Microsoft announced the deal Wednesday with Erich Andersen, chief IP counsel at Microsoft’s Intellectual Property Group saying the software giant invests $11.4 billion each year in research and development and for more than 30 years has been developing technology for the connected car. As a result of its prowess in that area, Microsoft is in position to license its connected car technology and thus its deal with Toyota, he said. Andersen said the patent agreement includes “broad coverage” for connected car technologies and builds on the existing relationship between the two.
The Internet of Cars
“When you look across telematics, infotainment, safety and other systems in today’s connected cars, you find Microsoft technologies and innovation,” said Andersen in a statement announcing the deal. “Microsoft doesn’t make cars; we are working closely with today’s car companies to help them meet customer demands.” According to Andersen, during the course of the next three years, 90% or more of cars will be connected to the internet, and Microsoft wants to be a big player in that market. “From amazing fuel savings, to predictive maintenance and safety features, to self-driving cars, we’re at a critical inflection point that will change how we drive,” Andersen wrote in subsequent blog post. “Microsoft is working with the world’s leading automotive companies and suppliers to deliver these technologies and services to customers.” Andersen pointed to Azure, Microsoft’s cloud platform for the auto industry as one example of technology it has. Toyota already uses Microsoft’s Azure cloud for its Toyota Big Data Center.
“This is an exciting time in the industry, and we believe that to create the best, most immersive connected car experiences, automotive makers should partner with technology leaders like Microsoft,” said Tokuhisa Nomura, executive general manager of Toyota’s Advanced R&D and Engineering Company in the same press release. “Through this patent partnership between Toyota and Microsoft, we will be able to innovate faster to deliver new, contextual and immersive experiences to our customers.” Absent from the announcement Wednesday is any information about which patents Toyota will license and how much it will pay to access the Microsoft patents.
Microsoft isn’t the only tech company eyeing the automotive market as a next bastion of growth. Last year mobile chipmaker Qualcomm Inc. (QCOM) inked a deal to acquire NXP Semiconductors N.V. (NXPI) to get more into the automotive market and Intel Corp. (INTC) recently inked a multi-billion-dollar deal to acquire Mobileye (MBLY), which makes vision technology for cars. Apple Inc. (AAPL) and Alphabet Inc.’s Google (GOOG) are also going after the market as is Alibaba Group Holding Ltd. (BABA) the ecommerce giant in China. (See also: Alibaba Expands Into Augmented Reality, IoT Cars.)
According to research firm Research & Markets, the connected car market had shipment of 5.1 million units in 2015, with that expected to grow to 37.7 Million units by 2022, representing a CAGR of 35.54% between 2016 and 2022.