Toyota’s Microsoft Turnabout

Gary S. Vasilash

For years, Ford has been chasing Toyota in its advertising and marketing, working to convince people that its product have every bit as much quality as those from the company that was—up until last year—synonymous with “quality.”

One thing that Ford has done—well—is to leverage technology, particularly in the partnership that it has established with Microsoft, which led to the SYNC infotainment system that is a true differentiator in the automotive space.  Handily besting other automotive companies.  Including Toyota.

Today, pulling, perhaps, a turnabout, Toyota Motor Corp. (TMC) and Microsoft announced they’ve established a partnership—“a strategic partnership” –-to build the next-generation telematics system for TMC. The system will be based on the Windows Azure platform. Toyota plans to first feature this in 2012, in its electric and plug-in hybrid systems.

Toyota then plans to have a global cloud platform by 2015, which would arguably make telematics services affordable and accessible anywhere.

Microsoft Ballmer Keynote

Steve Ballmer, Microsoft CEO

As Microsoft CEO Steve Ballmer put it, “It further validates the power of the cloud, as the Windows Azure platform will provide the enterprise-grade, scalable platform that TMC needs to deliver telematics in its automobiles worldwide.”

The two companies are to be making a 1-billion yen (~$12-billion) investment in Toyota Media Service Co., a TMC subsidiary for digital info services.

What’s interesting to note is that in some ways, TMC was a leader in automotive telematics, having launched its G-BOOK telematics service in October 2002. It upgraded that system in 2005, and it not only offered accident notification services, but also digital music downloads and traffic-based navigation. For whatever reason, that didn’t seem to scale or evolve well.

While it may seem that Toyota is working with Microsoft to trump Ford, there may be a simpler explanation: Clearly Toyota is going at this cloud-based telematics in a big way, and there aren’t a whole lot of other companies on the planet that could make the sort of investment necessary to pull this off—time, smarts, money, resources—other than Microsoft.