With the convergence of electronics and automobiles, Siemens VDO believes that technology innovation is what will set their company apart. That is the word from David Royce, director of corporate strategy for Siemens VDO. With a lot of suppliers hurting because of problems at GM and Ford, Royce's plan is to strengthen their role as a technology supplier. While it seems obvious that this strategy is a sound one, with electronic features being crucial to many of the systems today's vehicles rely upon, many other suppliers do not have the resources to push the envelope. Siemens is in a unique position. Electronic and computerized systems are poised to become an even bigger part of the vehicles of tomorrow, and will make up a large chunk of a vehicle's cost to build. That means there should be a solid opportunity for suppliers of electronics and computerized systems in the future. It is predicted that by 2010, 13 percent of the value of an automobile will be tied up in software. Software requires hardware, therefore the entire value of these components will be significant.
Royce also eluded that Dephi and Visteon may make excellent take-over candidates. With electronics being a higher margin endeavor, Siemens VDO is in a unique position to take over other component suppliers. This would expand their portfolio of offerings, perhaps offering a more integrated set of solutions for automotive components and systems. Siemens VDO is also backed by Siemens AG, which has a large amount of R&D resources.