Microsoft, Ford partnership believed close

NEW YORK (CNNMoney.com) -- Ford Motor is set to announce a partnership with Microsoft to provide greater wireless connectivity to its lineup of vehicles, according to a published report.

The Wall Street Journal reported the wireless offering will be called Sync and will allow for hands-free cell phone communication and other wireless information transfers inside the car, including the ability to receive email and download music.

Ford reportedly is set to announce a partnership with Microsoft to add greater wireless connectivity to its vehicles in 2007, starting with the Focus and Five Hundred sedans.

Zune vs. iPod More

The automakers have been trying to attract buyers with greater entertainment and wireless communication options, including ports for MP3 music players in traditional car stereo systems, DVD video players for backseat passengers and satellite radio offerings.

The Ford-Microsoft agreement could provide a lift to both companies in the competitive challenges facing them.

Ford (Charts), which is looking for ways to stem losses and market share declines, is hoping that the wireless offering is a way to differentiate itself from some of its competitors, while Microsoft (Charts) is looking for a way to promote its technology as the best platform for everything from entertainment to data storage. It introduced the Zune MP3 player this past year as it battles competitors such as Apple Computer (Charts) for sales of MP3 music players and music downloads.

Ford saw its U.S. sales plunge nearly 8 percent in the first 11 months of 2006, and in November it finished fourth in U.S. sales, behind not only General Motors (Charts), the traditional No. 1 U.S. automaker, but also Toyota Motor (Charts) and DaimlerChrysler (Charts). It is expected to fall behind Toyota on a more permanent basis in 2007 sales.

The Journal reports that the system will debut in early 2007 as an option on at least two Ford brand models that are to be refreshed early in the year, the Focus and Five Hundred sedans. It is expected to offer the system as an option on the entire Ford brand lineup, including trucks, starting in the 2008 model year, which will hit showrooms in the late summer and early fall.

Ford spokeswoman Sara Tatchio declined to comment to the Journal on any partnership. Microsoft spokesman Chris Elliott said the company has been working with Ford on certain technologies and will have an announcement at the Detroit auto show and Las Vegas's Consumer Electronics Show the week of Jan. 8, but declined to discuss specifics.

Zune vs. iPod: The battle begins