As part of a long-term strategic plan to unlock the goldmine that is customer data, Mercedes-Benz recently announced the development of an in-house proprietary operating system (OS) – the Mercedes-Benz Operating System (MB.OS). Anticipated to launch in the next couple of years with the new Mercedes Modular Architecture (MMA) platform, the MB.OS seamlessly links vehicles with the cloud and IoT, and has been designed to be the foundation of all future products.

Conceived as a purpose-built chip-to-cloud architecture, the MB.OS allows access to the vehicles’ hardware and software components. It comprises four key domains – powertrain, autonomous driving, infotainment, and body & comfort systems – and will allow the German automaker to deliver differentiated features and services to customers. Meanwhile, the OS will be standardized across Mercedes-Benz’s vehicle portfolio, enabling a continuous stream of product/service upgrades and enhancements.  In essence, this strategy will enable Mercedes-Benz to “retain full control over the customer relationship, ensure data privacy, and leverage the unique integration of all car functions.”

In tandem, Mercedes-Benz will collaborate with other technology leaders to deliver superior in-vehicle customer experiences.  While Mercedes will control the architecture, it will partner with companies like Nvidia and Google to offer advanced navigation, infotainment, and assisted driving (AD) functionalities.

For instance, it will be partnering with Nvidia, drawing on its software, data and AI competencies and its Orin system-on-chip, to push forward on its AD agenda. Initially, this will be aimed at improving Level 2 capabilities, with the ultimate objective of realizing Level 3, hands-off driving at speeds of up to 130 km/h.  In addition, Mercedes-Benz will focus on improving vehicle safety. It will be collaborating with Luminar, deploying its advanced lidar sensors with enhanced perception capabilities.

Infotainment is seen as integral to enriching the in-vehicle customer experience. Accordingly, Mercedes-Benz has entered into a long-term strategic partnership with Google to develop a branded, next-generation in-car navigation system. Navigation capabilities from the Google Maps Platform will be embedded into the MB.OS to offer services like real-time and predictive traffic information and automatic rerouting.

Simultaneously, because of its access to all vehicle data, including data on battery charge levels and battery health, the MB.OS will support integrated charging capabilities. It will enable accurate range management of electric vehicles (EVs).

To learn more, please access our research reports, Strategic Insights and Growth Opportunities for Software-defined Vehicles, Strategic Analysis of Automotive App Stores Market, Digital Transformation Impact on Global Automotive, or contact sathyanarayanak@frost.com for information on a private briefing.

Our Perspective

As the automotive industry transitions from being hardware-focused to becoming software-defined, vehicle/driver data is set to generate significant, continuous streams of additional revenue. Mercedes-Benz’s strategy of developing its own automotive OS aligns with this trend.

By 2025, Mercedes-Benz intends to target €1billion from software-enabled, features-on-demand. If they are going to pivot on a business model that is going to generate revenue on a constant basis, then they will need to have control over the entire in-vehicle OS; if not entire then, at least, to a large extent. They will need proprietary software since an outsourcing approach will reduce Mercedes-Benz to being a mere vehicle assembler. Moreover, the outsourcing model will also be a difficult proposition for the automaker since the volumes that it plays with are around 1/10th that of VW on a global scale and, hence, will not be economically viable.

Today, companies like GM, Geely, Ford, Honda, Stellantis, and Renault-Nissan-Mitsubishi use Google’s Android Automotive OS platform. This has profound, long-term ramifications in terms of who controls the customer relationship and who finally ends up benefiting from licensing fees. In this context, control over customer data means the ability to control lucrative in-vehicle products/service revenues and build a distinctive brand experience. The development of the MB.OS – which delinks hardware from software – will promote accelerated development and innovation. It will allow for faster software OTA upgrades, while supporting greater convenience, flexibility, and ease of use. This will result in continuous (rather than static) value-add for the customer over the life cycle of the vehicle.

While the intent behind the development of MB.OS is clear, one major challenge with developing an OS will be getting app developers on-board. Similar to the way games are developed for PS and Xbox, developers will need to come up with different versions of games/apps to make them suitable for MB.OS. This might be a deterrent since many developers might not be interested in designing app/games for a niche/low volume OS as it will impact their revenues.

With inputs from Amrita Shetty, Senior Manager – Communications & Content, Mobility

About Kamalesh Mohanarangam

Kamalesh Mohanarangam is a Program Manager within Frost & Sullivan's Mobility practice. With more than 10 years of experience in strategy consulting and market analysis, Mohanarangam covers the automotive industry with a focus on the chassis & safety and autonomous driving domains.

Kamalesh Mohanarangam

Kamalesh Mohanarangam is a Program Manager within Frost & Sullivan's Mobility practice. With more than 10 years of experience in strategy consulting and market analysis, Mohanarangam covers the automotive industry with a focus on the chassis & safety and autonomous driving domains.

Manish Menon

Manish Menon is a Program Manager within Frost & Sullivan's Mobility practice, leading a crack team of Connected Cars and Autonomous Driving market experts. With a background in automotive engineering, he brings with him over 10 years of automotive industry experience spread across research & development, strategy planning, market research and consulting, and technology incubation. Manish, a recipient of the Best Analyst of the Year Award for three consecutive years (2017-2019) and an inductee to the prestigious President’s Club for two consecutive years (2018-19), is known for his ability to tease out intrinsic market details to help clients with future areas of growth. 

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