Since the end of the partnership between Ford and Microsoft to develop the first generation of the SYNC infotainment platform, Microsoft has successfully repositioned itself as a privacy-forward enterprise partner to OEMs for developing cloud-based connected and autonomous vehicle applications with its suite of Azure cloud services. The poor overall reception of SYNC, and the subsequent failure of Windows Embedded as a viable infotainment operating system platform, meant that Microsoft has remained a tangential partner to OEM infotainment products and services, only working to embed selected applications such as Skype on more modern platforms, as well as bringing in certain edge services from its Azure product suite.
However, modern infotainment roadmaps are filled with digital services which are used by consumers throughout their daily lives. The expectation is that these applications and services, which are available ubiquitously on mobile platforms, are now also available seamlessly while on the road.
In order to bring these digital ecosystems into the vehicle, two specific tech giants have started partnering with global automakers to integrate their digital ecosystems: Amazon and Google. These partnerships allow OEMs to integrate popular digital services such as Google Maps and Amazon Alexa, but these partnerships also come with certain compromises for OEMs and their existing supply chain. For example, Google requires OEMs to integrate its full services suite while continuing to bolster the value of its advertising business, and Amazon's Alexa ambitions underpin a broader retail strategy.
Privacy is Microsoft's differentiator
Given the latent ambitions of both Google and Amazon in bringing their digital services into the vehicle, Microsoft can claim one major differentiator from their competitors: privacy. Microsoft does not seek to monetize the user; rather, their business model is focused entirely on enterprise support to their customers, often resulting in large Azure and other software licenses.
To position themselves as the enterprise enabler, Microsoft has been quickly building a large catalog of partners on its Connected Vehicle Platform, underscored by announcements with major connected vehicle partners such as LG, Faurecia, TomTom, Otonomo, WirelessCar, and Cubic Telecom.
One important element of these activities is the enablement of in-vehicle experiences through its partnerships with LG and Faurecia. Microsoft's cloud-based software has been integrated with LG's webOSAuto platform, and Faurecia uses Microsoft software to build personalized services in its "Cockpit of the Future" product.
The common thread of privacy underpins all of these partnerships and product announcements. None of these announcements present any opportunity for Microsoft to monetize the consumer - a key difference from the other tech partners in the industry.
Back in the infotainment game
While Microsoft's infotainment ambitions today are limited to the webOS partnership, there is a very real opportunity for Microsoft to act as a neutral partner to OEMs who want to build a curated digital ecosystem. While services from Google and Amazon are more familiar to users, Microsoft's intellectual property in Bing, Cortana, Azure, and Windows give it all of the tools needed to build a differentiated infotainment product which focuses on enabling the OEM business model. It won't be easy, however, given that:
Bing and Bing Maps lags far behind the popularity of competing solutions from Google and Apple.
Cortana has almost zero consumer adoption outside of some Windows devices, and thus lacks the developer scale of Google Assistant and Amazon Alexa.
Windows has not been engineered for infotainment since the early 2010s, and without a major re-engineering effort, will continue to be passed over for more proven platforms like QNX, Automotive Grade Linux, and Android.
Azure faces stiff competition from Amazon Web Services, each company trading blows with major automaker partnerships.
Using its partner-based approach, in this conceptual reality, we would likely expect Microsoft to bring in best-in-class partners while acting as the system integrator, allowing OEMs to curate their own digital platforms.
"With some industry tailwinds favoring privacy-forward applications, Microsoft has a real opportunity to re-emerge as a player in the infotainment space, but it wouldn't be easy. As one of the few companies with all of the intellectual property necessary to build a modern infotainment platform, it would be a shame for the industry if we don't at least see a conceptual attempt by Microsoft and some of its key partners to put together a competitive offering against Android Automotive." says Alex Oyler, Director of SBD Automotive North America.