Future Re-invention: Software Defined Industries

The recent $5 billion investment by Volkswagen (VW) into Rivian might seem like another routine business headline about mergers and consolidation within the auto industry—a practice that has been ongoing for decades. However, on closer examination, this deal represents something much deeper. Given that Rivian has been struggling financially, losing $30K to $40K per truck over the past five quarters and burning through $1.5 billion per quarter, many may question the rationale behind this investment. Rivian's market cap has also taken a hit, plummeting from $150 billion to just $16 billion by September 2024.

But why would VW, one of the top three automakers globally, invest so heavily in what looks like a sinking ship? The answer lies in the future of the automotive industry—VW is positioning itself to become a Software Defined Industry (SDI), building software-defined vehicles (SDVs) that are set to redefine the automotive space.

The Shift to Software-Defined Vehicles

The concept of SDVs has been evolving for the last decade, and VW's subsidiary CARIAD is at the forefront of this movement. CARIAD, an acronym for "CAR-I-AM-Digital," is tasked with creating a unified software platform for all VW brands, shifting the focus from traditional hardware dominance to software-led innovation. This trend is not unique to the automotive sector; industries across the board—utilities, healthcare, retail, travel, and financial services—are undergoing a similar transformation, becoming software-defined and software-led.

Back in 2019, TechBlocks partnered with one of the world’s largest automotive OEMs to build a middleware platform that allows for remote vehicle management. This forward-thinking approach by the OEM, which was then the market leader, signaled the industry's growing recognition of the critical role that software would play in the future.

https://tblocks.com/client-story/reimagining-the-connected-car-for-an-automotive-giant/

What Does It Mean to Be a Software-Defined Industry?

Being a Software Defined Industry doesn’t simply mean integrating software into the business value chain. It requires reimagining the entire operational model around software at the core:

• Breaking Free from Siloed Thinking: Older companies often find it harder to abandon established practices compared to digital-native players like Tesla and Rivian. The entire narrative of how value is created must change.
• Unified Control and Coordination: In a software-defined world, there are no isolated “black boxes.” A unified platform must control both the experience and the hardware to deliver a seamless user experience. Apple and Google have excelled in this space with their integrated ecosystems of hardware, software, and services.
• Lifecycle Support and User-Centered Design: The software architecture should support the entire business lifecycle, with all components working in perfect harmony to deliver a tailored customer experience—much like how smartphone manufacturers have mastered user experience by controlling software, hardware, and network infrastructure.

The Benefits of Becoming Software-Defined

The shift to a software-defined model offers numerous advantages:

• Agility and Innovation: Businesses can iterate and innovate in real time, rather than waiting for months to implement changes.
• Cost Savings: From utilities to healthcare to automotive, the ability to innovate through software has led to significant cost savings. Chinese automakers, for example, have reduced production costs by up to 30% while mastering the art of building software-defined vehicles.
• Market Leadership: Those who successfully adopt a software-defined approach will set the pace for their respective industries, solidifying their leadership in a rapidly changing landscape.

The Future: Software-Defined Everything

At TechBlocks, we believe that the future of every major industry is software-defined. From utilities and healthcare to automotive and retail, the companies that embrace this shift will be the ones to lead in innovation, efficiency, and customer experience. Our expertise in building modern digital value chains helps businesses make this transition seamlessly. Whether it’s creating digital platforms for retail giants, smart utility products, or digital health solutions, we are your partners from “Concept to Commercialization.”

Next Steps: Talk to Us

At TechBlocks, we power the software-defined industries of today and tomorrow. We specialize in building cloud-native platforms that enable frictionless user experiences, innovative monetization strategies, and unmatched efficiencies. With our expertise in Design Thinking and Lean Engineering, we create world-class digital Centers of Excellence (COEs) and future-proof solutions that drive businesses forward.

If you're looking to take the next step in becoming software-defined, we’re here to help. Let's build the future together. https://tblocks.com/rfp/