MSFT Stock: This Deal Could Be Huge News for Microsoft Corporation

MSFT StockPartnership a Big Win for MSFT Stock

There’s no question that Alphabet Inc’s (NASDAQ:GOOG) “Google Maps” holds the crown in mapping technology. But now it looks like Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) are teaming up to try to spoil Google’s reign. The potential partnership is also a clear move to join the autonomous vehicle space, and that is bullish for both MSFT and AMZN stock.

Google has been building its mapping technology for quite some time now and the company is using its expertise in the area to help its autonomous vehicles navigate city roads.

Google has been working on a driverless car since 2009, and since then its vehicles have logged about 1.5 million miles in autonomous mode. (Source: “Google Self-Driving Car Project Monthly Report,” Alphabet Inc, February 29, 2016.) Google says we can expect to see its driverless cars hit roads “relatively soon.” (Source: “Google: Autonomous cars coming ‘relatively soon’,” Computerworld, March 23, 2016.)

But when they do, it’s starting to look like Google won’t be the only tech giant taking up laneways. Microsoft and Amazon might be working together to get involved in the driverless car arena, which should have MSFT stock and AMZN stock shareholders applauding the move.

Daimler AG (ETR:DAI), the German automobile manufacturer that owns Mercedes-Benz, confirmed earlier this week that Microsoft and Amazon were close to taking an ownership stake in HERE, a company that builds digital maps for driverless cars. (Source: “Daimler Confirms Microsoft, Amazon in Talks to Invest in HERE Location Service, The Wall Street Journal, April 7, 2016.)

HERE was purchased last year by Audi AG (ETR:NSU), BMW AG (ETR:BMW), and Daimler from Nokia Corporation (HEL:NOKIA) for $2.85 billion. (Source: Ibid.) The purchase is part of a plan for the three automakers to build a platform for self-driving cars connected to the Internet.

Thomas Weber, a Daimler board member in charge of research and development, told The Wall Street Journal that both Amazon and Microsoft want to provide the cloud computing capabilities for the massive amount of data that needs to be processed from HERE’s sensors for driverless cars. (Source: Ibid.)

So what’s the fuss about HERE?

The company is developing a high-definition 3-D representation of roads, highways and their surroundings that is constantly updated in real time. Cars connected to HERE’s service will upload data about traffic, weather, and road conditions to the cloud in real time, which will also be available for other driverless cars. The platform is a vital component to getting driverless cars on the road.

The potential partnership between Microsoft and Amazon seems like a perfect match as both compete against Google in information services. “Amazon Web Services” and “Microsoft Azure” are the two market leaders in cloud computing.

“Google Cloud Platform” trails the two by a wide margin, but the company is beefing up the business since hiring Diane Greene as chief of the cloud business back in November. A couple of weeks ago, Google announced that it is going to open cloud data centers in Oregon and Japan, with plans to add another 10 over the next 12 to 18 months.

Google also recently announced that it reeled in Apple Inc. (NASDAQ:AAPL), taking it away from Amazon as a customer for its Google Cloud Platform. Google has also secured customers such as Spotify, The Coca-Cola Co (NYSE:KO), Walt Disney Co (NYSE:DIS), and Home Depot Inc (NYSE:HD).

Microsoft and Amazon’s move into the driverless car sector also helps them fend off Google’s cloud computing advances. But more importantly, the partnership will push back at Google and get Microsoft and Amazon into the driverless car market, which should prove to be huge over the coming decade. According to Boston Consulting Group, the market for autonomous cars will be about $42.0 billion by 2025 and may be a quarter of global auto sales by 2035. (Source: “Driverless-Car Global Market Seen Reaching $42 Billion by 2025,” Bloomberg, January 8, 2015.)

MSFT stock shareholders in particular don’t want the company to miss out on another trend, as it did in being way too late to the game in the smartphone and digital music markets, so this is a great move for the company.

The advantage Microsoft and Amazon will have over Google if a deal is reached is that the two aforementioned companies will be working together with a consortium of car makers that they can pull data from. Daimler has also said that it’s talking to several other car manufacturers about joining the mix, as more driverless cars on the road with HERE’s service will improve its accuracy. Google Maps doesn’t have that advantage, which gives MSFT stock and GOOG stock shareholders a reason to cheer.