Microsoft Corporation (NASDAQ:MSFT) To License Its Technology For Connected Cars To Toyota Motor Corp (ADR) (NYSE:TM)

Microsoft Corporation (NASDAQ:MSFT) has entered into a deal with Toyota Motor Corp (ADR) (NYSE:TM) in which the world’s biggest software maker will license the technology it has developed for internet-connected vehicles to the Japanese auto giant. This is the first deal of its kind that the Redmond, Washington-based tech giant has made with a car maker and it is an indication that Microsoft may be open to partnering with other car manufacturers.

Algorithms on wheels

Some of the internet-connected car technology patents that Microsoft holds include motion sensors, voice navigation and recognition, Wi-Fi and vehicle operating systems. With cars increasing becoming computers on wheels, technology firms such as Microsoft are seizing the opportunities that are being presented.

“The connected car represents an enormous opportunity for the auto industry, and at the core it’s a software challenge,” said Microsoft’s business development executive vice president Peggy Johnson, in a statement.

Artificial intelligence

Microsoft envisions future cars being more convenient and personalized, a fact that will only be realized through artificial intelligence. According to the tech giant, software in cars would enable them to have predictive maintenance features where a fault in the car is detected ahead of time before the car completely breaks down. Artificial intelligence systems in cars would also enable a passenger/driver’s intended routes to be anticipated based on information available from their calendars. Cars would also be in a position to offer customized entertainment for the passenger or driver sitting inside.

Rapid growth

According to Microsoft, there will be a rapid growth in the demand for technologies that support connected car services. A report by Gartner Research says that by 2020, the number of new cars with data connectivity as a feature will increase to 61 million every year up from 6.9 million every year in 2015.

On car technologies, this is not the first time that Microsoft and Toyota are working together. Last year in April the two companies created a data analytics firm whose mission was to bring new internet-connected technologies to vehicles while avoiding overwhelming drivers.

On Thursday shares of Microsoft Corporation fell by 0.25% to close the day at $64.87.

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