Microsoft (MSFT) and Ford (F) today are announcing a deal to offer an in-car communications and entertainment system based on Microsoft software as an option in a dozen 2008 Ford model cars and in all models starting in 2009. The news was expected to be announced by Ford at the North American International Auto Show in Detroit this morning, and discussed later today by Bill Gates in his keynote at the Consumer Electronics Show in Las Vegas. The new system, to be known as Sync, will connect with wireless phones, allowing new features like voice activated calling, and to iPods, Zunes and other MP3 players, allowing music to be played through the car’s stereo system. Sync is essentially a platform for car-based consumer computing.

Nice coverage of the announcement on Autoblog.com They posted a copy of today’s news release, which says the system includes the following features:

• Voice-activated, hands-free calling: Simply press the “Push to Talk” button on the steering wheel, and then say the name of the person you wish to call. Sync will automatically connect with the names in the mobile phone’s contact list.
• Uninterrupted connections: No need to hang up in the middle of a cell phone call as you enter your vehicle. Simply touch the Telephone Button on the steering wheel, and Sync will instantly connect to a Bluetooth phone.
• Audible text messages: Sync will convert text messages from your phone to audio and read them out loud. The system is even smart enough to translate such commonly used text messaging expressions as “LOL” and : ). You can choose to reply from any of 20 predefined responses.
• Advanced calling features: Sync includes the same features offered on mobile phones, including caller ID, call waiting, conference calling, a caller log, a list of contacts, a signal strength icon, and a phone battery charge icon all conveniently located on the radio’s display screen.
• Voice-activated music: Browse the music collection on your digital media player, mobile phone or USB drive by genre, album, artist and song title using simple voice commands, such as “Play genre Rock,” “Play ,” or “Play Track .”
• Instant voice recognition: Sync’s advanced voice recognition technology means when you’re ready to use your phone or digital music player, just speak simple voice commands.
• Ring tone support: For supported phones, Sync will play personal ring tones. If you’ve configured unique ring tones to identify specific callers, Sync will automatically play those, too.
• Automatic phonebook transfer: Sync will wirelessly transfer all the names and numbers in a mobile phonebook automatically.
• Multilingual intelligence: Sync is fluent in English, French and Spanish.