Consumer Electronics Show Software companies and carmakers face off in Vegas

Software giants like Google want to break Germany’s dominance in automaking. Daimler, BMW and Audi are showing they’re determined to fight back.
Quelle: dpa
We can't stop this Audi here! This is bat country!

It took a while, but German luxury automakers Daimler, BMW and Audi have woken up to the challenge they face from US Internet giants.

They have listened to the warnings that infotainment is the new battleground and have responded by rolling out new systems that offer a wide range of services — but don’t play fast and loose with drivers’ data.

The scramble for supremacy in onboard electronics was evident at the Consumer Electronics Show (CES) in Las Vegas last week, where the Germans were jostling with the likes of Google. There’s no doubt that they’re playing catchup.

“Google, Apple and others have existing ecosystems that they just have to expand to cars,” said Stefan Bratzel, head of the Center for Automotive Management.

Making code, not cars

As is to be expected, Google had a prime location near the main entrance to the show where it exhibited its vision of the future of driving: smart, interactive and of course powered by Google software. Its Maps service, available through its own Android operating system as well as through Apple’s iOS, offers voice-activated navigation. During the journey, Google offers to inform relatives or friends of the estimated arrival time and takes messages.

It’s unfamiliar territory for automakers, who have been forced to wean themselves off their traditional focus on luxury design, 12-cylinder engines and high-speed performance.

A few years ago it would have been unthinkable that Audi would devote time to devising a computer game to keep passengers entertained through virtual reality goggles. How times have changed.

At CES, it showed off the product of its collaboration with Disney: a VR environment with asteroids and hostile spaceships and comic-book characters like Iron Man in which the actual movement of the car is incorporated into the game. If the car accelerates, the game gets faster too. If it turns left or right, the action follows.

My rapper name is MBUX

It’s still a prototype but could go into series production in the next three years.

Daimler’s Mercedes-Benz presented its upgraded MBUX multimedia system, operated through voice commands and hand gestures. The company began redesigning its entire software architecture three years ago and now offers wireless cloud updates.

“We’re also a kind of software company,” said head of research Ola Källenius. The Swedish executive, who is due to succeed Dieter Zetsche as CEO in May, stressed that MBUX is an open system. “You can’t reinvent the wheel everywhere, especially where there are damned good wheels already,” he said. So MBUX has integrated services like Yelp, Tripadvisor, WeChat, Amazon, Alibaba and Spotify.

Priced at up to €2,500 ($2,880), MBUX doesn’t come cheap. But 65 of 100 A-Class buyers have opted for it. That’s up from 10 percent for Daimler’s previous infotainment system.

Arch-rival BMW plans to catch up by March. Its personal assistant will be activated by the voice command “Hey BMW.”

“A few years ago the auto industry had to be shaken awake to stop it missing the digital transition,” said Gabriel Seiberth, an auto expert at consultancy Accenture. “Now they’re increasingly evolving into tech companies. Many rivals with noisy marketing especially from China will be taken down a peg or two in the coming years.”

Your data is safe with us

Dario Gill, Chief Operating Officer of IBM Research, has some free advice for manufacturers. “Data is the new intellectual property,” he said, adding that firms should guard it closely.

The Germans are doing just that. “The BMW customer demands that we protect his data,” said Holger Hampf, Vice President von Designworks, BMW’s internal technology thinktank.

None of them sees data kraken Google as a realistic partner. It’s a different story with Microsoft. “They don’t push themselves to the front,” said Hampf. “And Microsoft leaves the interaction with customers to us.”

The makers have also hooked up with Amazon. The retail giant’s Alexa voice service is already fitted into several BMW and VW models. “Alexa Auto,” presented in September 2018, navigates and stores the drivers’ routines, switching on the headlights when the car approaches a garage or playing audiobooks.

Seiberth said the IT giants don’t pose as big a threat to automakers as one might think.

“The big tech companies have weaknesses too. Apart from Apple, no Silicon valley company has managed to get a proper foothold in the hardware business,” he said.

Britta Weddeling is Handelsblatt's technology correspondent in San Francisco. Franz Hubik is a Handelsblatt reporter based in Düsseldorf. To contact the authors:[email protected], [email protected]