From Product to Platform: How can BMW compete with Platform Giants?

Today, it is natural for digital services to be available anytime, anywhere. Thanks to digital platforms, we can connect with our intelligent assistants, stream movies on our networked televisions, and wirelessly control our homes with smartphone apps. Within the last few years, our cars have also been transformed into computers on wheels. However, the apps with which we are accustomed are often not available in cars. Why are cars different? This teaching case examines how the worldwide automotive manufacturer BMW developed its onboard infotainment system into a digital platform. While the transformation of a manufacturing firm into a technology company reveals multiple challenges, new actors enter the stage. In 2017, Google announced the launch of Android Automotive OS, a complete operating system for cars with access to a vibrant platform ecosystem. Should BMW accept Google’s offer to use Android Automotive OS as a digital platform for their cars, or should they strive to create their own proprietary platform ecosystem? This teaching case introduces the dynamics of digital platform ecosystems and illustrates the “platform conundrum” that many traditional companies must confront: Is it better to build a new proprietary platform ecosystem or join an existing dominant platform ecosystem? We provide rich insights from BMW’s development, sales, and strategic divisions, helping students to understand the risks, chances, and challenges of various choices that occur in the context of digital platform ecosystems and why such decisions might be crucial to the future of traditional companies such as BMW.