“We believe that there is a tremendous opportunity for software in the automotive industry; software that delivers value to automotive OEMs and suppliers and specifically to the car in terms of the value it provides drivers and passengers,” says Mark Spain, Senior Director, Microsoft Automotive Business Unit, in a Movers & Shakers interview with Frost & Sullivan’s Franck Leveque, Program Director, Automotive and Transportation. “It’s our vision and associated investments that, we believe, will create sets of very rich and valuable experiences. We are excited about the current and future opportunities as we progress towards that vision.”


– Mark Spain 



Franck Leveque (FL) – How would you characterise Microsoft’s current involvement in the automotive industry?


Mark Spain (MS) – Microsoft is deeply involved in the auto industry. About a decade ago, Microsoft created a specific business unit focused exclusively on engineering technology for the automotive sector. The Microsoft’s Automotive Business Unit (ABU) differs from other Microsoft product groups in that all engineering, testing, program management, business development, and marketing is managed in one self contained entity, functionally it’s almost like a separate company with Microsoft. This focused expertise enables ABU to engage with the auto industry at all business and technical levels. Over the years we have been working closely with automakers and tier 1 suppliers worldwide to deeply understand their business, and their requirements, and – working with our industry partners – design software optimized for the auto industry and the in-vehicle environment. Today, Microsoft operating systems power over 60 in-vehicle systems from 20 leading automakers and tier 1 suppliers


FL – Would it be right to say that Microsoft has so far been in the shadows of the automotive industry rather than being visible to the end consumer as a major player?

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MS – Some products are brought to market in a manner that does not make it completely obvious that they are Microsoft Windows powered. It’s a common practice in the automotive industry for OEM’s to define all aspects of the vehicle interior. Hence, tier 1 suppliers demand branding of the device, specific either to the car or the car manufacturer. In the case of Microsoft software technology, it is important to recognise that Windows powered products are branded either by the car OEM or, in some cases, by the device manufacturer but never by the underlining OS (Operating System) powering the device. Therefore, it is not commonly recognised that Windows is powering and growing in a number of devices.


However, recently more and more of our partners are approaching us with requests to display Microsoft logos on their devices and vehicles. For example, Fiat Auto Group views Microsoft software in their ‘Blue&Me’ system as a key customer benefit, and chose to put a Windows logo in every Windows equipped vehicle, and highlights the features and functionality of the Windows system prominently in their product marketing. So visibility to the end consumer will increase as this trend continues.


FL – How does Microsoft’s involvement in the automotive industry fit in with its overall strategy?


MS – Microsoft vision is to “Enable people & businesses throughout the world to realize their full potential”, and that includes the time people spend in the car and the integrated and portable devices they use the car. In the U.S. alone, upwards of 550 million hours are spent every week in the vehicle – on average people spend about 1.5 hours a day in their car which is a significantly large amount of time.


The aggregate total amount of time that people spend in cars makes it clear that this is a valuable slice of people’s lives. Developing software technology that delivers value based experiences to people in their cars, allows us to deliver against our mission any place, anywhere and anytime.


People spend a considerable amount of time in their vehicles, talking on their phones, and therefore want a rich and distraction free communication medium. Or, in other words, they want to be connected from a communication perspective. Some want to be entertained, others want productivity, while still others – myself included – want to navigate effectively without too much effort. Therefore, there is a rich set of different types of experiences that people can and would value in the car.


FL – Did the launch of Blue&Me platform at the Geneva Motor Show garner the success you expected?


MS – This launch was eagerly anticipated as it was the result of several years of collaborative effort by Microsoft and Fiat Auto. We were thrilled to publicly share the results of our collaboration and introduce our joint capabilities. We also highlighted the broader paradigm shift that has occurred in terms of a new business model based on working directly with automotive OEMs and helping them introduce a viable technology related to the new ways in which people are making car buying decisions. This approach also addresses the new things that consumers want to do inside the car and aims at achieving these goals in radically shorter time to market and at radically lower costs.


The results were quite overwhelming from the standpoint of the press, analysts and more importantly from the OEMs, supplier and end consumer interests.


FL – Currently, the Blue&Me platform focuses on music playback and hands-free phone connectivity. Are future developments expected to cover the entire Infotainment and Telematics domain?


MS – Our strategy is focused on an integrated set of core applications that customers value – communications and entertainment, plus powerful platform capabilities. We recognize that the growing popularity of mobile phones, portable digital media players and other devices creates an opportunity to enable rich, safe integration for drivers and passengers. At the same time, the platform will have the ability to host a wide range of applications and content scenarios, those executed locally on the in-car device as well as off board services delivered wirelessly from the outside cloud (the mobile operator, OEMs or the Microsoft Windows Live or MSN cloud).


Microsoft and our OEM partners strive to exceed consumer expectations. A perfect example from the Geneva Motor Show was that of Fiat’s launch of the Blue&Me platform with the inclusion of an SMS reader application. With its partners, Fiat built this application on top of our platform, leveraging our standard API’s and our standard tools. The application converts inbound text messages to speech allowing the driver to listen to their text messages without taking their hands off the steering wheel or taking their eyes off the road.


An even wider range of such innovations will happen on the platform. The next major area of focus will be broadly in the area of navigation and location based points of interest services.


FL – What are the chances of the platform hosting future applications such as remote vehicle diagnostics, e-call or even road user charging?


MS – The OEMs we are working with realise that there are opportunities in areas such as remote vehicle diagnostics and other services that will extend value to their customers, their dealers and to their engineering processes as well. They are very enthusiastic about our platform’s ability to host solutions that address these opportunities. So I think it’s fair to assume those types of capabilities, solutions and applications will, in fact, be made available on the Windows Mobile for Automotive platform.


From a technical perspective, our current platform has the hardware and software capabilities to support these applications. The outstanding issues are the business model and the logistics associated with it. At present, we are engaged with a large number of OEMs who are intent on leveraging the platform for a number of traditional Telematics types of scenarios. These primarily deliver value to the driver such as safety and security features, for example automatic crash notification, remote door unlock, and e-call among others. Other scenarios of particular interest to automotive OEMs are more specifically focused on diagnostics type of applications that deliver value to the driver, dealer and OEM directly.


FL – Do you think the perceptions of the Windows OS in the desktop environment might in any way have an impact on the automotive business either now or in the future?


MS – Yes, it does in a number of ways. On one hand, some people may have had less than satisfactory experiences with their PCs and challenge the fitness of Windows for the automotive environment. On the other hand, there are people that know more mission critical enterprise systems worldwide run on Windows than on any other operating system and have quite positive predisposition to Windows in their car.


Working with industry we have created automotive grade software platforms that meet or exceed the requirements of automakers and tier 1’s. Our platforms provide the highest levels of reliability, scalability and manageability, and are specifically engineered for the vehicle environmental requirements such as heat, power consumption, vibration, power management, etc


Also, we are increasingly asked by many OEMs and suppliers to introduce more consistency – as there is the PC business – to the car.


FL – The business model adopted by Microsoft is quite new. Can you elaborate on the eco system business model and the benefits that automakers can reap out of it?


MS – There are a couple of elements to it. One is that Microsoft’s business model is essentially a direct licensing model that allows automotive OEMs to standardize on a software platform with a standardized hardware reference specification. This offers OEMs the ability to multi source their hardware. Since this is very easy for automotive OEMs to do, it creates an opportunity for them to drive costs down and gain all the benefits associated with multi sourcing models. It’s a model similar to the PC; organizations that standardize a particular desktop OS such as Windows XP find multiple suppliers for the hardware, software applications, and utilities.


A standardized OS is by definition compatible and supportable across a wide range of hardware. By introducing elements of this model to the automotive industry we are driving a horizontally integrated model which is proven to provide multiple benefits associated with choice, cost and options.


FL – With the European automotive industry mostly standardized on QNX Neutrino OS and QNX now offering a complete platform with their hardware partners, what opportunity does the MS platform have?


MS – Clearly there are alternative software platforms in the in vehicle Telematics and entertainment space. We believe that having choice and having options is good for the industry in an overall manner. Having said that from a supplier perspective the acquisition of QNX by one of the hardware partners actually conflicts with the horizontal model. You have now got a vertically integrated model where you have a hardware company owning the platform company driving a completely vertically controlled offering to the industry. We believe that the model fundamentally doesn’t benefit the industry overall and that the aggregate value of the horizontal model will ultimately win.


FL –The Blue&Me platform is a step in the right direction for standardised platforms? Do you see a real market for a truly standard platform?


MS – Our engagement with several OEMs has vindicated our approach of building a standardised platform that offers value to OEMs and suppliers. We worked with Fiat to engineer and bring that technology to market over essentially a couple of years. The time required by the next OEM will be much shorter. The reason being, that both OEMs and their choice of suppliers will be able to leverage the investments that Microsoft has made in standardising technical references, hardware specifications as well as software specifications. This will help OEMs and their suppliers define their experiences, expose their technical engineering interfaces on the vehicle and rapidly apply these investments to their car and get into the market in a significantly shorter time and significantly lower cost.


FL – What’s next for Blue&Me, any interesting news on the cards?


MS – After working with Fiat, we incorporated our acquired knowledge into advancing the technology for new in-vehicle experiences, improved system performance and efficiency, enhance end user experience, and drive costs even lower. In parallel we are engaging with the Tier 1 suppliers and the related partners in the three regions of the world as well. I can’t obviously share those names, but our goal on the whole is a market share position that allows the benefits of that horizontal model to be achieved and recognized by the entire industry and to achieve volumes.


FL – Vehicle manufacturers in Europe always want to differentiate. So what will be the next one – another Blue&Me or something different?


MS – Keep in mind that the Blue&Me is the Fiat product name for their product which is powered by the Windows Mobile for Automotive. We anticipate that each OEM will identify their own names for products to be used in their vehicles in the future. Most certainly, we will continue to innovate on our Windows Mobile for Automotive and Windows Automotive platforms to meet the current and emerging needs of the industry. While OEMs will focus on slightly varied case scenarios, the overall trend will be to work with variations of the core platforms.


FL – What do you think of the car of the future? Will Microsoft have any role to play in this?


MS – Microsoft’s goal will be to achieve volumes in terms of our standard platform and by doing so we can create standard user experiences inside the vehicle. Our software vendor eco system and API’s will assist vehicle manufacturers to target volume vehicles. The combination of the eco system and API approach can yield in a wide range of scenarios by 2015 – pure Telematics scenario like RVD and E-call, pure Infotainment and Telematics scenario like navigation and LBS services and pure entertainment and communication scenario like digital music playback and Bluetooth.


By 2015, we will see a set of seamless experiences that will travel with you in the car but potentially in a very different ways from the present and will fully account for the passenger’s role with respect to the vehicle. Microsoft’s vision is to bring rich device independent experiences into the vehicle that the people enjoy.


About Mark Spain:


Mark Spain is Director of Microsoft’s Automotive Business Unit. Based in Redmond, US, Mark is responsible for driving Microsoft’s business activities, revenue, product roadmap and strategy in the telematics industry. The Automotive Business Unit’s charter is to create a standard platform supporting applications and services in every vehicle. Based on this strategy, the Automotive Business Unit leverages other Microsoft divisions like the Industry Solutions Group, Mobile Devices, Speech Group, MSN Autos, MapPoint, and other product groups to connect the vehicle. Mark works with teams in North America, Europe and Asia to support customers, partners and system integrators in combining platforms, tools, products and solutions that take full advantage of the Microsoft platform and helps bring Microsoft-based solutions to the automotive industry.


Mark has been with Microsoft for thirteen years and held various technical and management positions including responsibility for Windows Mobile and Embedded Devices marketing, Exchange Server architecture and chief of staff of US Subsidiary. Prior to joining Microsoft, he was with Oracle and Hewlett-Packard for the balance of 20 plus years in the technology industry.


Background


Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company’s industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For further information, please visit www.frost.com.