Microsoft is hoping you'll use Office 365 in your automobile, answer emails, schedule meetings and even tinker with PowerPoint down the road as autonomous vehicles gain traction. And this productivity on wheels effort will be powered by Microsoft's Azure cloud platform in the background.
Welcome to Microsoft's evolving auto strategy, which rhymes with its multiplatform app-centric approach on the mobile and cloud fronts.
The demonstrations and announcements from Microsoft's industry unit at CES 2016 represent a strategic shift for the software giant. Microsoft's most high-profile partnership in the auto industry was with Ford and its SYNC platform, which revolves around so-called infotainment. Today, SYNC is run by BlackBerry's QNX unit. Apple has CarPlay and Google has Android in automobiles too. The general thinking is that the automobile industry will be driven by in-cockpit experiences as much as things like fuel efficiency, reliability and design. Incidentally, Google is testing autonomous vehicles and Apple has been rumored to be exploring its own car.
As the auto industry increasingly revolves around software prowess, Microsoft smells opportunity. What's notable about Microsoft's master plan is that its strategy is more about enabling and enhancing the car driving experience not necessarily fighting what is likely to be a free-for-all scrum to be the auto operating system. In other words, Microsoft is playing to its strengths as an enterprise company. The other wrinkle here is that Microsoft is positioning itself as a Switzerland to the auto industry.
Peggy Johnson, executive vice president of business development at Microsoft, said in an interview that the company is broadening its focus in the automotive industry. "Our focus is on the cloud. We've been in the automotive arena for years and we've broadened it to tap into the cloud," said Johnson. "We want our customers to tap into wherever they are. It is a different strategy that we're broadening our focus."
Johnson added that she sees Microsoft's role in the auto industry to be more of an enabler via cloud technology. Microsoft can also be a good partner since it isn't interested in customer data from automakers. "If you overlay what we're doing with the automotive industry, they're all challenged with the move to the digital space. It's about the user and access to information where ever they may be. We believe the way to do that is connections to the cloud," said Johnson. "Microsoft won't take the customer data. We're an enabler. We're going to bring their cars into the connected world without stepping on their toes."
Microsoft's Sanjay Ravi, worldwide director of discrete manufacturing, said the company is happy to take a back-end role as it becomes a white label platform for auto manufacturers.
That approach could be a winner for Microsoft. Does an automaker really want to partner with a technology company that's aiming to make its own cars? The jury is still out on that question since Google and Ford have been reportedly collaborating on autonomous vehicles. Coopetition is likely to be the norm for a while.
For Microsoft, the in-cockpit experience in the car could resemble the smartphone landscape. For instance, Ford's latest SYNC offers a choice between Apple's Car Play and Android Auto. For Microsoft to play on the front end, it would have to be an option too. Isn't it easier to allow drivers to access software like Office in their cars via Windows, Android or iOS?
McKinsey noted that the auto incumbents are likely to compete with each other as well as Google, Apple and Uber. In fact, recurring revenue via services will be the fastest growing slice of the auto industry. There's a reason Google and Apple are fascinated with cars -- you can argue the auto will merely become an extension of the smartphone ecosystem.
Under Microsoft CEO Satya Nadella, the company has charted a cross platform course in the mobility world. The aim is to take Microsoft's cloud, productivity applications and PC experiences cross platform. Office 365 reaches beyond Windows to Android and Apple's iOS. Microsoft is supporting Windows Embedded, which is used as an OS for automobiles, but Ravi indicated the real win is around services.
The announcements from CES 2016 highlight where Microsoft is going.
- With Harman, Microsoft is collaborating to bring Office 365 to dashboards. Skype for Business will also tag along. Harman said it will team with Microsoft to enable drivers to use Office 365 on the road. Harman's infotainment systems will also use over-the-air updates to keep Office current. Here's why this move is interesting: Office 365 tools like email and calendar could be useful today with personal assistant technology, but the partnership sets Microsoft up better for a day where autonomous vehicles are on the road en masse. Should autonomous vehicles take off, a commute in an auto will resemble one on a train as folks get real work done. Another key point: Harman serves as the brain of most high-end autos. In fact, RealMoney's Jim Cramer floated the idea that Apple should buy Harman. Perhaps Microsoft should put Harman on its shopping list too.
Johnson wouldn't put a timeline on autonomous vehicles, but did note that competition in that space probably means that they will arrive sooner rather than later in some form. The initial focus of the Harman-Microsoft partnership revolves around email and calendar via voice, but autonomous vehicles mean that traveling in a car will start to resemble a train or plane. "You'll want to be just as productive in a car as you would a train," said Johnson.
- Nissan is using Azure to power its telematics system for its LEAF electric vehicles and Euro Infiniti models. Nissan is using Azure as a platform to deliver services such as point of interest notifications and analytics. Nissan is using Azure today. The most likely scenario for Microsoft is to leverage Azure as its way to more automaker share.
- Volvo owners with Volvo on Call will be able to use Microsoft Band 2 to start navigation systems, lock doors and turn the heater on via voice activation. Volvo and Microsoft recently partnered around HoloLens.
- IAV and Microsoft will demonstrate Windows 10 streaming application as well as the Azure IoT Suite as a way to model and ensure vehicles follow safety procedures. IAV is an engineering and technology consulting firm that designs, develops and validates new vehicle technologies.
The common thread between these announcements is that Microsoft is pitching Azure as an enabling platform, tossing in analytics and focusing on its core productivity strengths. Aside from the Microsoft Band 2 partnership with Volvo, Microsoft is taking an enterprise behind-the-scenes approach to the auto industry. That strategy makes sense given that it's not a detour from Microsoft's broader intelligent cloud, productivity and computing experiences themes.