Volkswagen & Microsoft
Volkswagen & Microsoft

Volkswagen’s Remarkable Journey from #1 Car Maker to Software Company via Azure Cloud

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At the ripe old age of 82 and having become the world’s largest automaker, Volkswagen AG is undertaking a massive transformation to surge into the wild new world of digital as a software company that provides mobility services and information rather than just cars, trucks and buses.

Centered on the Volkswagen Automotive Cloud developed in partnership with Microsoft, Volkswagen is developing a new strategy grounded in software and technology to provide that all-encompassing objective of every digital business: to deliver superior customer experiences.

“Our goal is the customer experience for customers in their own vehicles and beyond,” said the Volkswagen executive in charge of the new mobility-services effort, Christian Senger.

Senger’s comment came in a press release issued in conjunction with a media event yesterday that featured Volkswagen AG CEO Dr. Herbert Diess and Microsoft CEO Satya Nadella.

So yes indeed—for all of the complex and wide-ranging and visionary discussions that rightly go into conversations about digital transformation, it’s great to see that more and more companies are realizing that the single primary objective must be to deliver elegant and easy-to-use experiences that align with the digital lifestyles and expectations of billions of people around the planet.

And in the Cloud Wars, no company has been more on top of that trend than Microsoft, and no executive has done more to push that notion than CEO Nadella.

About a year and a half ago, Nadella began to hammer home an utterly essential point that he’s made many times since then: every company in every industry must itself become a software creator and a technology company, and every tech vendor must transcend the old model of creating software that customers can use and instead begin giving them the tools and know-how to create their own software.

That ethos was reflected in the thinking of Volkswagen CEO Diess, who put it this way in the press release: “Our strategic partnership with Microsoft is a key element in our efforts to develop Volkswagen into a software-driven mobility provider. With the Volkswagen Automotive Cloud, we are working on a unique solution for our customers,” said Diess.

The Volkswagen CEO then added an aggressive endorsement of the technology chops his company has developed and will continue to develop both on its own and through its heightened relationship with Microsoft.

“Our upscaling capabilities give us a huge competitive advantage in this area,” Diess said.

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Nadella himself couldn’t have said it better: just as Volkswagen, on its earlier path to becoming the world’s largest automaker, had to scale up its auto-making capabilities in design, development, procurement, engineering, manufacturing and distribution, so too in the digital world must it become unmatched in its “upscaling capabilities” if it wishes to take the #1 spot in software-driven mobility services.

In the press release, Nadella said, “Digital technology is rapidly changing every aspect of the auto industry – from the manufacturing process to the car itself. Our partnership will enable Volkswagen to deliver new Azure-based connected vehicle services that accelerate the company’s transformation into a software-driven mobility provider and define the future of mobility for people everywhere.”

To offer a glimpse into how the company will do that, the accompanying infographic supplied by Volkswagen offers a high-level view. And Volkswagen executive Christian Senger offered this perspective:

Satya Nadella, CEO of Microsoft (L) with Dr. Herbert Diess, CEO of Volkswagen AG (R).

“The Volkswagen Automotive Cloud will be the global technological backbone of our digital ecosystem. At the same time, we will be launching a new, high-performance software architecture in our vehicles. This will lay all the foundations required for the full networking of our vehicle fleet and for the development of digital added-value services for our customers. Our goal is the customer experience for customers in their own vehicles and beyond.”

The Volkswagen Automotive Cloud will be rolled out next year in parts of Europe with a new vehicle called the “ID.” that will also be introduced in China later in 2020. The ID. model family is expected to make its debut in the US in 2022, the company said.

And, in a further indication of the heightened ties between Volkswagen AG and Microsoft, the companies will accelerate activity at the Development Center Volkswagen established in Seattle near Microsoft headquarters late last year. The car-company-becoming-mobility provider said it hopes to “learn from Microsoft’s highly developed culture of agile collaboration and digital leadership,” with Microsoft also supporting Volkswagen’s recruitment efforts in the highly competitive job market in the Seattle region.

(Disclosure: At the time of this writing, Microsoft was a client of Evans Strategic Communications LLC.)

 

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