Convergences should secure demanding and solvent customers

The term convergence is on everyone’s lips. Because on the one hand, digitized vehicles open up an almost unlimited market of services in the field of mobility. In the case of motor vehicles, this ranges from the constantly self-expanding safety system, as Tesla is doing by means of data networks, to built-in game consoles and to artificial intelligence and autonomous driving. On the other hand, car manufacturers are also forced to convince customers, who are strongly courted and demanding in many ways, of the value of their respective brands with ever more efficient products and attractive service offers. Those who can adorn themselves with the names of global companies such as Apple, Microsoft or Google by cooperating with them or acquiring shares in them hope to secure the brand-conscious and financially strong generation of tomorrow. 

Convergences with IT giants are often billion-dollar deals

The emphasis is on the word “solvent”. Because everyone wants to earn: IT providers often let themselves be paid billions for their cooperation with car manufacturers. According to inside-it, VW will invest around 27 billion euros in digitalisation in general by 2025.

Microsoft and Google provide know-how for cash

According to VW’s head of software Dirk Hilgenberg, Microsoft is to help to accelerate the provision of applications in cloud computing and software engineering. Cloud services from Microsoft are to be used for this. VW is also interested in Microsoft’s developments in the field of artificial intelligence. The Wolfsburg-based carmaker’s quid pro quo remains monetary, as Scott Guthrie, vice-president of Microsoft Cloud, points out; his company does not get access to VW’s data. 

Ford has also entered into a 6-year connected driving collaboration with internet giant Google in the first quarter of 2021. Google is to become the central provider of cloud services for Ford. In addition, the infotainment systems are to run on Android as the operating system from 2023. Ford’s own Sync. software, which ran Ford’s infotainment systems until now, will be dissolved. When announcing the cooperation, Ford manager David McClelland referred to Google’s expertise in machine learning and artificial intelligence and also emphasised that Google would not receive any data from Ford customers for further use. 

Summary in a nutshell

  • Convergences open up an almost unlimited market in the field of mobility.
  • Mergers with IT giants cost carmakers a lot of cash.
  • Car manufacturers hope that by cooperating with IT giants, some of the latter’s attention will spill over to them.
  • Some car manufacturers do not further develop their own operating systems and instead rely on cooperations. Others go the opposite way and rely on the further development of their own operating systems in order to be able to exist independently on the market.
  • Industry benefits from the innovative impulses of high-tech startups.
  • magility networks companies with technology experts from all over the world.

Cooperations are good – independence is better?

Even though the German car companies have just jumped on the bandwagon of convergence and are looking for cooperation with software developers – it does not seem to be in their nature to renounce independence in the long run. Daimler and VW are currently working flat out on their own operating systems with which they can survive on the market in the future without the intervention of Amazon or Google.

Experts from three corporate brands are developing a new operating system

At VW, the child already has a name: VW.OS is being developed by around 5000 experts from VW, Porsche and Audi. For this purpose, the company Car.Software.Org was newly founded, whose number of employees is to double again in the next four years.

From smartphone to electric vehicle

Meanwhile, one of the world’s largest smartphone manufacturers is starting up in China. Xiaomi is entering the smart electric vehicle business. Founder and CEO Lei Jun wants to invest around 10 billion dollars in a subsidiary over the next ten years to compete against rivals in a market that, according to Dan Ives, an analyst at investment firm Wedbush, will be worth 5 trillion dollars over the next ten years. Compared to that, the other products in Xiaomi’s belly shop look like peanuts. The Chinese giant makes electric toothbrushes and razors, light bulbs, watches, surveillance cameras and scooters on the side.

Convergences – Startups get in on the act 

In addition to classic convergences, start-ups with their high-tech developments are increasingly playing a leading role in the industrial markets. Entire startup-driven industry segments are increasingly emerging. According to Speedinvest, investments in so-called “industrial tech companies” have increased almost ninefold across Europe from 2014 to 2020. For many years, we at magility have been accompanying high-tech startups as they enter the EMEA market. Our clients from industry benefit from the innovative impulses of our high-tech start-ups. We bring together traditional companies with the right technologies and specialists from the high-tech world. Feel free to contact us if you would like to expand your international network in line with your company’s business model. We at magility will be happy to help you