Why the Microsoft-Toyota tech tie-up is on the highway to success, says Eric Volkman [Mob.Volkman.2016.15.04]

It’s been a very long time – decades, in fact – since Microsoft has been a leading-edge company.

In recent years it’s always seemed to show up just after the crest of a technology’s popularity. Remember the Zune music player, its late-to-the-market Apple iPod wannabe? Better yet, don’t. It wasn’t exactly a smashing success.

Regardless, Microsoft is pushing further into the auto mobility space, a move that seems at first blush to be yet another case of too little, too late for the American tech giant. But appearances can be deceiving; the company isn’t a latecomer at all and its approach is, actually, quite sensible and potentially very lucrative for its business.

Microsoft and Toyota recently announced they were teaming up for a new data analytics shop, Toyota Connected. This will be located in the Japanese carmaker’s US headquarters in Plano, Texas, and will be staffed by Toyota boffins joined by Microsoft engineers.

In the carmaker’s words, it “will serve as a data science hub for Toyota’s global operations and will support a broad range of consumer-, business- and government- facing initiatives”. It almost goes without saying that the ‘initiatives’ have to do with the connected and, ultimately, autonomous car.

But while rival tech incumbents are busy road testing their own autonomous vehicles or developing the technology that will make those cars self-piloting, Microsoft has different ambitions. The company wants to be the backend provider handling the flood of data streaming to and from connected vehicles, via its Azure cloud computing platform.

It's already got deals in place to provide such services not only for incumbent manufacturers like Ford, BMW, Volvo and Nissan, plus component makers (e.g., Delphi) and auto tech solutions providers such as Harman.

Toyota has been a relatively long-time Azure user with the tech giant, having inked its partnership with Microsoft back in 2011. Toyota Connected is described by the two companies as an ‘expansion’ of that arrangement.

In many ways, it’s a marriage of two rather compatible partners. Microsoft’s greatest successes have been in the consumer mass market; Windows has been such a standard PC operating system for so long that it’s rare – and very jarring for some – to encounter a machine without a version of it.

This meshes very well with Toyota’s long-standing approach to the market, which is similarly to appeal to the thickest possible slice of the consumer pie. Its goal is to move the metal, which is why the vast bulk of its models are relatively affordable, easy to drive, and intuitive to operate. It isn’t regularly the biggest manufacturer in the world by accident.

Given that, the products and services that derive from Toyota Connected will be very much tuned to appeal to the average car consumer. We shouldn’t, then, expect whiz-bang technology and over-the-top ‘wow’ factor from the offerings. Rather, Toyota Connected “seeks to connect cars to people’s daily lives” according to Microsoft’s press release on the launch of the extended partnership.

The tech company cited potential technologies such as blood pressure monitoring in stressful driving situations, restaurant suggestions along the travelled route and automated notifications of friends/colleagues in case car and passengers are running late. The partnership even aims to install sensors in seats in order to keep track of an occupant’s weight.

And of course, the collaboration will look into better ways of providing the obvious in-vehicle assisted services in the cleanest and most unobtrusive ways. For example, insurance providers, using data fed to them by the car, will be able to tailor and price their auto policies according to actual use and, in these waning pre-autonomous days, driving habits.

By tying together lifestyle apps like the blood pressure monitoring and notification functions with the expected in-auto services, the idea is to integrate a Toyota owner’s driving life with his or her regular day-to-day. If the big vehicle maker can do this more effectively than its rivals, it will stand an excellent chance of not only staying number one on the market but even expanding its lead. And it’ll need the cloud computing power, not to mention the engineering prowess, of Microsoft to get that done.

In spite of their size and history, both companies remain hungry and ambitious. With Toyota Connected, they not only aim to craft the leading edge of consumer in-car tech, they want to leverage this to and from other areas of technology as well. The partnership will support Toyota’s research into artificial intelligence and will provide support for the company’s efforts in the robotics sphere. Both of these, in addition to leading-edge ADAS and autonomous driving research projects, are covered by the Toyota Research Institute, a $5Bn (£3.4Bn) company offshoot located in two offices in the US.

Toyota plus Microsoft makes a formidable combination. It will be intriguing to watch what Toyota Connected manages to concoct over the next few years. If things go right for the collaboration and it works as expected, a great many of us will be using its solutions before we know it.

TU-Automotive Japan 2016

18 Oct 2016 - 19 Oct 2016, Tokyo, Japan

Having been dedicated to connecting key figures across the telematics ecosystem in Japan and beyond, TU-Automotive Japan 2016 will explore issues, opportunities and technologies in the connected car, autonomous vehicles and auto mobility.