Microsoft Corporation (MSFT) has “entered into a long-term strategic relationship” with General Motors Company (GM) and Cruise LLC, a company developing autonomous electric vehicles majority-owned by GM. Cruise CEO Dan Ammann said, “Microsoft, as the gold standard of trusted democratization of technology, will be a force multiplier for us as we bring our fleet of all-electric, self-driving shared vehicles to market.
In addition to providing Cruise with key technologies, Microsoft is also making an undisclosed equity investment in the company, joining in a round of funding that will raise $2 billion in total. This round of financing will bring Cruise’s total valuation to $30 billion.
- Microsoft takes a stake in Cruise, a company developing electric and autonomous vehicles.
- Cruise is majority owned by GM.
- Azure from Microsoft cloud computing Service is a key part of the technical backbone of cruise vehicles.
- Microsoft also has other initiatives with GM as a key technology provider.
Accelerate to market with Azure
Following the announcement, Cruise prominently stated on its homepage that, “We are partnering with Microsoft to accelerate the commercialization of our fully electric, shared and autonomous vehicles.” This statement is found under the heading “Moving from R&D to marketing.”
Microsoft says, “To unlock the potential of cloud computing for autonomous vehicles, Cruise will leverage Azure, Microsoft’s edge cloud computing platform, to bring its unique autonomous vehicle solutions to market. large scale. Microsoft, as Cruise’s preferred cloud provider, will also tap into Cruise’s deep industry expertise to enhance its customer-focused product innovation and serve transportation companies around the world through continued investment in Azure. »
The importance of edge computing is as follows: “At its basic level, edge computing brings computing and data storage closer to the devices where it is collected, rather than relying on a central location which can be thousands of miles away.This is done so that data, especially real-time data, does not suffer from latency issues [i.e., delays] that can affect the performance of an application. Additionally, businesses can save money by having processing done locally, reducing the amount of data that needs to be processed in a centralized or cloud-based location. »
Microsoft’s ongoing collaboration with GM
Microsoft also says it will continue to be GM’s “preferred public cloud provider to accelerate its digitization initiatives, including collaboration, storage, artificial intelligence and machine learning capabilities.” Additionally, Microsoft plans to work with GM “to streamline operations across digital supply chainsdrive productivity and bring new mobility services to customers faster.”
Importance for investors
Microsoft’s announcement comes shortly after reports emerged that Apple Inc. (AAPL) has ambitious plans to enter the electric vehicle market with self-driving capabilities. Exactly how much Microsoft’s collaboration with GM and Cruise may add to its bottom line isn’t clear at this point, but it’s likely to be modest in percentage terms, given that the tech giant has reported a figure of total business of $143.0 billion and net income of $44.3 billion. for his fiscal year 2020, which ended on June 30, 2020.
GM is making a big bet on electric and autonomous vehicles, planning to spend $27 billion developing 30 models that will go on sale globally through 2025. The spending projection has increased by $7 billion, or 35 %, during 2020. In this context, further strengthening its position as a key technology partner of GM is definitely a positive point for Microsoft.