Telematics and the cloud: Building the business case

The software giant Microsoft and global automaker Toyota will build a platform for Toyota’s telematics services using the Windows Azure platform. The two companies will kick in approximately $12 million to fund Toyota Media Service Co., a Toyota subsidiary to provide digital information services to Toyota automotive customers, starting with electric and plug-in hybrid vehicles in 2012. A case study on Microsoft’s corporate website hints at some of the opportunities enabled by cloud-based services.

According to the official case study, Daimler used the Azure platform to create a Web-based service with a personalized page that lets drivers of its smart fortwo electric vehicle check the charge state of the vehicle, find public charging spots near the car, and configure certain vehicle functions, such as billing information. Because development of the vehicle was not complete and Daimler wanted to bring the solution to market quickly, it used Microsoft development tools and applications, as well as programmers from Microsoft’s staff in Germany, to complete the cloud-based application in three months.

In addition to fast turnaround, there are two other potential benefits of using Azure or other hosted application platforms. First, automakers wouldn’t need to build their own data centers. Second, they can rely on the hosts to scale the system as needed while automatically updating the platform.

Focus on the cloud

Microsoft’s embedded operating system is the basis for Ford’s Sync as well as Fiat’s Blue&Me and Kia’s UVO. When asked during the press conference how this announcement differed from Sync, Microsoft CEO Steve Ballmer said, “Sync has been about an in-car device, while this is a platform for applications to be delivered from the cloud. They might be delivered to the in-car GPS or through the phone with the car as endpoint. But it’s a cloud platform that’s the focus.” He added that the platform was designed to support a wide range of applications in the car, to the car, and alongside the car. (For more on telematics and the cloud, see ‘Telematics and cloud computing: Hey you, get onto my cloud!’, ‘Cloud computing and fleet management’ and ‘Turning telematics data into business critical information’.)

Noting that several verticals in highly regulated industries are leery of cloud-based services because of security, regulatory compliance, and governance issues, Analysys Mason analyst Steve Hilton says real-time or near real-time infotainment services could be big data hogs—and the business case isn’t proven yet.

“I don’t think the issue is a technical one,” Hilton says. “Azure is a good platform, and Toyota is a quality manufacturer. The technology will be in place. The bigger issue is, Will the consumer pay for infotainment over an on-board screen? How will the telecom providers price this solution to Toyota or the end consumers directly?”

The announcement did not include any information about connectivity to and from the car, and that could be a bigger barrier than hosting cloud-based applications, according to Hilton. “Available bandwidth over mobile networks certainly gives me pause,” he points out. “Which is slower: traffic in New York City during rush hour or a video download over AT&T’s congested 3G network? Sounds like a joke, but don’t be so sure.”

Who crunches the data?

When it comes to electric vehicles transmitting information that can help utility companies manage loads via smart grids, Ballmer said it was an open question which entity might crunch that data. “When we get information from the car, we could assemble it behind the utility’s walls, Toyota’s walls or Microsoft’s walls, whichever would enable the better consumer experience,” he said. (For more on smart grids, see ‘Telematics and smart grids: The business opportunity’; for more on EVs, see ‘Telematics and EVs: Things to do while charging’ and ‘How to profit from telematics driver data’.)

The same goes for application development: “The number of things going on is large; some things Toyota needs to enable, there are some things that Microsoft would love to enable.”

One thing Microsoft would love to enable is connecting the car to Windows Server and Office products. Toyoda suggested that when an EV driver got up in the morning, she could use her phone to tell the car when she would leave in the morning and where she would go. The EV would be fully charged when she left, and the vehicle would choose the best route, too.

“Why should you have to tell the car your schedule?” Ballmer mused. “If you’re using Microsoft software, it could automatically connect your schedule with the car. There would be one integrated world of digital information.”

Susan Kuchinskas is a regular contributor to TU.

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