Issue: Jul 2005


Paradigm shift towards partnerships in the automotive industry



Juergen Za, Marketing Manager Europe for the Microsoft Automotive Business Unit about finding joint solutions to create a new driving experience. By Don Husat.

by Don Husat

Juergen Za, Marketing Manager Europe for the Microsoft Automotive Business Unit about finding joint solutions to create a new driving experience. By Don Husat.

Auto manufacturers are looking at a paradigm change. As more and more software is integrated into the car, the automotive industry is changing from a sector that is mainly concerned with engineering to one that has to concentrate on various areas of development. The automotive industry is therefore fast becoming one of the prime examples of Old and New Economy integration. Car companies are entering partnerships with specialised companies in other fields. Automakers should be prepared to leverage their relationships with suppliers, distributors, and technology partners more intensively. Only those firms that skilfully develop and manage the capabilities of this extended enterprise will thrive.
Faced with the complexity of this task, automakers and their partners are investigating models drawn from other industries most often IT and consumer electronics companies to test their applicability and value. Also, the global realignment of the industry proceeds at almost lightning-fast speed, currently leaving only ten automotive groups worldwide - each of them looking for an advantage over their competition. One of these advantages can be the forming of strong partnerships with leading companies in a number of segments, including the software industry.
Telematics is one of those places where software companies and auto manufacturers can work together to their mutual profit. This relatively new field in terms of the automotive industrys more than 100 years of existence provides a new playing field for car manufacturers. Partnerships with software companies are a chance for these corporations to ensure their technological edge with regard to potential buyers. But how do car companies work with software firms to bring telematics solutions into that car? And what is telematics all about for them?
A case for telematics
Telematics is about enabling vehicles for wireless services and communication. More and more automakers are integrating such telematics solutions into their vehicles. At the moment, the most sought-after applications are navigation and audio entertainment. A study by Strategy Analytics from May 2004 predicts that these two segments will continue to grow exponentially in the years to come as well. By the end of 2010, 12.2 million navigation systems will have been shipped in Europe, Japan, and North America, according to the analysts an increase of 7.9 million with regard to 2002 figures. One of the biggest growth opportunities in this area will be off-board dynamic navigation via wireless devices like cellular phones and Personal Digital Assistants (PDAs).
The continued improvements of various kinds of technology will drive the telematics segment. One of the results will be that more standardised solutions are being integrated into automobiles. As these systems can be produced in high-volume numbers their development costs will be significantly reduced, making them more affordable for a larger number of consumers. Simultaneously, mass production simplifies updating and upgrading as most of the same software can be used for most systems.
High-end versus basic telematics systems
The emergence of smart mobile technology that can turn a cellular phone or a PDA into a personal telematics solution has certainly influenced the automotive industry to look at telematics from another angle. The advent of mobile technologies and the high market pervasion of these devices and almost every aspect of the daily life guarantees that more and more consumers will want to use their system everywhere they go, which includes the car. As PDAs and mobile phones become ever smarter, they are able to display information regarding traffic, navigation, and news on their displays.

Nevertheless, mobile devices will not replace the need for embedded telematics systems for various reasons. On the one hand, there will always be the need for certain kinds of embedded applications and interfaces in car models, for example the integration of wireless devices so that motorists can use their mobile phone. On the other hand, luxury car owners will expect a high-end telematics solution as part of their automobile within a few years. They want a comprehensive device consisting of a graphical display, on-board navigation, hands-free phone, entertainment choices like radio, MP3 player, DVD, TV, and video as well as diagnostic functions. Interfaces to the MOST and CAN buses are a must for these customers as well.
While a bare bones version of a basic telematics solution will most likely be integrated into almost every single car in the near future, high-end systems will be available as add-ons in luxury vehicles for some time to come. The reason for this is, of course, that high-end systems are much more expensive to develop and integrate into the car and are being sold in much lower numbers than that of a basic solution.
Joint development efforts ensure best solutions
Nevertheless, car manufacturers can profit by developing either kind of solutions in cooperation with software companies. As in-vehicle telematics applications generally fall into two categories automotive-specific and consumer-specific a software company like Microsoft can be a bridge between these two disparate areas. With a dedicated Automotive Business Unit, the software company is best positioned to combine its knowledge in the consumer segment with its know-how in the in-car computing field. With its dedicated partner programme, Microsoft is the partner of choice for a number of companies within the automotive industry.
One of the reasons for this is that the software specialist knows that developing telematics solutions is a time-consuming process. Not only do applications and platforms have to be designed, but the accompanying hardware as well as the services to be offered with the system also need planning. Testing is also a very important part of the process, consuming a lot of time and efforts when developing in-car computing devices. All these requirements drive up cost a reason for Microsoft to be a proponent of standardised in-car computing solutions that can be flexibly scaled to whichever model the manufacturer has in mind. While currently a telematics device consists of 20 percent standardised and 80 percent customised components, a turnaround of this number would significantly drive down cost and development efforts.
Regardless of the amount of standardisation concerning in-car computing solutions, the joint development is often preferable for car companies than doing everything alone. This also ensures a much more timely implementation. Another positive aspect of this kind of cooperation between players from different industries is that each partner can concentrate on their core expertise. The result is a joint system that incorporates the combined know-how of a car manufacturer, a software company like Microsoft, and a hardware supplier the best of all worlds, so to speak.
Future expectations
Partnerships within the automotive industry will continue to thrive as car manufacturers, suppliers, software and service companies move closer together to develop customer-centric solutions. Auto manufacturers will have a number of advantages by working with partners: lower development and maintenance cost, a faster time to market, and the possibility to implement devices that look different for each car model while being based on standards. With the implementation of flexible solutions in cars, the auto manufacturers would be mastering the paradigm shift superbly.


Send your comment:
Name: Email:
Phone: Town & Country:
Comment:



























































































































































































































































Automotive Industries
Call For Interviews, News & Advertising

x

Thank You

x