Google to Fuel the Expansion of In-Car Mobile Technology

Google and Audi are expected to partner to use Android-powered in-car mobile technology in Audi vehicles.

Jan 2, 2014 at 7:00PM

At the upcoming Consumer Electronics Show in Las Vegas, Google (NASDAQ:GOOGL) and Audi are expected to announce a strategic partnership to implement in-car mobile technology in Audi vehicles.  The in-car entertainment and information system will be powered by Google's Android OS. The pairing of technologies will fuel the expansion of mobile platforms in the auto industry. The partnership will likely escalate efforts by Google's rival Apple (NASDAQ:AAPL) to accelerate similar deals with automakers.

The goal of the Google and Audi partnership is to allow vehicle passengers and drivers to access information and features via systems similar to an Android smartphone. Users will be able to listen to music, navigate to new locations, and use various applications within the in-car technology. The inclusion of the Android OS in Audi vehicles will prove to be an important proof of concept as mobile technology is more commonly incorporated in vehicles.

Google shows tremendous growth: The company reported revenue of $14.9 billion in the third quarter of 2013, which is a 12% increase over revenue reported in the same quarter of 2012. Google also continues to be very profitable and reported a net income of $3.64 billion, or $10.74 earnings per share, in the third quarter of 2013.

Investors should watch for a potential deal between Google and Audi for in-car mobile technology. The inclusion of the Android OS in Audi vehicles will likely be just the tip of the iceberg for Google. Keep an eye out for Google to make deals with other car manufacturers to include the Android OS in new vehicle models. Google's expansion into mobile systems for automobile makers will help grow company revenue and expand profits.

Apple's iOS in the Car
Apple currently offers the "iOS in the Car" technology, which allows the pairing of the iPhone with vehicle dashboards. This technology uses a vehicle's in-car display to interact with iPhone maps, music, and messages. The driver can also use the new Siri Eyes Free technology to control the iPhone. Apple indicated that the company expects at least 12 car manufacturers to implement the "iOS in the Car" technology in 2014.

Apple continues to show growth: The company reported revenue of $37.5 billion in the fourth quarter of 2013, which is a 4% increase over revenue of $36 billion reported in the fourth quarter of 2012. Apple continues to show that it is very profitable: The company reported a net profit of $7.5 billion or $8.26 earnings per share in the fourth quarter of 2013.

Apple reported a strong finish to 2013 with excellent sales in iPhones, iPads, and Macs. The company reported that in the fourth quarter of 2013 the company sold 33.8 million iPhones. Apple expects strong sales next quarter with the release of several new products including the new Mac Pro, OS X Mavericks, iOS 7, iPhone 5c, and iPhone 5s.

Investors should keep tabs on which auto companies decide to implement Apple's "iOS in the Car" technology. The adoption of this technology will likely spur iPhone sales as new car purchasers will want to take advantage of the iOS in-car features. The inclusion of Apple's technology into popular vehicle models could improve brand awareness and solidify Apple's position as a leader of in-car technology. The adoption of iOS by car manufacturers will help Apple expand its market and grow company revenue.

Nvidia's piece of the pie
Recent reports have indicated that Nvidia (NASDAQ:NVDA) will play an important role as the supplier for processors in the Google and Audi partnership. Nvidia currently supplies mobile processors for many of the popular Android devices. The deal should be beneficial for Nvidia and allow the company to increase processor sales.

Nvidia reported revenue of $1.054 billion in the third quarter of 2014, which is down 12.5% from revenue reported in the same quarter 2013. Nvidia reported a net income of $153.8 million or $0.26 earnings per share in the third quarter of 2014. The company explained that it is focused on growing PC and mobile specialty markets as well as advancing the GPU market. The strong sales of Quadro, Tesla, and Tegra 4 technologies are helping offset a decline in sales for mainstream PC units.

Investors should watch for a deal between Google and Audi that would involve the use of Nvidia processors. Nvidia investors should look for other potential Google partnerships with automakers interested in using the Android OS. The proliferation of Android vehicle-based systems will help increase the sales of Nvidia processors and grow company profits.

The bottom line
As in-car mobile technology becomes more commonplace in the industry, consumers will likely come to expect mobile integration in new cars. This opens up a new market for Google's Android and Apple's iOS. The industry seems to be leaning toward one exclusive mobile OS per vehicle model. As more vehicles incorporate mobile technologies, the vehicle make and model may heavily persuade the mobile device that the consumer chooses to use.

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Ryan Sullivan has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Nvidia. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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