Meet the company that 'invented software-defined vehicles'

“I’ll be egotistical and say we invented the term 'software-defined vehicle',” says Sonatus boss Jeffrey Chou with a laugh. It’s not entirely true – you can find versions of the phrase going back to the 1970s – but the software engineer and founder of multiple tech start-ups was well placed to be among the first to see the ongoing shift. As the car industry is transformed by the development of software-defined vehicles – cars designed around their computer systems, allowing for over-the-air updates and upgrades, in-car payments and advanced artificial-intelligence (AI) systems – so the technology world has started to expand into the automotive arena. At this year’s CES tech show in Las Vegas, there were big automotive presences from the likes of Amazon, LG, Sony and more, while Nvidia had a bespoke set-up at a nearby hotel. There were also plenty of firms that have launched into the automotive space but come with staff and an approach from the tech world. Sonatus is one of those, and Chou says there’s a major opportunity for new players in the market. “Software-defined technologies came out of data centres in the IT world,” he says. “It’s the same value proposition for automotive as it has been for media, finance, retail and every other sector it has transformed. I mean, it’s inevitable, right? Software-defined technologies will disrupt every industry.” That’s something Chou knows from his career, in which he has founded or worked for a number of tech start-ups that were eventually acquired by industry giants such as Cisco. And spotting that the automotive industry was ripe for software-driven disruption is why he and business partner Yu Fang founded Sonatus in 2018. “When I was at Cisco, we built the first software-defined networking switch,” says Chou. “So a lot of what we offer is that we’ve seen in the playbook before. "One of the key enabling technologies that inspired software-defined services is connectivity. So it started with connectivity in vehicles, just like it did in data centres. That happened in the late 1990s and sparked orchestration platforms and networks. If you look at the evolution, it’s all there in automotive. It’s the latest domino to fall.” California-based Sonatus has developed a suite of automotive software that cover a broad range of services and areas, from developing in-car functions and systems to cloud-based and security services, all of which can be tailored to the needs of clients. It currently employs nearly 250 people. At CES, it highlighted a number of software solutions that it was working on with a Ford Bronco electromod prototype that, among other things, could use facial recognition technology to adjust seat settings and drive modes for individual family members. It even demonstrated an ‘if this, then that’ style app, allowing different settings to be applied when different people enter the car. But don’t expect that service to be offered publicly in a Sonatus-branded package: recognising that manufacturers want to own their overall system packages, the firm has focused on addressing specific problems they need to solve. “A lot of our first few generations of products were taking technologies that we built in the IT industry and adapting them for the automotive world,” says Chou. “We knew where to start and where to plant the right seeds to scale the platform and where the value propositions were. One of our advantages as a company is that we’ve seen it before and delivered it before.” The Hyundai Motor Group was the first car maker to use Sonatus’s ethernet technology for some of its in-vehicle connectivity systems. Chou says: “Give Hyundai a lot of credit. It was all about the connected car for them at the time and they were modernising their in-vehicle networks by moving to ethernet. But ethernet is not trivial; it’s a hard technology to adapt properly. But we’ve got a lot of people from firms that know ethernet. So our first-generation product was solving their in-vehicle connectivity issues. And since then, we’ve just built on top of that.” The conservatism of car firms did take some adjustment but, as Chou notes: “As much as they are conservative, they are cost-driven, and going to ethernet meant cost savings. It’s 10,000 times faster but with fewer wires. They realised they could save money by moving to a modern network.” One key selling point for switching to ethernet and modern connected cars was the prospect that car firms could actually save money on their systems. “Saving money is always one of their top things,” says Chou. “It’s risk reduction and saving money. Sometimes you’ve got to adopt a new technology to do both.” But while Sonatus identified a gap in the current market, you might wonder how long it will be there. After all, just about every car firm insists that it’s currently becoming a software maker and taking that technology in-house. “Of course every car manufacturer is doing it all themselves,” laughs Chou. “That’s what they’re going to say. And some are. They’re building teams of thousands of engineers. I’ve yet to encounter a car firm that isn’t expanding its software staff. Our biggest competitors are internal development teams. But the software-defined vehicle is such a wide topic that no one company can do it all. There are opportunities for suppliers; you just have to find the right answer.” Think of firms such as Sonatus as a specialist suspension firm: sometimes it will make sense for a car firm to bring in outside assistance. “In every industry that has had a software revolution, the big firms all wanted to own it. It’s natural,” says Chou. “But they realise you don’t get credit for paying 1000 engineers to develop plumbing; you need to focus on what makes your car different. “Right now, software infrastructure is a shiny object and it’s new, so they’ve got to try it. They’ve got to bang their head against the wall several times, and that will give us an opportunity. I’m not knocking the car firms: they’re great and they have great engineers. We’ve learnt a lot from them. But suppliers will still have room here.” Chou believes it comes down to the inherent differences between developing a car and developing software. He notes that traditional manufacturing is “very silo-based: they have an ADAS system and a suspension system and body control and a steering wheel, and they write out specs and send them to suppliers. Software is different, if you want to do it properly: it’s horizontal technology, not vertical. It spans across those silos.” Chou says the goal for Sonatus is to evolve as a services company, offering customised products to a range of manufacturers for their bespoke software. He says the firm is currently profitable and grew around 60% in the last year but that the focus was on maintaining the “quality of people” it enjoys, rather than growing too fast. He adds that credibility is a huge challenge for new software firms, because “you have to be around for 15 years to support the next Toyota Corolla if you supply software for it. Stability is everything: car firms have seen too many Silicon Valley firms that disappear next year.” That long product life is one area in which the car world differs from other industries in which Chou has worked in the past. The other is how centralised it is. “I only have 20 customers that matter,” he says. “In the IT industry, I have thousands of customers. But even though there are only 20 customers, it’s more fragmented, because the requirements differ more between each of them.”

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Meet the company that 'invented software-defined vehicles'

Sonatus boss Jeffrey Chou was among the first to see the industry's ongoing shift to software-defined vehicles

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Meet the company that 'invented software-defined vehicles'

Sonatus boss Jeffrey Chou was among the first to see the industry's ongoing shift to software-defined vehicles

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