Big Companies Scramble for Software Advantage

Steve Ballmer

Watches that make phone calls. Glasses that surf the web. Driverless cars. The number of software intensive products, connected to us and to each other, is growing. What was unimaginable five years ago is now commonplace.

Oxford Economics, a global forecasting and quantitative analysis firm, predicts that by 2020 more than 50 billion devices will be connected to a global network. In this Borg-like era of connectivity, everyday physical objects will be able to identify themselves and communicate directly with other devices.

Connected products are shaping the future of the high-tech and automotive industries, as well as many others. Traditional manufacturers are transforming into software and services businesses while software companies are manufacturing their own products, both sides looking to control the end-to-end customer experience and gain the competitive advantage.

Case in point: Microsoft’s recent purchase of Nokia’s devices and services business for about five billion dollars. According to a piece in The New Yorker, “Microsoft wants to sell you a phone, a tablet, and a TV box that are not only running Microsoft software and connected to Microsoft services but that are designed and manufactured by Microsoft as well. This is because, perhaps, it has no choice.”

The computer-industry giant that used to rely solely on providing its software to device manufacturers now realizes the need for stronger connection between the two in order to deliver a better customer experience.

While the Nokia acquisition will give Microsoft a leg up in the smartphone arena, Nokia has some interesting projects of its own on the burner, not least its Here Auto, which was unveiled this past weekend at the Frankfurt Motor Show.

Here Auto—software for the driverless cars of the future—is Nokia’s initial foray into the smart vehicle platform. Nokia’s plan is to develop the cornerstones of a system that can one day integrate into the future ‘smart city’ and allow the car to communicate with other vehicles and connected things.

The epic quest for the smartest software with the coolest packaging is moving at breakneck speed. Watch this space.

And while you’re at it, take a look at Samsung Electronics’ Galaxy Gear. A secret-agent-style wristwatch that can make phone calls, surf the Web and take photos. It also connects the consumer wirelessly to their smartphone, making available a broad set of apps which let you draft messages, set alarms and check the weather. More than 500,000 of these devices are expected to sell in the coming year. And that’s just Samsung. Look out for similar offerings from Apple and others.

Photo: Microsoft Steve Ballmer by Masaru Kamikura on Flickr (CC BY 2.0)

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