What I Would Do as Owner of a Car Company

Build the Operating System Platform for the Car

The battle for the connected car is underway. Fresh from their victories in the smartphone wars, Apple and Google have started to stake out territory with their announcements of iOS in the car and the Open Automotive Alliance.

But if I owned a car company, I would be wary of letting either of these companies control my platform. I would have learned my lesson from the smartphone wars: it is possible to make money just producing hardware — to be Samsung, in other words — but I would rather control the much higher value platform and ecosystem for the connected car. Not just in my own cars, even though that’s where I’d start. But eventually in many other cars as well. I would do this by making the Operating System platform for the connected car.

Still, we live in a Bring Your Own Device world, so my car will need to be compatible with both of the dominant smartphone platforms. So I would carry on conversations with Apple and Google about their operating system expansion plans. But really, I wouldn’t be thinking about putting their OS directly into my car so that software developers build iOS or Android apps for automobiles. Keep your friends close and your enemies closer. I also would have learned my lesson from watching hardware become commoditized in other industries while the platform retains its value. I want to own the platform. And that means I need to figure out how to build my own operating system for the connected car.

Laying the Foundation

Being first to market would provide me a huge advantage. But there are a couple prerequisites for any OS to properly establish itself as a platform — like connectivity and a common interaction model, which for the car will likely be a mixture of voice, touch and gesture. So, I would start by doing what GM is doing and incorporate connectivity into every car. This is one area where GM is ahead of the game.

Then, I would call up Jeff Bezos and setup a meeting. I’d say Jeff, you’ve been spending tons of money and resources retrofitting Android for your Kindles. Let me help you with that.

I’d leverage Amazon’s work on building their own OS on top of Android and I’d do the same thing for my cars. I save myself the learnings and hiccups in retrofitting Android, I gain the core “killer apps” and payment platform that Amazon has already been building, and I am one step closer to building the OS for the Car.

At the same time, I would require all apps that launch on my OS, including internally built apps, to be built on the same API’s that third party software developers would eventually be able to leverage. Jeff did something similar at Amazon a number of years ago when they started moving toward becoming a platform.

Next, I would need to focus on the interaction model with my OS. The car is a unique environment, one in which safety concerns are paramount. I need to provide a seamless experience for the driver without distracting them from the road. This is another reason why going beyond the “phone on wheels” model is critical for success in the connected car. Delivering a seamless interaction experience with the car is going to be crucial for the long-term success of my operating system. Fortunately, I have some time if I can reduce the hardware dependencies on things like voice and gesture integration and cut down my time to market by delivering the experience primarily through software.

Still, an operating system isn’t a successful platform unless external software developers are producing their own apps for it. Apple and Google worked hard to build their software developer communities that would do just that. For the connected car, I don’t want to let them control the space. If Apple or Google are able to get a foothold with developers to make apps for the car on their OS, I’m at a disadvantage. I need to get to market as fast as possible.

Before my OS launches in production-ready cars, I would launch an SDK for app developers who want to incorporate data from my cars into their apps for phones and tablets. I would leverage the same API structure for my SDK and for API’s for my OS. This could give me a head start in building a developer community on my platform once it launches in cars.

After Launch

Typically, it has taken about a year and a half and between 1-2 million customers for other successful platforms to build thriving producer communities of software developers. Examples include the iPhone, Nike’s FuelBand (incubator of 10 software startups in 2013), and the Xbox One, which is right on track. And while I’m building towards opening up my platform, I’ll ship about 2 million cars a year anyways. This would put me in a good place.

Once about 1-2 million customers buy cars with my operating system in them, I would be confident that I could appeal to a producer community of software developers who would build on my platform.

World Automobile Domination

After I start gaining traction with my producer community of software developers, I then seek to allow other automobile manufacturers to use my Operating System. I could relatively easily get some of the auto manufacturers with lower market share on board. Depending upon how successful, or unsuccessful, I am at organic recruitment of auto manufacturers, I would reserve some resources to acquire an auto manufacturer with middle market share just in case.

As more automobile manufacturers integrate my Operating System into their cars, the number of customers with my Operating System starts to skyrocket. World domination of the automobile industry will ensue as more and more producers start building apps for my Operating System instead of the other Operating Systems in the market.

In other industries, we’ve seen that there is really only room for two, maybethree, successful platforms in an industry. Look at the iPhone and Android for smartphones, or Xbox and Playstation for video game consoles. Facebook and Twitter also fit the mold if you’re looking at their developer ecosystems. Battles for platform dominance are usually winner-take-all, or at least winner-take-most.

Build the Operating System Platform for Car

So if I owned a car company, I would act fast. The individual steps along the way would be more complicated than what I’ve laid out here, but this would be my road map.

The business case for doing this now is simple. If I succeed, there arebillions and billions of dollars on the table. Controlling the platform is what’s made companies like Apple, Amazon, Google and Facebook into the multi-billion dollar behemoths they are today. But platforms aren’t just for tech companies — existing businesses like Nike are building them too. With connected technology poised to transform the automobile industry, I would want to position myself for platform dominance.

There’s also the flip side of this reality: what happens if I don’t build a platform. Eventually, the business of making hardware will continue to be further commoditized. Cars have been made for decades. It’s an Industrial Revolution business model. And we’re now in the Connected Revolution. As the Connected Revolution takes over the automobile industry, what consumers expect from their car will change. Consumers will first choose which platform they want to buy. Then they will choose which hardware manufacturer they want to buy their car from. If I own one of the two main platforms for the car, I will be positioned for long-term success. If not, I’d be very, very worried — especially looking even further ahead.

Eventually, cars will drive themselves. And, when they do, I want to own the platform. That’s what will soak up more and more of peoples’ attention and money. And that’s where I want to be.

Filed under: Platform Innovation | Topics: connected car, connected revolution, platform thinking, platforms