to 21 million by 2018, up from 2 million in 2012.

Ford will keep the Livio name and the 11-person firm will operate as a wholly owned Ford subsidiary. Livio will report to Ford’s electrical and electronics systems engineering division.

Livio, founded by now 31-year-old Jake Sigal, will continue to assist its existing customers, which include other automakers, suppliers and third-party software developers.

The deal with Livio marks Ford’s first acquisition of a technology company in about 13 years, Mascarenas said.

In October 2000, Ford entered a joint venture with Qualcomm Inc dubbed Wingcast that allowed drivers to issue voice commands to operate the car radio or phones. That venture shut down almost two years later.

Editing by Matthew Lewis