Apple and Google Expand Their Ecosystems to the Car

by Jennifer Kent | Jul. 9, 2014

In the past week, Google and Apple have both extended their efforts to penetrate yet another connected consumer platform – vehicles. Apple announced nine new auto manufacturers that have committed to integrating Apple’s CarPlay product into at least some forthcoming vehicle models, and Google unveiled its competing Android Auto product at the Google I/O conference. Both CarPlay and Android Auto allow drivers to access and control select smartphone apps and services through the vehicle’s display or physical buttons, or by using voice control. Both products are designed to limit driver distraction while allowing consumers to interface with phone-based apps and services in a safe way, appropriate to the in-vehicle environment.

The tech giants’ entrance into the connected car space is not surprising. Both Apple and Google want to be the consumer touch point for connected applications and services, from the mobile space to the connected home space, and now the automotive space. The more device ecosystems they penetrate, the stickier their services become, and the more revenues they can generate. Apple can sell more hardware and digital content by expanding to the car, whereas Google will gain access to a whole new layer of consumer data and a new platform for delivering ads.

The consequences of the expanding presence of the tech companies in the auto space on auto manufacturers are mixed. A long list of auto manufacturers has already signed up for one or both of these smartphone-based initiatives, but doing so threatens OEMs’ role in the car app ecosystem. It is much more cost efficient for developers to build apps for two mobile OSes than to build an app for each OEM’s proprietary infotainment system. Additionally, consumers have made clear their preference for third-party apps and OS app stores over apps and app stores provided by mobile OEMs and mobile carriers. The same preferences are likely to apply in the vehicle space. Plus, OEMs are not likely to be able to play one OS off the other, but instead must support both initiatives – otherwise, they risk losing vehicle sales because the driver’s smartphone is not compatible with the car's on-board operating system.

Still, auto OEMs can continue to play an important role in the infotainment ecosystem. Due to safety concerns, auto OEMs have a much better argument for retaining a closed-garden approach for the majority of its services, compared with other companies that have been disintermediated by Apple and Google (e.g., mobile carriers). OEMs can allow select applications that improve the vehicle experience for drivers, but do not compete with their own services, to be distributed through the Apple and Android app stores and mirrored to the infotainment unit, while remaining the sole provider of revenue-generating services or those services that pose a safety hazard if provided by a third-party.

More detailed perspectives on the evolving connected car ecosystem, including an assessment of leading connected car use cases and business models, is included in Parks Associates’ recently-published industry report Connected Cars: Revenue Opportunities.



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