By Deborah Gage 

Ford Motor Co. on Thursday said it would invest $182.2 million in Pivotal Software Inc., a closely held software-development tools and services company, another sign of the automotive industry's drive to beef up its software skills.

The Pivotal relationship gives the car maker access to "really advanced software development methods and cloud tech skills at a speed at which we wouldn't be able to do on our own," said Ford Chief Executive Mark Fields. Cloud tech refers to the use of a network of remote servers that run applications and store data.

"As we look at tech and software and how it is opening whole new areas for us to provide experiences for consumers, it is important that we get a level of fluency" in software, he added.

The investment in San Francisco-based Pivotal is part of a $253 million round that includes an initial contribution from Microsoft Corp. and vaults Pivotal's valuation to $2.8 billion. Ford was a Pivotal customer, and Ford Chief Information Officer Marcy Klevorn will join Pivotal's board.

In March, Pivotal disclosed a partnership with Volkswagen AG, Europe's largest auto maker by sales. That relationship involves joint development of software and mobility solutions at Volkswagen's Berlin-based Digital Lab.

Ford that same month formed subsidiary, Ford Smart Mobility LLC, and in April released FordPass, a collaboration with Pivotal. FordPass includes a smartphone app that helps users with parking, car sharing, remote access to vehicles and other services. Owning a Ford vehicle isn't required to use the app, and Ford says that FordPass "aims to do for car owners what iTunes did for music fans."

Ford is also opening new software labs in both the U.S. and Europe that the company says will be staffed with software architects, engineers and experts in user experience, all using Pivotal's method of rapidly developing software.

Three-year-old Pivotal is headed toward an IPO but has no date in mind, according to Chief Executive Rob Mee. First quarter revenue was $86 million, up 56% from last year, and the company claims annualized recurring revenue as of March 31 of $115 million.

Current Pivotal investors General Electric Co., EMC Corp. and VMware Inc. also participated in the latest round, taking total funding in Pivotal to about $358 million. Pivotal spun out of EMC and VMware in 2013, taking software assets from both companies. At the time, GE invested $105 million in Pivotal for a 10% stake.

The investment is expected to be completed this month and is subject to regulatory approval.

The Pivotal investment is also a coup for Microsoft Corp., which runs Pivotal software, called Cloud Foundry, on its Azure cloud. Ford in January struck a partnership with Amazon, Microsoft's chief competitor for Azure, to let drivers control lights, thermostats, security systems and other parts of their homes from their cars through Amazon devices like Echo.

Microsoft's other big Azure competitor, Google parent Alphabet Inc., struck a partnership with Fiat Chrysler Automobiles NV on Tuesday to incorporate Alphabet's self-driving car technology into 100 Chrysler minivans.

Write to Deborah Gage at Deborah.Gage@dowjones.com

 

(END) Dow Jones Newswires

May 05, 2016 12:06 ET (16:06 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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