Volkswagen and Microsoft Link on Digital Connected Car on Volkswagen Automotive Cloud

Together, the two companies will develop the technological basis for a comprehensive industrial automotive cloud.

Volkswagen and Microsoft Corp. will collaborate to develop the ‘Volkswagen Automotive Cloud’, claimed to be one of the largest dedicated automotive industry clouds for all future Volkswagen digital services and mobility offerings. It’s partly a defensive move.

The Supervisory Board of Volkswagen AG approved the conclusion of an agreement to this effect between Volkswagen and Microsoft yesterday. Volkswagen along with the entire auto industry continues to confront the technical, legal and above all financial challenges the brave new world of autonomous vehicles is going to usher in. Whether customers will accept Giant Smartphones on wheels remains an open question. (read AutoInformed Special Report: More Press Releases than Automated Vehicles as Makers Describe Intentions)

Volkswagen in a press release said, “with Microsoft as its strategic partner, the company is taking a decisive step in its digital transformation into a mobility provider with a fully connected vehicle fleet and the digital ecosystem dubbed Volkswagen We.

It appears to be the latest victory for Microsoft. The world’s leading companies run on Microsoft Azure. Starting in 2020, more than 5 million new Volkswagen-brand vehicles per year will be fully connected and will be part of the Internet of Things (IoT) in the cloud. The profound partnership between the two companies will lay the foundation for combining the global cloud expertise of Microsoft with the experience of Volkswagen as an automaker with a global market presence.

Microsoft Corporation has a long-standing licensing agreement with Toyota Corporation that includes broad coverage for connected car technologies needed for autonomous vehicles. The latest deals build on a previous ones going back to 2011 that include their collaboration on the Azure-based Toyota Big Data Center. (read on: Microsoft and Toyota Partner on Next-Generation Telematics, Toyota Hires Microsoft Exec as Technology Officer, Microsoft Licenses Toyota Connected Car Technology)

The Volkswagen Passenger Cars brand is present in more than 150 markets throughout the world and produces vehicles at more than 50 locations in 14 countries. In 2017, Volkswagen delivered 6.23 million vehicles including bestselling models such as the Golf, Tiguan, Jetta or Passat. Currently, 198,000 people work for Volkswagen across the globe. The brand also has more than 7,700 dealerships with 74,000 employees.

Together, the two companies will develop the technological basis for a comprehensive industrial automotive cloud. In the future, all in-car services for vehicles of the core Volkswagen brand as well as the Group-wide cloud-based platform (also known as One Digital Platform, ODP) will be built on Microsoft’s Azure cloud platform and services as well as Azure IoT Edge. This will – VW hopes – streamline the technical landscape or is that a jungle Microsoft rules?

Via the Volkswagen Automotive Cloud, Volkswagen will optimize the interconnection of vehicle, cloud-based platform and customer-centric services for all brands, such as the “Volkswagen We” ecosystem.

By building the Volkswagen Automotive Cloud, Volkswagen wants to leverage consistent mobility services across its entire portfolio and to provide new services and solutions such as in-car consumer experiences, telematics, and securely connect data between the car and the cloud. Yesterdays surprise revelation that personal Facebook information for 50 million users has been compromised, once again raise the security issue that looms as a large obstacle on the road to the interconnected vehicle; one that is never discussed in autonomous vehicle press releases.

New Digital Headquarters

As part of the new entity, Volkswagen will establish a new automotive cloud development office in North America near Microsoft’s headquarters. Microsoft will provide hands-on support to Volkswagen as it ramps up its new automotive cloud development office, including resources for hiring, human resources management and consulting services. The workforce is expected to grow to about 300 engineers soon.

Beyond the technological rationale of the partnership, Microsoft provides access to cloud expertise across their organization so Volkswagen developers and engineers can benefit and learn from Microsoft’s alleged agility and can transfer those experiences into the core Volkswagen organization.

Largest Digital Ecosystem?

In the long term, 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.

About Kenneth Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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