Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

CarPlay: Not Perfect, but Perfect for Apple

By

An impressive list of automakers are already revved up for the company's integrated iOS dashboard.

PrintPRINT
One of the more entertaining trends at CES 2014 involved automakers and in-car apps. The auto companies appeared somewhat desperate in their attempts to make new mobile tech features seem relevant and necessary, as essential as the functions we've come to expect from our smartphones.

Ford (NYSE:F), for example, unveiled a pizza-delivery app, while Mercedes-Benz talked about taking Facebook (NASDAQ:FB) mobile. GM (NYSE:GM) announced that future cars would come LTE-equipped, and Audi (OTCMKTS:AUDVF) demoed its very own tablet-based entertainment system. Each manufacturer wanted to show off its app store, even if apps themselves were in short supply.

To call most of this redundant would be to state the obvious: One hundred and fifty million Americans now own smartphones, which they generally carry with them into the car. More importantly, embedding mobile technology into the car is a recipe for obsolescence. The average automobile on the road is 11 years old; the average smartphone was bought in the last 12 months. So while your next car might seem pretty clever as you're driving it off the lot, rest assured that for the majority of its existence, it will be about as "smart" as that tattoo you got in college.

The dearth of apps points to yet another problem. Car manufacturers have been reluctant to commit to a software platform -- much less a standard -- and developers appear to have returned the favor by not bothering to port their apps. For example, GM is pushing its own software platform called Connected by OnStar but has hedged its bets by signing onto both Google's (NASDAQ:GOOG) Open Automotive Alliance and the Linux-based GENIVI Alliance.

Nobody knows what platform next year's models will be running, and that makes software development a risky investment. Perhaps this explains why, a year after releasing its software development kit, GM has only 10 apps to show for it.

The whole idea of smartcars needs rethinking, and that's what makes Apple's (NASDAQ:AAPL) CarPlay so interesting. Known during development as "iOS in the Car," Apple did well to rename the product, since CarPlay pulls its functionality from the phone itself rather than loading the iPhone's operating system onto the dashboard. At the moment, this requires a wired connection, but Volvo (OTCMKTS:VOLVY) has said that a Wi-Fi option is in the works.

There are some caveats. CarPlay will enter life as an app in your vehicle's existing operating system. How well it gets incorporated -- and the extent to which you can avoid your car manufacturer's default interface -- will vary. AnandTech and SlashGear see this as a trade-off, but it also constitutes an advantage. Automakers are more likely to adopt an app than they are a prepackaged operating system, and it's no coincidence that, at launch, Apple can already brag of an exhaustive list of CarPlay partners, including Ford, GM, Toyota (NYSE:TM), BMW (ETR:BMW), Nissan (TY0:7201), and Honda (NYSE:HMC).

Mercedes has raised the possibility of adding this service to preexisting models as an aftermarket solution. If so, that's good news for software developers, who will need to do some work to make their iOS software CarPlay-compatible. In this case, they're immediately guaranteed a large and committed market, and it wouldn't be surprising (or difficult) to see Apple develop a quick lead in apps.

From Cupertino's perspective, the best part about CarPlay may be that no one else is in a position to copy it. Google will have a hard time convincing carmakers to adopt Android wholesale. Too many of them see the dashboard as a piece of branding and a potential revenue stream. On the other hand, Google's operating system is so fragmented that it will take years to get something like CarPlay adopted (although this is probably Google's best option, given the limitations of cars and the car market).

This is a situation where integration pays off. Being both a hardware and software company has hurt Apple in some ways -- closed products tend to guarantee you a minority market share -- but it also allows the company to offer tightly integrated solutions where no one else can. CarPlay is one such opportunity. Mobile payments may be another. Consumers give up variety when they buy into the iPhone's 4-inch, three-model universe, but Apple can reward that sacrifice by giving them more varied ways in which to use that iPhone.

The difficulty for competitors is that, as pointless as it is to reinvent the smartphone, it would be even more futile to try and reinvent Apple. I suspect that CarPlay will be a big deal. In any event, it's nothing to laugh at.
< Previous
  • 1
Next >
No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE