As the smartphone market continues to expand and initiatives like smart electric grids continue to pick up steam, another industry has begun getting

“smarter” with software and apps: the automobile industry. Ford, BMW, and other automobile companies are enhancing their vehicles with onboard software that improves the customer experience, and the auto industry is working on technology that will allow cars to be managed via the cloud.

Automakers are finding that software is a way of adding more “value” and freshness to their products without having to invest so heavily in new vehicle production. It takes Ford Motor Company, for example, about two and one-half years to plan, design, and build a new car. Design and production, including metal stamping equipment and assembly line setup, must be finalized long before the car rolls off the line. But the auto makers can create a new software interface for a car within months and update it again and again over the life of the car without much lead time. This enables Ford and other automakers to significantly improve the passenger experience and add new features to cars years after they are built.

Ford is perhaps the automaker doing the most to innovate with software and apps. Its Milford Touch interface is an in-dash touch screen available for select vehicles with controls for navigation, music, phone integration, and temperature. Ford has upgraded this interface and the Sync software behind the interface, adding tablet and smartphone integration and better voice response. In 2010, Ford added support for the online music streaming service Pandora, which is very popular among young potential buyers. This update enables drivers to connect their tablets and smartphones to the Sync system to access music and other apps using voice commands...........

1. How is software adding value to automakers’
products?
2. How are the automakers benefiting from software-enhanced cars? How are customers benefiting?

3. What value chain activities are involved in enhancing cars with software?
4. How much of a competitive advantage is software providing for automakers? Explain your answer.