Product Development in a Flat World

One of my domain focus areas from an engineering services perspective is auto infotainment and telematics technologies. Recently, I came across an interesting article on IEEE Spectrum Online titled This Car Runs on Code. It gives a very good perspective on the amount of software and complexities associated with engineering today’s leading cars.

It takes dozens of microprocessors running 100 million lines of code to get a premium car out of the driveway, and this software is only going to get more complex.

Where Software is Used in Cars

Source: IEEE Spectrum

These software implementations are driven by strong consumer demand and the drive to bring new differentiating products to market as indicated by industry reports such as the following one.

A recent report by The Strategy Analytics Automotive Multimedia & Communications, “Infotainment Semiconductor Demand Forecast: Innovation Will Drive Growth,” predicts that the rapid on-going innovation in digital consumer electronics and growing adoption levels will, in turn, create new in-vehicle and vehicle-portable device product opportunities for OEMs and suppliers that will increase infotainment semiconductor demand by 50% between 2008 and 2015.

What is interesting to note in the IEEE article is not only the cost for the embedded software but also the cost impact of unreliable software in cars.

Cost of Software in Cars

For today’s premium cars, “the cost of software and electronics can reach 35 to 40 percent of the cost of a car,” states Broy, with software development contributing about 13 to 15 percent of that cost. He says that if it costs US $10 a line for developed software—a cost he says is low—for a premium car, its software alone represents about a billion dollars’ worth of investment.

Cost of Software Repair in Cars

Such complexity brings with it reliability issues. IBM claims that approximately 50 percent of car warranty costs are now related to electronics and their embedded software, costing automakers in the United States around $350 and European automakers €250 per vehicle in 2005.

As you can see these are significant costs associated with software in cars. From my perspective of product engineering services, this calls for specialized providers of industrial grade software engineering services who can deliver highly reliable software for the car makers.

Major auto suppliers such as Delphi and Conti have been very successful in being outsourced providers of highly reliable mechanical and electrical components to car manufacturers in the past. Do you think a similar scenario is likely to play out with key auto-software engineering providers delivering highly reliable custom software products for each car?

There is a potential for each car model to be differentiated to a high degree by the software applications and user experience catering to niche buyers. Think of the long tail in car sales. Would love hear your comments on this.

Link to IEEE article: http://spectrum.ieee.org/feb09/7649