Toyota's Car OS vs. Ford's Sync (Microsoft Windows Automotive), Part 2

Welcome back for Part 2!  I didn't expect this to be a series when I wrote the original post, but two things happened recently that might (I hope :-)  ) make  a second post interesting.  First, Reuters picked up a story from the Nikkei business daily headlined "Toyota plans standards for in-car software".    A few interesting items from the article:

• Toyota is reportedly is acting to boost efficiency and keep a competitive edge over rivals in safety as "cars become increasingly computerized and increased complexity drives up software development costs", according to the paper.
• AisanSeiki and Denso are part of the group participating in the project with Toyota, and there's some possibility of forming a separate company to specialize in software development for vehicles. 
• "Toyota is known in the industry for working especially closely with parts makers from the development stage to avoid relying too heavily on its suppliers for value-added gadgets that often determine a car's competitiveness."
• A working version is expected by 2015.  [I wonder if this is correct?  An article in June 2006 said the OS initiative was targeted for introduction in 2010. (Thanks to Marcel Ono for this link).] 
• The report linked the Toyota OS initiative to another one called the VI (for Value Innovation) project.  The VI project is deisgned to help Toyota consolidate the computing infrastructure for features and functionality that today are often provided by 60 or more single-purpose control units.  

I commend Toyota for the discipline and foresight to invest in this domain.  There are many significant and difficult questions outstanding, but what is clear is that software will drive a very large chunk of innovation in the next 10 years, and *someone* will get value out of that intellectual property.  OEMs that don't invest will buy it from the suppliers, and perhaps other OEMs, that do invest.  But it really is a long journey.  It will take some time before the "Toyota OS" project (whatever it's actually called) delivers visible ROI. 

BTW, the VI project will probably payoff much faster.  I mean, really, is there any reason your rain-sensing wipers, light-sensing headlamps, heated and cooled memory seats, door locks, and climate systems couldn't all be controlled by a single controller?  Think of the development, packaging, validation, purchasing, and assembly efficiencies!  Not only would costs go down for the high-end vehicles that have all these features today, but these features could also then be profitably delivered on entry level vehicles -- creating multiple great "surprise and delight" opportunities. 

I agree with those who will say that an OEM might decide to hold back safety critical systems (e.g., wipers, lights) from this approach on the first go-round.  The immedidate issue is not (yet) which specific controllers should be "in" or "out", but that some OEMs (those I'm familiar with, anyway) lack the capability to even do the analysis of what could and should be consolidated to create additional value across the enterprise and for consumers. 

Each OEM will ultimately have to figure this out for themselves, but for those that don't move agressively to own this architecture space -- well, the suppliers will do it for them.  I expect that suppliers are already pushing their multifunction controllers as ways to lock-in expanded business.  For those OEMs that can't or wont' commit to the investments in software competency and in-vehicle software architecture required, the supplier-led path is a path forward.  But a decision to take this supplier-centric path should be coupled with a recognition that the OEM is granting suppliers significant future  intellectual property.  This issue has confounded the industry for years. 

So what?  So OEMs should choose wisely, and have great clarity about the value they will strive to provide in the extended value chain.  There's not a single correct approach here, but the question needs to be answered: With so much future IP bound to software, how will OEMs maintain their margins if they lack strong software competency and control of their in-vehicle software architecture?  In fact, competency with in-vehicle software architecture might be one of the most critical skills to successfully execute on the "OEM as system integrator" business model that some OEMs seem to be moving towards. 

Finally, I should mention OEMs and suppliers don't have to "go it alone"... there are a number of industry groups trying to make progress in the in-vehicle software architecture space.  Groups of this type have been around for quite a while, and historically have struggled to get real industry traction.  The reason, IMHO, is that suppliers and OEMs have long been arguing about what the basis of competition should be -- i.e., what will be the proper role of the supplier vs. the OEM.  Recently, some of these organizations have made a bit more progress, especially in Europe. 

One of them is OSEK, and even Toyota's OS initiative makes room for OSEK/VDX, as this chart shows. 

Another one of them is AutoSAR.  I think suppliers and OEMs alike are finding more incentives to embrace industry groups like AutoSAR because they recognize both the difficult competency challenges and also the increasing risk/opportunity cost of being left behind.  Additionally, the idea of creating a common platform that suppliers and OEMs can extend has suggested there could be some cost and agility benefits from sharing some software engineering.  As AutoSAR likes to put it, "cooperate on standards, compete on implementation".  In the past, AutoSAR has mostly focused on "traditional" controllers vs. infotainment, but indications at Convergence 2006 were that AutoSAR does intend to move toward infotainment (where Microsoft has so far chosen to focus).   

Way back at the beginning of this post, I mentioned there were two reasons for a "Part2"... the second is the email dialogue I've been having with Marcel Ono, which he gave me permission to post.  My comments are in dark blue, Marcel's are in green.  Header text is in black.  The first message/reply pair is first below, and the second message/reply pair is second (so you don't need to try to read from the bottom up). 

----Paste of email thread below----

De: John Mullinax
Para: Marcel Ono
Enviadas: Segunda-feira, 26 de Março de 2007 2:42:42
Assunto: RE: (Beyond | IT) : Toyota OS vs. Ford Sync

Hi Marcel, Thanks for sharing your thoughts.  I've added a few comments inline below.   Would you mind if I posted this exchange as a comment to the original post?  (or maybe a “Part 2”)? 

John Mullinax

-----Original Message-----
From: Marcel Ono
Sent: Thursday, March 22, 2007 10:40 PM
To: John Mullinax
Subject: (Beyond | IT) : Toyota OS vs. Ford Sync
Importance: High

Hello John,

I appreciated your post very much. Great insights for a real "million dollar question": shall I go with my system or your system?

Toyota has chosen a way that makes sense to a company with strong R&D capabilities, stock prices rising to the sky and guts to wait 5 years until complete solution deployment. As far as I know, the same thing happens in other well-established companies in this industry.

Might this be a 'de facto' doctrine of the automotive world... To try "reinvent the wheel" forever and ever?

[John Mullinax] I think you are right… but I wonder if this might be changing as the pace of change (as well as capital and competency) drives OEMs to think of their role more as system integrators than designers of every sub-system.  The choices an OEM makes on this question tell something about their financial position and engineering competency, but also something about how they value particular sub-systems and what they believe the basis of competition will be in the future. 

On the other hand, Microsoft's initiative will launch new standards. The trend is already set, as the cost of electronic components are falling while the resources are continuously increasing.

I expect to see at some point in the future truly HW and SW platform reuse, like our home PCs. No more trainings on the new XYZ microcontroller version 1.4.5.6 and such things. Just like IT. Concentrate efforts on the product features and leave the poor bits alone!

Nevertheless.. I've never seen any Microsoft-branded application running onboard (Sync? Only in pictures).

[John Mullinax] Are you familiar with Fiat's "Blue and Me"?  From the Microsoft perspective this a predecessor to the Sync system Ford is working on, as it also uses Windows Mobile for Automotive (now called Windows Automotive). 

Is there a chance to win in an aggressive market where you get a business in terms of cents? Or even less? I don't think so...

[John Mullinax] I’m not sure if you are questioning the chance of an automotive OEM or the chance of an outside company like Microsoft?  The way incentives and decisions tend to be structured in OEMs has made it difficult for some OEMs to choose to invest in vehicle software architecture at the nameplate or even platform level.  I imagine that the type of investment Toyota is making, if successful, can help change this dynamic – which would help the company to continue to evolve faster than its competitors.  There is also another dimension: the business proposition for in-vehicle software may not be constrained to just the vehicle itself.  Software can help us integrate our vehicles more fully into different parts of our lives, and there may be business opportunities that view the vehicle not as an end in itself but as part of  a larger ecosystem. 

As being part of this story, I anxiously expect the next steps. I would love very much to be part of the team who will change the automotive industry story.

Looking forward for new insightful postings.

[John Mullinax] Thanks for your sharing your thoughts!

Best regards,

Marcel Ono

----------- begin second message/reply pair--------

Hi Marcel, My turn to apologize the late reply. I appreciate your insights, and appreciate your willingness to let me post them! More comments in response to your thoughts are inline below.

John Mullinax

From: Marcel Ono
Sent: Friday, March 30, 2007 9:27 PM
To: John Mullinax
Subject: Res: (Beyond | IT) : Toyota OS vs. Ford Sync

Hello John,

Thanks for your e-mail. Sorry for the late answer. Quite busy week this one.

Feel free to post the e-mail as a comment. Anyway, a "part 2" would be nice, why not!

[John Mullinax] Thanks!

It is true that most OEMs are much more likely to become system integrators. But that seems to be the main idea behind the Toyota OS.

What I understood from Toyota's initiative is that they want to give to suppliers a framework for developing subsystems. And not to take over the entire creation of the subsystems themselves.

[John Mullinax] That is my understanding, as well – and why I think Toyota’s current effort may be a little different from other examples where OEMs have tried to “re-invent the wheel”.

The article where you got the story (from autoindustry.co.uk) is a summary of the article from Nikkei Electronics Asia. In the original version (http://techon.nikkeibp.co.jp/article/HONSHI/20061026/122752/) it is said there that Toyota intends to improve safety, reliability and cut software costs by giving every information and control subsystem the same underlying (Toyota) OS. In the original article there is also an interesting figure giving a layered-view of what the system would be like, even giving space for the popular OSEK.  Anyway, this is far from being a trivial task and only time will tell who's right and who's not-so right.  Consensus is the hardest thing to achieve...

[John Mullinax]This link is very informative- thank you again!

I've found some additional info on Sync and Blue and Me. Rather interesting I must say. They are particularly targeted for the up-average to high-end market aren't they?

[John Mullinax] I can’t comment on what vehicles will get this functionality. My personal opinion is that this is not just for the high-end market. The primary in-vehicle experience for Sync is intelligent hands-free access to phone and music. Certainly other things are possible and desirable, but it’s the smart way of enhancing the value of consumer “brought-in” devices within the vehicle that has been the focus of Sync development. The people who are most likely to value this capability are young people – that is, people who are also likely to purchase a less expensive vehicle.

What I meant from "getting a business in terms of cents": business where you've got to squeeze your profits until the last drop. But it doesn't seem to be a business target for Microsoft's approach. At least that nice set of features don't seem to be cheap at all.

[John Mullinax] My personal view on Microsoft’s approach is that Microsoft is a platform company at its core. The company has been successful so far by creating a strong, general purpose computing platform, and fostering a huge partner ecosystem. People buy the platform (partly) to get access to the broad range of applications that are available, people write applications for the platform because a lot of people buy it. It’s a strong self-reinforcing circle. It used to be that the only platform we had was Windows on a PC. Then we added Windows on servers. Then we added Windows on mobile devices. At some point, we recognized that the Internet is itself a platform, and we added Windows Live. MSN is a media and advertising platform. On top of Windows, .Net is a platform, and also Sharepoint and Office together are a platform. And now, Windows Automotive is emerging as a platform, too – yes, it’s a variation on Windows CE/Windows Mobile, but one that can have its own unique ecosystem.

Software can definitely do lots of things for us. The most interesting thing in my opinion is the possibility to integrate different contexts to create new environments where people feels comfortable, see usefulness and want to pay for it :)

[John Mullinax] I agree with you – and especially when you are creating a capability for people to realize these context integration opportunities for themselves!

By the way, what role did Microsoft assumed during the development of Blue and Me and Sync? Did you developed the software and hardware or teamed up with someone else?

[John Mullinax] Continental (formerly Motorola) took Microsoft software and put it on Freescale hardware. The software itself was done by Microsoft in partnership with Ford and is based significantly on Windows CE.

Thanks and best regards.

Marcel Ono

----- Mensagem original ----