Microsoft's three major moves in the automotive industry exposed "car ambitions"

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A popular joke in the American auto industry goes like this: One day, a Microsoft software engineer met a Detroit automotive engineer. The software engineer teased, “Your auto industry is moving too slowly. If car technology developed at the same pace as Microsoft’s, today’s cars would have 32 cylinders, go 10,000 mph, and cost less than $50!” The Microsoft engineer expected the car engineer to be embarrassed, but the latter just smirked and replied, “But who would buy a car that crashes three times a day?” As one of the world's largest tech companies, Microsoft entered the automotive sector back in 1995, and it was met with skepticism from traditional automakers. Recently, Microsoft has made three major moves that have sparked widespread interest—and debate—within the automotive industry. **Three Major Moves Reveal Automotive Ambitions** On June 6, Microsoft appointed Jeff Bayer, former vice president of product strategy at the Dai-Ke Group, as the president of its interactive entertainment business. Bayer gained fame at Chrysler for using online games to promote vehicles. This time, Microsoft tapped him because of his deep understanding of both the automotive industry and related electronics markets. Then, on July 6, the FIA announced that Microsoft had won a fierce bidding war to become the official engine control system sponsor for the 2008 F1 season. This move clearly showed Microsoft’s ambition to enter the most critical areas of automotive technology. Finally, on July 16, Microsoft launched its car dealership management software in the U.S. with great fanfare. Bill Gates stated that car dealers could now manage their global sales networks more efficiently using the platform. At the launch event, John Reed, Sales Director of Microsoft’s Automotive Division, said, “The scale and potential of the automotive market are very attractive. Even though we’re latecomers, we’re confident in the future of our software.” He also hinted that Microsoft would use competitive pricing to gain a foothold in the industry. **Competition in the Automotive Sector Is More Intense Than in Office Software** Some experts predicted that the future car would be “a computer with four wheels”—exactly what Microsoft envisions. According to the head of Microsoft’s Automotive Division, “With the growing presence of electronic devices and communication systems in cars, automakers are looking for a standard software platform. Who better than Microsoft to provide that?” However, Microsoft’s journey into the automotive space hasn’t been smooth. In 1995, it set up an Automotive Division with the goal of making its products as dominant in cars as they were in offices. But it soon realized the competition in the automotive industry was far tougher than in the office software market. Automakers had many choices, including Japanese companies like Toyota, Honda, and Nissan, which formed a non-profit organization to develop international standards for automotive software. General Motors also introduced OnStar, a system that automatically contacts emergency services during accidents. Microsoft also faced competition from embedded operating systems such as VxWorks, Linux, and QNX—all of which had strong ties to the automotive industry. Despite these challenges, Microsoft still has unique strengths. Its car window system can seamlessly integrate with software commonly used on computers, offering users a familiar interface. At the Geneva Motor Show, Microsoft demonstrated a production car running the full version of its mobile Windows OS. Later, at the Hannover Communications Technology Show, it unveiled a concept car with full Internet access. In terms of management software, Microsoft also holds an edge. In May, it introduced a solution for automotive suppliers, helping them optimize resource allocation through computer systems. A project manager explained, “With increasing competition, suppliers can boost profits by using efficient systems. Microsoft’s platform helps them do exactly that.” David Cole, chairman of the Ann Arbor Automotive Research Center, noted, “Microsoft’s moves are aimed at raising awareness within the automotive industry.” While continuing to develop automotive software, Microsoft is also learning from its mistakes. A senior executive from the automotive division admitted, “Whether Microsoft becomes a preferred brand depends not only on technology but also on how well we adapt to the culture of automakers. In the automotive world, the manufacturer’s brand is king, not the equipment provider’s.” To that end, the software giant is trying to be more humble in the automotive field. A Microsoft technical leader said, “We don’t talk about dominance. No one in the auto industry holds a dominant position.”

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