German automotive heavyweight Volkswagen says it will build all in-car services for its brand on Microsoft technology alone, following a strategic partnership announced today. The terms of the five-year deal were not disclosed.
The decision comes 10 days after the Renault-Nissan-Mitsubishi Alliance inked a global agreement with Google to power its cars’ “intelligent infotainment systems” with Android. The Alliance sells 10 million cars annually.
Car makers were previously were reluctant to allow major tech companies “into the dashboard”. This month there has been a decisive public shift, with Audi integrating Amazon’s Alexa voice assistant into a new SUV.
Car makers believe streaming video, restaurant reservations and even repair or service shop location-finding, along with the nascent (and controversial) in-car advertising industry could prove a lucrative offering.
Volkswagen said the same day that it is pushing of a 30 percent increase in productivity worldwide by 2025 compared to 2018.
Microsoft Volkswagen Partnership: 5 Million Cars Connected Annually
More than five million new VW brand vehicles per year will be connected to Microsoft’s Azure cloud platform from 2020 onwards, the two said, with Volkswagon to set up a new cloud development office near Microsoft’s HQ and hire 300 engineers.
VW and its 11 subsidiary brands sold 10.7 million vehicles in 2017.
The two will also use Azure IoT Edge, which allows users to “containerise cloud workloads – such as Azure cognitive cervices, machine learning, stream analytics and functions – and run them locally”.
The strategic partnership with Microsoft will turbocharge our digital transformation,” said Dr. Herbert Diess, CEO of Volkswagen AG.
“Volkswagen, as one of the world’s largest automakers, and Microsoft, with its unique technological expertise, are outstandingly well-matched. Together, we will play a key role in shaping the future of auto-mobility.”
In the long term, the two said. the solutions developed through the strategic partnership will be rolled out to other Volkswagen Group brands in all regions of the world, building the foundation for all customer-centric services of the brands.
“This includes the Volkswagen ID. electric family as well as conventionally-powered models. In the future, Volkswagen’s fleet of cars will become mobile ‘internet of things’ hubs linked by Microsoft Azure.”
In a major efficiency push, meanwhile, Volkswagen today said it has identified its biggest optimisation potential as lying in production structures and processes, considered to be far too complicated in many places.
“There is also room for improvement in standardizing our global production network”, Andreas Tostmann, the Volkswagen Brand Board Member for Production said.
“That is why we are now introducing uniform structures at all factories along with uniform and comparable key performance indicators. In production alone, we have efficiency potential of EUR 2.6 billion through 2025.”