We hope that today's event provides an engaging and interactive opportunity for you to learn more about our software strategy and how we are enabling a software-defined future. Following our presentation, which features a number of our business and technology leaders, I will moderate a live Q&A session. Questions can be submitted through the Slido text box below your video window at any time during today's event, which is expected to run approximately 75 minutes.
Before we begin, I would like to remind you that today's discussion will include forward-looking statements based on our current view of future financial performance, and that actual results may differ for reasons that we cite in our Form 10-K and other SEC filings. We will not be addressing specific questions about the quarter or year, and we will defer any financial questions until our third quarter 2023 earnings conference call. A replay and transcript of today's event will be published on our website at ir.aptiv.com. With that, let's get started.
Hello, everyone, and welcome to the Aptiv Wind River Software Teach-In. We're really excited to provide you with an update on our software strategy. As you're aware, the digital transformation of the industrial landscape is well underway. The devices around us continue to get smarter and generate more data, requiring more processing at the edge and higher levels of compute performance.
To keep up with the pace of change, these smarter devices require cloud-native, intelligent edge software solutions that deliver the highest levels of security, safety, reliability, and performance. As a global leader in intelligent edge software, Wind River has helped enable the ongoing digital transformation of a variety of industries, including aerospace and defense and telecom. In fact, Wind River software solutions are deployed on over 2 billion devices worldwide, most of which require secure development, deployment, operation, and servicing of mission-critical software.
Now, to enable the software-defined vehicle of the future, the automotive industry needs to fully embrace the digital transformation that's taking place in these other industries, and the combination of Aptiv and Wind River are perfectly positioned to drive this change. Aptiv's compute, application software, and vehicle architecture expertise, combined with Wind River's full edge to cloud software portfolio, delivers significant benefits to our OEM customers, including reducing costs and complexity, increasing flexibility, and unlocking new business models.
At Aptiv, we continue to solve our industry's toughest challenges by providing high-value, margin-accretive solutions, which create value for our shareholders. Today, you'll hear from some of our top software and technical talent, Benjamin Lyon and Anant Thakur of Aptiv, as well as Paul Miller and Avijit Sinha of Wind River. There's a lot to talk about, so let's get started. I'll now turn it over to Benjamin Lyon, Aptiv's Chief Technology Officer, who will kick off today's discussion.
Thanks, Kevin. In recent years, the landscape of business and consumer interactions has been revolutionized by the ongoing digital transformation. As Kevin mentioned, devices around us continue to get smarter and need to handle massive amounts of data. Consumers are now demanding that things around us are continuously connected and kept up to date. Just think about how we interact with our smartphones and the internet every single day.
To unlock the full potential of this digital transformation, we must address the technical challenges that lie ahead and demand continuous innovation, with a focus on enhancing processing power, upgrading software capabilities, and enabling true edge to cloud connectivity. Today, the industries undergoing the digital transformation are coping with a shared set of challenges: increased software complexity, a lack of modern tools, difficulty in balancing connectivity and security, and proliferation of data, to just name a few.
There are three key architectural puzzle pieces that we are bringing together to solve these challenges, creating a blueprint applicable across multiple industries. Let's start at the foundation of the technology stack and work our way up. First, we have next gen hardware, which is designed for mixed criticality workloads and enables an up-integrated and virtualized compute platform. Moving up the stack, we are enabling cloud-native software architectures. This modular approach leverages microservices and containers to build, run, and update software. This provides significant advantages versus a monolithic architecture. And finally, we are providing an edge-to-cloud connectivity platform. This end-to-end cloud-native platform streamlines the entire software development life cycle. This enables seamless and secure development, deployment, and operation of complex software ecosystems.
By adopting these solutions, our customers can not only navigate the complexities of transitioning to a software-defined future, but also lower cost and pave the way for future growth in their own software offerings. At the forefront of the next wave of digital transformation are four industries characterized by their complex operations and intricate networks: telecommunications, aerospace and defense, automotive, and industrial.
The concept of the intelligent edge is central to this transformation, enabling the processing of larger data volumes and facilitating quicker, informed decisions at the source, fostering agility and responsiveness at the edge. Predictions indicate an acceleration in the pace of transformation over the next two years. By 2025, a significant shift is expected, with 75% of edge-collected data being processed at the edge. As this common trend spreads across these industries, it will inevitably create substantial business opportunities....
Aptiv and Wind River's capabilities are perfectly situated to deliver the comprehensive solutions and unique tailoring each industry demands. As such, we are positioned to continue to capture substantial value from this transition. While these industries navigate a similar path, their speed of transformation varies. Leading is consumer electronics. Products like your smartphone and edge-enabled features like video meetings are examples of mature deployments of cloud-native, edge-enabled software-defined architectures.
So we see in consumer products all three architectural puzzle pieces developed and deployed at scale. Next is the telecommunications market, where this architecture is in initial production and is in the process of scaling up, and it is followed by other industries, including aerospace and defense, automotive, and industrial, each at varying levels of maturity. For automotive, the industry is rapidly moving towards next-gen architectures, and Aptiv is leading this charge with our Smart Vehicle Architecture solutions.
We'll touch on that in more detail later on. As industries continue along this transformation, there is a significant market opportunity for edge-to-cloud software solutions, underscored by the projected growth across these end markets. By 2030, we estimate a total addressable market of $21 billion, indicative of the need for mission-critical software across multiple evolving industries. Let's drill into the double-digit growth drivers of each. In telecommunications, the market is scaling to cloud-native, software-defined infrastructure to support the rollout of 5G, a market shift from proprietary bare metal solutions. In aerospace and defense, which shares many of the highly regulated safety-critical requirements in automotive, the sector is urgently focusing on software to make quick decisions in high-risk scenarios, expanding the need for intelligent systems.
Such urgency is driving a similar large market opportunity in the automotive space, as the industry needs to transform from legacy to cloud-native architectures to enable the software-defined vehicles of the future. Similar attractive growth opportunities exist in the industrial market as manufacturing becomes increasingly automated and software-driven. To capture the value from this tremendous market opportunity, Aptiv and Wind River will enable the transition from legacy to cloud-native software architectures.
Revisiting the three key puzzle pieces I mentioned earlier, let's start with next-gen hardware architectures. The industries we just discussed are all transitioning from single-use, distributed hardware to highly-integrated, high-performance compute. Highly-integrated compute is needed to reduce overall hardware complexity and cost, as well as break the dependency of the software on the underlying silicon. This allows greater flexibility in managing your silicon choices. It also decouples the software development process from the hardware development process.
This provides scalability as new features are continuously added within these software architectures. Moving up the stack, the application software in legacy architectures is monolithic and laced with complex interdependencies that slow down the development, testing, and deployment of new features and applications. Future software applications need to be architected with a modern service-based approach that leverages standard containers. Why standard containers?
Well, containers help us break down that large, monolithic code into isolated, testable, scalable components that allow us to develop, deploy, operate, and service software much more efficiently. To take advantage of modern software architectures, you need a modern, unified, end-to-end connectivity platform that enables faster and more efficient development, deployment, and operation across the full software life cycle. Finally, moving to cloud-native architectures will require the highest levels of safety and certification for use in the mission-critical industries we just walked through.
Let's go one level deeper on mission-critical systems. By fully addressing the mission-critical nature of next-gen software architectures, Aptiv and Wind River can continue to provide more flexibility and better performance while reducing cost. The up-integrated virtualized hardware must support simultaneous execution of mixed critical workloads, leading to a further centralization of software functions that reduces system complexity and costs. The software applications ensure deterministic execution, assuring that the system performs desired actions within specified time constraints consistently.
This is especially important in aerospace and defense, as well as automotive, where a single software failure could have fatal consequences and lead to significant damages. For example, cybersecurity threats are constantly evolving, and the ability to address them efficiently and in a timely manner is absolutely essential in these industries. Lastly, the edge-to-Cloud Platform must enable continuous certification, allowing software to be safely certified throughout the development process.
This reduces the certification time and the costs associated with traditional approaches. Now that we've walked through the broader industry transformation, I'd like to introduce you to Paul Miller, Wind River's Chief Technology Officer. Paul will discuss the Wind River portfolio and how they've solved some of these challenges across multiple industries. Paul?
My name is Paul Miller. I'm the Chief Technology Officer for Wind River, and I'm here to give you a bit of an overview of what we do at the company. Wind River's history is one of being in mission-critical software systems used in aircraft, defense, automotive, telecom, medical, a whole host of areas where you'll find Wind River supporting human lives when they're at risk. In particular, we provide ultra-reliable, safety-critical, and high-availability software. We have over 40 years of business of doing this, and in recent years, we've produced a portfolio that's comprised of edge assets, as we call them, that you see in the bottom of the slide here. These are really infrastructure components that are used to power these mission-critical systems, whether they be aircraft or automobiles or medical devices.
In recent years, Studio's been introduced, as you see in the top right, and this is really growing the company from a software vendor to more of a strategic partner with our customers, and we help them solve software lifecycle and operational needs through this. As we start looking at how people use this software, we're gonna start with the edge assets in the portfolio. You'll see here on the left-hand side, a layered diagram, which typically has, some type of hardware platform that the software is deployed on. You can see Helix, VxWorks, and Linux sitting on that hardware, and then applications that our customers build are then deployed on that system. This comprehensive portfolio gives us the ability to solve problems for our customers. Today, we're in over 2 billion devices providing those capabilities.
The variety of software that you see here includes Linux, that's available for high-performance embedded systems, VxWorks, which allows critical systems to be built in safety-critical environments and safety-certified environments, and Helix platform, which allows us to up-integrate compute systems. This has been used in avionics platforms for over 10 years, and this is providing the ability to have incredible savings in platforms where historically you may have tens or hundreds of computers with all the harness and weight that goes with that type of a distributed system, now being up-integrate d via software to produce massive savings in these systems. We're really unique in the market in supporting modern cloud-native and containerized applications. If you look at the history of embedded systems, they were really monolithic pieces of software that just ran directly on bare metal.
As modern technologies for software development have moved forward, people are now building software with containerized capabilities. This provides a much more flexible software development environment, a much faster time to market, and significant savings in the effort required to develop that software. This is a very attractive way to build software in today's modern world, and we're bringing that to the embedded device portfolio as well. As we move from the edge portfolio over to studio, you can see this diagram in the bottom center, and this is known in the industry as DevSecOps. This is the software lifecycle methodology that people follow to build software and maintain it as a complete lifecycle operation. It starts in the plan phase, where you ideate the concept of a product.
As that moves into the code or software development phase, people actually build the software that's used to implement the product. You then move towards build, where a binary is created and delivered into that system. That system then goes through significant test activity to validate the functionality is as intended. Then the output of this is in the release phase, where a software artifact is produced that is then used in the system. For many businesses, they spend a significant amount of investment in their software development and have difficulties hitting quality software, maintaining that software in the field, and hitting their schedules. This tool chain that we've developed, Studio Developer, solves this particular phase of the DevSecOps problem.
It's the industry's only cloud-based development solution, enabling significant savings in OpEx, as well as improved time to market and maintainability through having a modern tool chain. As you can see on the top element of the slide, the various components that we provide in this solution, you can see Studio Gallery, where we provide the ability to bring third-party tools integrated into the tool chain. Pipeline Manager, they can visualize their entire development cycle through this DevOps loop, and interact with the various tools that they need through a cloud-based single pane of glass. The test automation framework provides the ability to fully test the software that they're building in a virtualized environment, in a fully automated fashion, integrated with continuous integration and continuous deployment.
The virtual lab ability provides a virtual target that emulates their actual system to test in a cloud-based environment as if they were testing on the actual physical device. Then system simulation provides the ability to shift left software development. Instead of waiting for hardware prototypes to arrive with new silicon, systems can be simulated, and software can be built and run on those systems before they even physically exist. This provides tremendous time to market advantages for customers as they use this tool chain. As we shift now to the operations side, we'll take a look at the concept of deploy and operate. Once the develop capability is complete, you now have produced a software artifact. Handoff from developer occurs with the software artifact produced from the development tool chain being deployed into a system.
This can occur at the time of manufacturing or in the field, depending on the industry. The operate capabilities then enter. This provides the ability to upgrade, patch, and provide security updates, as well as lifecycle manage that deployed system. This is a very modern capability. You can see it's a continuous loop, where the results of that operate cycle are continuously iterated back into the development tool to ensure you have a continuous integration and continuous deployment capability that allows you to continuously adjust and improve the software, even though it's deployed in those remote systems. And then finally, the monitor capability within the operate quadrant. We call this our Digital Feedback Loop . This collects data, and it feeds the digital twin or development updates and produces live analytics from deployed systems....
As you see the components here, we have Cloud Platform , which is an advanced Kubernetes system that allows a fully cloud-managed environment for distributed systems. We have the Digital Feedback Loop capability that allows collection from the field data and informing the back-end development and digital twin. And then Wind River Conductor that provides orchestration and automation for these deployed systems, as well as analytics that collects data from the field and presents that through visualizations and is used to feed machine learning models.
As we move to a few industry examples, we'll start with aerospace and defense. Wind River's been in aerospace and defense for almost 40 years, and our technology is used in avionics systems, critical defense infrastructure, land, sea, air, and cyber assets in the U.S. and internationally. A few different programs going on now that are very interesting and relevant to our technologies.
First, with Studio Operator, we're involved in what's called JADC2 and Platform One. With JADC2, it's a distributed cloud technology that allow the different service branches to operationally manage hugely distributed tactical assets, whether they're aircraft or ground-based vehicles or ships, and tie them together in a modern software paradigm. Platform One is really fed by Studio Developer that enables us to bring a DevSecOps tool chain for the development of the software assets that are then deployed into the field. You can see here in the aerospace and defense industry, many parallels with what's starting to happen in the automotive industry as the automotive industry looks to provide over-the-air updates and manage a software-defined vehicle. There's tremendous benefits of this cloud-native architecture to aerospace.
It provides modularization, reduced costs, the ability to reuse software components, and it reduces complexity through that modularity because the software is being broken down into individual containerized components that can be separately developed with standard APIs. As a result of this, you achieve improved reliability and reduced time in development.
At the bottom here, you can see an interesting example. Using our Helix Virtualization Platform, we were able to up-integrate a variety of hardware platforms into a single, virtualized infrastructure that allowed us to have a single compute platform that virtually hosted the multiple separate functions that used to be in the aircraft previously. This provides weight savings and miles of wire harness elimination, reduces cost in the airframe, and creates lifetime fuel savings from the weight savings that happens from the reduced compute and harness workload in that vehicle.
Aircraft have used this approach to help integrate over 200 separate functions into a single computer in this industry, using Wind River's technology previously. As we then take a look at the telecommunications industry, there's been a major transformation happening in this industry over the last several years. It's really transformed into a software-defined, cloudified infrastructure. This started at the core of the network and has now moved all the way to the edge, where 5G is being deployed today. This has resulted for those service providers, lower cost and faster time to market, as they can deploy software functions with the click of a button rather than taking years to integrate new hardware platforms. This has also eliminated vendor lock-in.
Given it's a software-defined environment, we can now swap software components in and out at the click of an orchestrator, and that protects the service provider from underperformance from their vendors. This is really happening because of a concept called disaggregation, and this happens where the previous hardware-based environment is being split into a layered architecture, where at the bottom layer, you have off-the-shelf hardware platforms, such as those from Dell and HPE. At the middle layer, you have an infrastructure component that is fully virtualized from companies like Wind River. And then at the top layer, you have an application layer where the telecommunications function is deployed. This enables competition at every layer. If the hardware vendor disappoints the customer, they can be swapped out for another. The same with the infrastructure and at the application layer.
This has really transformed the business that the service providers engaged in and given them significant leverage over their vendors. As we look at this, and Wind River made investments years ago to participate in this market with, Studio Operator, we provide a differentiated cloud technology that is now used by Verizon in the U.S. to deploy 5G, and then Vodafone in the U.K. to deploy the very first Open RAN network that's been deployed globally, with Elisa in Finland, providing the fully automated infrastructure for deploying edge data centers and 5G, networks, as well as companies like KDDI and NTT DOCOMO in Japan.
This is the first evolution of fully virtualized 5G Open RAN, and we're very excited about what this is doing for the industry because it's leveraging everything about Studio, automation, orchestration, machine learning, analytics, and distributed Kubernetes technology to host all these applications in the service provider market. As you can see, there's been significant transformations across the telecommunications and aerospace industries, and we find a really exciting software-defined future across all the verticals that we feed into. For further details on how this is happening, I'm going to introduce Avijit, who's our Chief Product Officer, for the next segment.
Thank you, Paul, and hello, everyone. I'm glad to be here to talk with you about how Aptiv and Wind River are enabling the software-defined vehicle . But before I get started, we'd like to share a video that demonstrates the significant advantages of Aptiv and Wind River's joint capabilities for automotive OEMs looking to adopt next-generation software architecture that is required for software-defined vehicle s. Let's get started.
We've all seen vision videos about the future of mobility. It is autonomous and connected, making our lives easier and more enjoyable. But those of us building that future know the barriers standing in our way. The monolithic, incremental approach to delivering features is slowing innovation. OEMs have started to respond, but current software lacks proper abstraction from hardware, driving the need to rip and replace. As consumers demand advanced features, complexity increases. Oceans of data need to be leveraged to enable intelligent solutions.
Developers need to coordinate across distributed companies and teams. The development process is lengthy, and vehicles are mostly static post-launch. The industry needs to change. That change starts with us. Aptiv and Wind River will offer the industry's first real-time, mission-critical, intelligent operating system with containerization, reducing interdependencies among ECUs, creating a scalable cloud-native platform, all accessed through a single pane of glass.
Aptiv and Wind River's joint solution will unlock previously inconceivable innovation across the entire mobility ecosystem, offering industry-leading reliability, safety, and security, up to 10x faster time to market, 20% or more reduction in software costs, and empowering OEMs to control the user experience of their vehicles. Together, Aptiv and Wind River will enable a safer, greener, and more connected future of mobility.
The investments that Aptiv has made in this business have very uniquely positioned it as the only full system solution provider, with industry-leading advanced technologies that span not only every horizontal layer of the technology stack, but also all of the vertical domains. Over the past five years, Aptiv has launched over 60 software programs with more than 20 customers, including a scalable hands-free ADAS solution up to Level 2+ for a large global OEM, establishing Aptiv as a first technology provider to successfully deploy a scalable L2+ platform that is now in production.
The first infotainment solution with native Google Automotive Services for Volvo and Polestar, and a best-in-class driver monitoring solution for multiple OEM systems, including GM's Super Cruise. Our competitors are focused on a single layer of the tech stack or a single domain. Aptiv is uniquely positioned to operate across the full stack.
Our full systems insights allows us to understand the interoperability between and synergies across technologies and domains, which enable us to bring them together to create innovative, optimized solutions for our customers. Through the commercialization of Smart Vehicle Architecture, Aptiv is transitioning hardware-defined legacy architecture to software-defined modern vehicle architecture. However, the vision of software-defined vehicle s cannot be achieved unless our industry fundamentally changes the current approach to software development and lifecycle management.
Having executed more than 60 software programs with 20 different OEMs, we have experienced firsthand many software-related challenges OEMs face today. The chart on the left represents the software release cadence and cost profile for developing, launching, and supporting a highly complex software system over multiple generations based on actual OEM data. As you can clearly see, the costs increase exponentially over time with the introduction of each subsequent new generation.
Meanwhile, high software costs do not translate into accelerated innovations. OEMs have struggled to update their software in a timely manner, managing to roll out minor updates only about once per year, and major updates can take a few years to implement. A number of factors contribute to these challenges. First, across all vehicle generations, software was written on top of legacy distributed architecture with single-purpose ECUs, which lacks the scalability to support the increasing number of new features.
Software was also tightly coupled to that underlying hardware, forcing OEMs to rewrite the software code in each new generation whenever a hardware upgrade takes place. Second, application software is built in a legacy, monolithic architecture. Software was written as a large, rigid block of code and was laced with interdependencies so complex that engineers find it easier to rewrite the entire code base than updating a specific component.
This led to significantly higher development costs and slower release speed. Third, all of this was exacerbated by the lack of modern software development and lifecycle management tools. During the development phase, engineers had to follow a disjointed and manual workflow due to a lack of integrated toolchain. Post-production, there was simply no solution available that would allow OEMs to update software over the air. These three key challenges led to lost revenue opportunities and higher development costs.
Of course, OEMs were very well aware of these challenges and started to look for solutions. However, due to the lack of off-the-shelf, readily available third-party solutions, they had to resort to themselves by investing heavily in homegrown solutions. Now, in addition to being a heavy undertaking in itself, such effort further compounded the challenges, as these homegrown solutions were often proprietary and lacked the ability to scale.
Aptiv and Wind River are here to change that. Aptiv and Wind River together provide a comprehensive product offering that can address all three challenges faced by OEMs today. Wind River Studio offers the industry's first end-to-end platform to streamline software development, deployment, and operations over the vehicle's lifecycle. Aptiv's containerized software and Wind River's edge software enable abstraction of software from hardware, offering flexibility across semiconductor options and modular updates that reduce the cost of OTA. All of this can be combined with Aptiv's SVA to develop, deploy, and operate a next-generation cloud-native architecture for software-defined vehicles. Our readily available off-the-shelf solutions will allow OEMs to focus on truly brand-differentiating effort, unlocking additional revenue opportunities while saving costs. Let us talk about each of these in more detail. First, let's talk about the hardware architecture.
As the automotive industry transitions towards software-defined vehicles, automotive OEMs are gradually rolling out their own version of the next-generation hardware architecture to support this vision. We expect nearly one of every four vehicles produced in 2030 to have a hardware architecture that is built on highly integrated virtualized compute and an optimized data and power distribution system. This trend will create an addressable market of more than $25 billion for advanced compute in vehicle operating systems and middleware and corresponding DevOps platforms.
Aptiv foresaw this trend and has not only been a pioneer, but also contributed to this trend by introducing our own software vehicle architecture years ago. We have gained meaningful market traction, and since then, and to date, we have booked $10 billion in SVA awards related to high-performance compute. Now let's take a look at what is required for the software architecture.
As mentioned earlier, automotive software has historically been written as a one monolithic block of code with significant dependencies between components. Because of that, code changes and updates are often very costly and difficult. To demonstrate this, let's try updating one feature, Adaptive Cruise Control, or ACC. Now, changes in the ACC code require corresponding updates in the two libraries referenced by ACC to ensure the overall software runs properly. The changes do not stop here. Because of the dependencies, change in one single code component leads to cascading changes throughout the entire code base, resulting in significant engineering effort. This challenge can be resolved by containerization. With containers, software code can be modularized and packaged into independent, self-contained components. This allows isolated updates of code and reduces development time and complexity.
Now, it's important to note that for safety-critical software like an ADAS feature, the benefits of containerization can only be realized through an RTOS that supports containerization at high levels of safety. This is to ensure that containerized software runs in a real-time, deterministic manner. VxWorks is the only commercially available RTOS that has such capability. Going back to our example of ACC update, now you can see that the ACC feature can be updated without affecting other software components. This greatly simplifies software development, testing, and integration. Within each container, the software code can be further modularized. The software feature can be further broken down into individual services that communicate with each other via APIs by implementing a modern microservices architecture. As software architecture further advances, even these individual services can be containerized.
This will further improve software updateability and enable more dynamic management of applications running inside a vehicle. And lastly, Wind River Studio offers a cloud-native, fully integrated DevSecOps platform to streamline all of an OEM's software lifecycle management effort. Historically, OEMs have used legacy tool chains that inorganically stitch together a set of third-party tools with no standard integration methods. This lack of standardization and integration led to significant manual effort and lost efficiency.
Wind River Studio, instead, is a customizable and integrated tool chain that enables automation and full traceability, which in turn contributes to faster development and reduced cost. Its capability to continuously certify software updates further expedites the development process by simplifying the traditional, lengthy, and costly safety certification process. Similar benefits apply to the post-production phase. Wind River Studio provides a fully integrated environment for OEMs to continuously improve software and deploy updates over the air.
This leads to better software features, reduced costs, improved customer experience, and new revenue upside. Having discussed the three solutions separately, let's now take a step back and look at how vehicles with next-generation hardware and cloud-native software will function in the world of the intelligent edge . With the support of Helix and VxWorks, applications will be running in containers and can be easily scaled up and down across subsystems. This enables more efficient use of compute resources.
VxWorks also ensures that safety-critical applications still run in safely and deterministically as they are being scaled. This capability to scale leverages Kubernetes, the same technology that hyperscale cloud service providers use to roll out highly available cloud services globally. With Kubernetes, software can also be orchestrated, not just within one vehicle, but across a fleet of vehicles, enabling software management at a large scale.
As software runs in the vehicles, data is generated and sent through the 5G network to regional data centers and then to the cloud. This connected infrastructure enables data to flow from the vehicle to Wind River Studio via the Digital Feedback Loop . This data is then used to create digital twins of vehicles in the cloud for simulation. This enables OEMs to proactively discover and fix software issues, driving down costs of software development and defects. It will also allow OEMs to better understand consumer behaviors and unlock additional value by building tailored features that improve customer experience.... Once vehicle data is analyzed in Wind River Studio, developers can update the software code and deploy it to vehicles. This enables a single pane of glass experience across development, deployment, and operations, all within Wind River Studio.
We just walked through the automotive technology stack that is required to enable the software-defined vehicle and how Aptiv and Wind River's combined capabilities make us a partner of choice to OEM customers. Now, I'd like to hand it off to Anant Thakur, Aptiv's Chief Strategy Officer and Senior Vice President, Product, who will dive deeper into the value that we unlock for customers and our commercial progress.
Thanks, Avijit, and hello, everyone. Earlier, Avijit showed you the chart on the left, which represents a legacy approach to software development and deployment, in which software reuse is limited, updates are difficult and infrequent, and cost compounds significantly over time. These challenges can be addressed with the modern cloud-native approach enabled by Aptiv and Wind River Solutions, with the results shown on the right-hand side. As you can see, software development, integration, and testing is streamlined, with faster time to market and lower upfront costs.
True lifecycle management is enabled, allowing for more frequent software releases with new and improved features, and reduced spending on warranty and recalls, as issues can be detected and addressed with ongoing software updates. Based on Aptiv's experience, we estimate these solutions can ultimately reduce OEM software costs of development, deployment, and post-production operations by about 25%.
They also support new OEM business models by enabling more frequent feature releases and updates over a vehicle's life cycle. Our solutions empower OEMs with greater flexibility in other key layers of the technology stack, including two of the largest and fastest growing spend categories, semiconductors and cloud. Wind River's in-vehicle software platform is supported by a broad range of SoCs, enabling software applications to be abstracted from the underlying hardware. This allows greater portability of software across vehicle platforms and provides OEMs with more choices among SoCs to optimize system performance and cost, while also improving supply chain resiliency. Through compatibility with major Cloud Platform s, Wind River Studio can run on an OEM's cloud of choice. By decoupling the development environment, tool chain, and data platform from the underlying cloud infrastructure, this again drives greater flexibility.
As a result, Aptiv and Wind River solutions enable OEMs to accelerate innovation, optimize performance, and improve scalability, while also avoiding vendor lock-in and managing costs throughout the technology stack. In addition to providing flexibility across the technology stack, our software products themselves are modular in nature, allowing customers to pick and choose the solutions that best fit their needs. For customers that are looking for a full system solution for software-defined vehicles, Aptiv can offer a cross-domain package of hardware and software products optimized at a system level. This includes our SVA hardware, Wind River's in-vehicle software platform, and Aptiv's application software, with end-to-end lifecycle management enabled through Wind River Studio.
For OEMs aiming to develop their own applications in ADAS or infotainment, for instance, we can offer hardware, Wind River software platform, differentiated building blocks such as Aptiv's perception stack, as well as Wind River Studio, to enable these customers to develop, deploy, and manage software more seamlessly and at lower cost. Finally, based on how we have architected our software offerings, we are increasingly positioned to sell software as standalone products that can be integrated with hardware from other providers. Across any of these models, we are able to leverage Aptiv's deep experience in integration, testing, and validation to ensure execution. This go-to-market approach is differentiated from several of our competitors, who typically propose rigid, black box, vertically integrated offerings and lack the cross-domain portfolio and experience to offer integrated solutions.
To illustrate how unique our portfolio and go-to-market model is, let's take our Gen 6 ADAS platform as an example. We've purposefully architected this platform to be open and modular, capable of meeting the needs of all OEMs in the market. Starting with the bottom of the stack, we provide an advanced sensor suite and high-performance compute solutions. When integrated with Wind River software platform, higher-level software is abstracted from the underlying hardware, which reduces OEM dependency on any particular SoC. One layer up the stack, our AI/ ML-based radar software can be paired with multiple computer vision solutions to provide best-in-class, high availability perception to enable highly automated ADAS features.
OEMs can then leverage the Wind River software platform, our perception stack, and Wind River Studio to build, test, deploy, and update their own in-house features, or they can opt for a full system solution, leveraging Aptiv's market-leading ADAS features, which use service-based architecture and containers to streamline updatability while maintaining the highest levels of safety certification. As we bring Aptiv and Wind River solutions to our customers, we are also building a robust, open, and collaborative ecosystem of partners that complement our technology. We are proud to work with some of the leading silicon and cloud infrastructure providers in the market.
For example, Wind River is partnering with Samsung to provide customers with its technology, including Helix, VxWorks, and Linux on Samsung's Exynos platform, enabling advanced software applications across all levels of safety, including in infotainment, cabin, and through Wind River's collaboration with Horizon Robotics, OEMs can leverage a fully integrated ADAS solution tailored to address the unique needs of the Chinese market with Horizon's Journey series and Wind River's full edge-to-cloud portfolio. Finally, Wind River Studio can run on an OEM's cloud of choice and supports both Amazon Web Services and Microsoft Azure, two of the most widely adopted infrastructure providers in the automotive industry.
Bringing differentiated solutions to meet our customers' needs has resulted in strong commercial success for Aptiv and Wind River, and the flexible go-to-market approach I discussed earlier is reflected in our awards, which span multiple products, platforms, and regions, and range from providing a full stack ADAS system for Geely, with Aptiv's perception and L2+ features integrated with the Wind River software platform, to enabling Hyundai Mobis and Autoever's development of next generation connected vehicles using Wind River Studio.
These commercial wins underscore the value of our portfolio and the robust engagement we continue to have with several OEMs on enabling their journey to software-defined vehicles, indicates that this is only the beginning. So when you step back, we see that the emergence of the intelligent edge and the shift to a software-defined future presents significant growth opportunities for Aptiv and Wind River, as Benjamin highlighted earlier.
Our combined portfolio can address a market size of $13 billion today, growing rapidly to roughly $37 billion by 2030. Building on the strong momentum and market traction we are seeing for our solutions across industries, we aim to raise our software revenue from $400 million today to $3 billion in 2030, at a growth rate that is double that of the market. To summarize, the transition to a software-defined future and the demand for an intelligent edge is happening now across multiple safety-critical industries. Wind River has a proven track record of bringing cloud-native solutions to the edge to address some of the most demanding real-time applications, from aerospace and defense to telecommunications.
Aptiv and Wind River are now uniquely positioned to leverage these same capabilities to address the needs of the automotive industry by modernizing software architecture as well as the development environment and lifecycle management. As the industry faces a pivotal moment to significantly change how software is developed, deployed, and managed to truly unlock software-defined vehicles, we remain the partner of choice for OEMs embarking on this transformative journey. Thank you for your time, and now I'd like to hand it over to Jane to moderate us through Q&A, where we'd be happy to address any questions you might have.
We hope that you enjoyed the presentation. We will now begin our Q&A session with our presenters. As a reminder, you can submit questions in the slide out text box at the bottom of your screen. First question: How are customer engagements going, and are OEMs recognizing the value of transitioning to modern software architectures? Kevin, why don't we start with you?
Sure. Great. I'll start off, and then I'll turn it over to my colleague, Avijit. I think I'd break that question up into two pieces, really. I think when you look at the telecommunications, the aerospace and defense industries, those places where Wind River's, you know, been involved for a number of years, so their primary industries, those customers have recognized the importance of virtualizing hardware quite some time ago. And as a result of that, you know, the benefits of being software-defined and the importance of how you architect software enable to be fully software-defined, to get the full flexibility, the full cost reduction, the full optimization that they're looking for.
From an automotive standpoint, which we're bringing Wind River into, I would say, you know, Aptiv's experience from a hardware standpoint, from redefining the hardware, Smart Vehicle Architecture, which we've been talking about for a number of years, which is, you know, intended to enable the software-defined vehicle . Obviously, we've made a lot of progress and have a lot of traction with customers. From a software architecture standpoint, I'd say today, customers fully recognize the importance of having a software-defined vehicle . I think there's some element of still struggling the implementation associated with that. Given some of the struggles the industry's had with programs and software development over the last couple of years, I'd say there has been a lot of progress in terms of understanding the importance of software architecture and the role that it plays.
We've had a number or have a number of, you know, OEM engagements today. You know, would expect, you know, a tremendous amount of momentum as we go forward. I'll turn it over to Avijit and let Avijit be a bit more granular about some of our discussions.
No. Thank you, Kevin. You know, our customers across industries, aerospace and defense, as you mentioned, telecommunications and automotive, are embracing cloud-native technologies and software-defined, different business models to bring differentiated solutions to their customers. But as Benjamin referenced in his presentation, customers are on a maturity cycle. There are certain customers in certain industries who've been early in adopting these technology patterns and others who are coming to it now. So in the aerospace and defense industry, as Paul mentioned in his presentation, they've embraced virtualization as a means to get flexibility across silicon choices, so there's been early adoption there. And more recently, in telecommunications, we've been working with our partners, such as Intel and Samsung and others, to give them the ability to adopt virtualization as they virtualize the RAN in the network.
More recently, with Aptiv, we are seeing traction in the automotive industry for our technologies across Edge and Studio as they seek to bring software-defined architecture into the vehicle and bring lifecycle management capabilities into the cloud. We are seeing tremendous adoption in aerospace and defense and telecommunications, and significant interest now with Aptiv in the automotive industry, as that industry starts to embrace these technology patterns and drive innovation in that industry.
Good. Thanks. Our next question: Can you dive deeper into what software Aptiv and Wind River are doing in your ADAS solutions? How will Wind River be integrated into Gen 6 ADAS?
... Yeah, maybe I can start there. So, as we mentioned in the presentation, right, so our Gen 6 ADAS platform, it's built off of the Wind River software platform. So, we're running Wind River VxWorks, we're running Helix Hypervisor, we're running Linux in some instances. And, you know, one of the things we highlighted and what really attracted us to Wind River that made it so differentiated, was that VxWorks is the only real-time operating system that can have the highest levels of ASIL certification, while also bringing cloud-native technologies into that environment. So it's the only RTOS that supports containers at an application level. And our ADAS stack is, you know, a services-based architecture that takes advantage of containers, and so we're excited to integrate these two together, and we're gonna be demonstrating that at CES.
So our ADAS stack is built off of, and we'll be leveraging the Wind River software platform. And then, our engineers, who are writing those applications and deploying and managing the vehicles, will be doing so using Wind River Studio.
Great. All right, third question: Does Wind River complete your go-to-market capability, or are there other areas you need to develop internally and/or buy in?
I can start. I mean, I think that there's always opportunities to broaden our capabilities and broaden where we participate in this stack, but we do think that now it gives us, as we mentioned in the prepared presentation, just such a flexible go-to-market business model, where, you know, we can provide our customers with the full, you know, hardware architecture, as well as the core software platform, on top of which we can build applications. That's our SVA hardware, as well as the Wind River software platform. Then we can offer a studio for customers to develop those applications and manage the fleets post-production.
And then, where we have really differentiated applications at a domain level, it could be at ADAS, it could be in-cabin sensing, it could be across the other parts of the vehicle, we can also offer those applications to build full-system solutions. So I think we have a complete offering for really taking flexible, modular and full-system solutions to our customers.
We have a question on unit economics, and how does Wind River charge for Studio versus Edge software? Is it a subscription per seat?
Yeah. So if you look at our products in the customer segments we serve, our Studio Developer product is geared towards developers. Our Studio Operator product is geared towards operations and lifecycle management, and our Edge software is geared towards software in the asset itself, whether it's a plane or a telecom tower or a vehicle. So when you look across these products and the capabilities they provide, on the developer side, it's a per-seat-based business model. On the operation side, it's a subscription-based model and on licensing of the in-vehicle software that goes into the vehicle or the asset.
And then, when you look at the lifecycle management things, we have shifted our customer base from licensing to subscription based business model because that aligns with how their cost structure is over the life cycle of the asset that they're trying to manage, and it gives us a good way of having recurring revenue over the engagement we have with our customers.
Mm-hmm. So the software-defined cloud-enabled vision seems very dependent on OEMs that all want to have tight control over consumer monetization. Does this help or hurt Wind River and/or Aptiv?
Maybe I'll start if that's okay. As you saw in the presentations, and I think it's reflected in some of the answers to the questions we've given, we're really about: how do we enable our customers to create a safe, secure business model that allows for recurring revenues? I mean, that is our objective. Aptiv, Wind River are not B2C companies, they're B2B companies. To the extent we can enable a recurring revenue stream for our customers, the reality is the markets we serve actually get bigger. You know, the ADAS market, the user experience market, in similar situations, you know, in the telco, A&D, and other markets. I wouldn't say it has any impact on how we go to market or our business model.
It's something that we're really trying to drive, so it actually increases the size of the markets that we actually operate in.
Can I just add one thing?
Sure.
I think that, the question was around, is it reliant on how OEMs control or affect monetization on the revenue side? We actually... A big driver for us for moving to cloud-native architectures and vehicles is also to help with the cost reduction, to develop software faster and to reduce the cost of delivering it, which is not at all dependent on how it's ultimately monetized, right? So we think this enables OEMs to develop software faster, at a lower cost, and deploy it and manage even issues and updates and warranties, you know, over the, the full life cycle of the vehicle.
Thank you. Just in terms of the competitive landscape, how do you do by industry, by product?
For Wind River?
For Wind River.
Yeah, so in the aerospace and defense industry, as it pertains to software that goes in the assets, we have competitors like Green Hills. In telecommunications, as we've brought virtualization technology, competitors are like Red Hat and VMware. In the automotive industry, obviously, QNX in the vehicle. But when you look across the spectrum of these industries and edge software and cloud-native capabilities, none of these players are able to offer an end-to-end solution. So we offer a very differentiated set of capabilities that span not just the asset, but the cloud capabilities that are essential to drive the lifecycle management of these assets. So we're bringing a very differentiated portfolio to the market, and that's why the interest that we see across aerospace, telecommunications, and automotive for our products.
Yeah. Okay. Thank you. So auto OEMs are building out their own software capabilities. Do you see risk of insourcing?
Sorry, risk of?
Risk of insourcing.
Of insourcing.
Mm-hmm.
Yep, maybe I'll take a shot, if that's okay, Paul.
Mm-hmm.
The amount of software going into vehicles is significant. When you think about ADAS user experience, electrification, enabling all that in an efficient way requires incremental software. So the market is significant. The growth opportunity is significant. A number of OEMs are interested in participating in that, from an economic standpoint, cost standpoint, also from a brand standpoint... The reality, though, is taking the old model of developing and integrating software and insourcing that into an OEM does nothing but create additional problems. And again, you've heard about those problems, those challenges.
Our objective is: how do we create a very efficient, flexible, low-cost process for our customers to have choice, to enable more software to go into the car, which requires, you know, how software is delivered to be completely rearchitected for the automotive industry relative to where it's been historically, and to put them in a position where they can create recurring revenue models, as they've all talked about.
And if you look at historically how software was developed and integrated in the car, clearly, there was a hardware issue, but there also was a software architecture issue. And our objective is really to solve that particular problem, to give the OEMs flexibility, whether it's they want to do, develop some of the software and integrate it, or they want to rely on players like ourselves to do some or all. I don't know if anyone wants to add to that.
Yeah, I think that one of the key technology components that enables that, we've seen that from the work that we've done in aerospace and defense as well as telecommunications, is the desire to have faster time to market, to be able to bring software functions into the vehicle or the application environment that enables faster monetization and new services. And the legacy software architectures were very monolithic, and it required you to deploy the entire system, and therefore, updates in the field and the ability to deploy new applications were really restricted. And so moving to these more modern cloud-native approaches enables the customer to monetize much more rapidly, bring more applications, and really participate in the software value ecosystem.
Yeah.
Just to layer one thing onto that, this is part of what was so, interesting to Aptiv about the Wind River platform, is it's an open platform, and that is what provides that flexibility, really, to our customers.
Thank you. All right, next question: Who will own the data that sits in Wind River Studio? Will the OEMs own this data? Do you anticipate recurring revenue models, or do OEMs have appetite for it?
Yes, fundamentally, our value proposition is that we enable our customers to adopt our technology to build their business and their set of services that they provide to their customers. So the data that's emanating from their assets and their customers will come into Studio, but it's owned by our customers. We give them the capabilities to take that data to drive analytics on it and to derive insights, and in the future, using AI and machine learning, to take that data and build AI models that can help drive differentiated offerings to their customers. So the data is theirs. We provide them the capabilities to harness the value out of the data.
All right. Okay. Can you provide more insight or the buildup for the 25% software program savings? Where will these savings come from?
Yeah, I can start there. So, where that number came from really was we looked at our own experience working with a number of OEMs on the cost of software development, so everything from the initiation of a program to when we're actually launching the product, and then deploying that software, so the cost of updating over the air over the full life cycle of a number of fleets. And then, the third bucket was operating those vehicles, so managing, you know, life cycle issues, warranties, recalls, and other things like that. And when we looked at it, we looked at the total cost, for example, an OEM, a large scale software program. It could be north of $2 billion over the 10-year life cycle for, you know, say, 10 million vehicles.
And when we looked at how Wind River solutions could actually affect change there, speed development, drive down cost development, on the deploy side, because we're shifting to containerization, it means the updates can be smaller, it can reduce the cost of that over-the-air updating. And then, because you can mitigate issues in the field, you can reduce the cost of warranties and life cycle management. And so when we added that all up, we said that you found that it was around a 25% cost savings, and we're confident we can bring that to our customers.
Sounds good. There are other industry leaders in operating systems for automotive. How does Wind River compare, and how will you win share?
Yes, I think, there are obviously incumbents who provided that capability to the automotive industry for years. However, many of these competitors are more anchored in the legacy way of software development and operating system constructs even. Our, as Anant mentioned in this presentation, VxWorks with support for containers, and the fact that it's certified offers a more modern software that's required for the distributed architecture in the vehicles, and then complemented with cloud-native DevSecOps capabilities, the ability to go from edge to cloud. These are things that are net new for the industry. They anchor them more into the future, as opposed to existing incumbents who are anchored in the past.
We've got a very full set of portfolio capabilities that bring customers forward into the future as they seek to embrace software-driven, you know, defined vehicle models. I think we are very well positioned to win in the industry there.
If I can add, none of those competitors have those same capabilities, either architecture or DevSecOps tools, that Wind River has and has been implementing in other industries very successfully.
Okay. Sounds good. Thanks. So in terms of the risks to the forecast and opportunities, what do you think are the big risks in achieving your plan?
Listen, I'll start. I think our plan across industries is actually very prudent and very reasonable. As we've been saying for the last couple of years, our customers in the automotive industry are struggling and are looking for help in enablement. There's a great deal of interest in what Wind River has to offer. When you look at telco, A&D, and other markets, the reality is the understanding of the need is pretty well penetrated across the customer base globally. There's a tremendous amount of pull, both within existing customers as well as with other customers. The momentum is very, very strong. We have a high level of confidence in the forecast that we've submitted.
Okay, thanks. Are there opportunities for further tuck-in software acquisitions to leverage Wind River core competencies? What could some of those opportunities be?
Aptiv or Paul, do you-
Yeah.
Wanna, wanna talk about it?
Go, Paul.
I think that, you know, as we look at our portfolio now, we've come through several years of investment and acquisition that we think has brought together all the assets that we really need to satisfy our customer demands. There's always gonna be opportunities to add new capabilities to the platform, but I think we today have the fundamental assets that we need for the entire software lifecycle management, as you saw in the presentation, not only the DevSecOps tool chain, the infrastructure, very modern capabilities with cloud-native assets, and then operational capabilities to manage those deployed systems.
So a very rich, rich set of capabilities that's taken some time to get to. So we consider ourselves pretty complete at this point, but we'll always look for new opportunities where it makes sense to add new software capabilities to our portfolio.
All right. How do you use AI/ML today with Wind River or in your ADAS solutions, or how do you plan to incorporate it in the future?
Sure. Well, it's interesting. Aptiv's actually been investing in AI for quite, quite some time, and you can see that in our 6th generation ADAS, both on the perception side, but also in, the driving policy, so how the vehicle, makes decisions. So we see that, as something that will continue and will continue to lead and drive forward in. In addition, we look into the back office functions for how we manage our business, and we look at what are the opportunities for using AI to identify patterns, anomalies, and figure out ways to be more efficient.
And then lastly, outside of automotive, if you think about telco and A&D, where you're managing a large distributed system, we're looking at opportunities for applying AI to how you manage that entire set of assets in order to detect issues in the system and either elevate those issues for resolution by an operator or automatically take care of them.
Mm-hmm.
Maybe, Paul, you can weigh in on that.
Yeah, in Wind River, we have four key pillars to our AI strategy. The first is that within the DevSecOps tool chain, we wanna enable software developers to use AI capabilities, whether it be AI automated test or code completion capabilities, that help them further reduce the cost of developing software and improve its predictability and time to market. The second element is we really want our customers to be able to build AI and ML applications, so a set of libraries and assets that they have that help them build their own solutions as they build their own products. The third component is within our Edge portfolio, the operating systems and infrastructure that we provide, we need the ability to host machine learning applications, in particular on the Edge, as well as AI functions.
Things like TensorFlow Lite support and capabilities that we need to host those applications are part of the strategy. And then finally, as Benjamin just mentioned, in aerospace and defense and automotive and in telecommunications in particular, the operational capabilities of AI are quite stunning. The ability to do predictive outage avoidance or predictive analytics, event correlation, root cause analysis, these turn weeks of debugging in the field into minutes. And so leveraging the technologies across those four pillars is how we look at investing in AI.
That's exciting. How would Wind River help OEMs decouple from underlying hardware, and why is this important?
Yeah, maybe I can start there. So I'll start with why it's important. I think what we've seen in our experience is as we're moving to more SVA-like architectures, and we shared it in the presentation, that one of the largest costs for OEMs is the underlying silicon and SoCs. And so, by driving some more flexibility and choice, which, you know, the Wind River software platform enables, that allow customers to take their existing software stack and potentially migrate it to a different SoC platform and, you know, pick and choose what's best for them for a specific application, we think that gives them flexibility. But then, given the nature of how costly it is as a part of the total vehicle architecture, it can really help them optimize on costs as well.
Mm-hmm.
Yeah, you know, as Anant said, being a fundamental platform provider, we appreciate the value of an ecosystem and partnerships. And so as Anant mentioned in his presentation, the two biggest cost drivers for our customers in automotive are cloud costs and silicon costs. Anant already touched upon the value, you know, that can be accrued by having diversity across silicon choices. So we have a number of partnerships in Wind River across silicon with Samsung, with Ambarella, with NXP, with Texas Instruments, and many others in the pipeline there. So we're gonna enable a lot of flexibility and choice for our OEM customers there to drive down costs there. And on the cloud side, too, our studio capabilities run on AWS and Azure, that gives them flexibility.
Having flexibility across both of these cost drivers gives our customers the ability to not be vendor locked in and have long-term flexibility in their business model.
Thank you. This is our final question: Is it conceivable that other tier one suppliers will use Wind River for ADAS programs despite Aptiv not being the tier one provider?
Go ahead.
Yeah, I'll start. So I'd say absolutely. By design, right, we want it to be flexible, and we want others to work in the solution. I would say that one of the core elements of Studio Developer in particular is that we're integrating a lot of third-party tools, and some of those third-party tools come from our competitors, or they come from others in the ecosystem. So we absolutely want to be able to enable the broader industry to use it, and it's not just about Aptiv or our, our customers using the-
Yeah, I'd say-
-end product
... you know, rationales as it related to Wind River, Aptiv transaction was obviously what can we-- how can we help Wind River grow in the markets that they currently operate? How do we bring that capability into the automotive market, where we see a huge need? But also, how do we enable Wind River to grow? And our objective is to make sure Wind River has the strongest solution. And again, we're about choice and flexibility to our customers, whether our customers want to deal directly with Wind River, and we have situations that that's occurring today, or they want to deal with Wind River through another tier one. That's absolutely fine. That's something that we encourage and, you know, we're incentivizing the Wind River team to do.
Sounds good. All right, any final comments for the team?
No, listen, thank you for your time. As you can tell, we're very excited about Wind River, the addition of Wind River to the Aptiv overall portfolio of technologies. We tend to talk a lot about what's going on in the automotive industry, based on our perspective and where we come from. Bringing Wind River into automotive, we're convinced, solves a lot of problems for our OEM customers and presents tremendous opportunities for Aptiv. However, there are also tremendous untapped opportunities in telecommunications and aerospace and defense and the industrial markets that the Wind River team is also very focused on. And, you know, we're really excited about what Wind River brings not only to the automotive market, but into those markets as well. So-
Great. Thank you, everyone. Thank you very much for joining.
Thank you.