Cars are becoming the ultimate mobile devices as automakers and mobile platform providers move toward an integrated future. As a result, the tech giants catalyzing this movement can expect to see substantial revenue increases as the new market develops.
Earlier this month, Apple (NASDAQ: AAPL) and "iOS In the Car" partner Honda introduced an iPhone-based dashboard system that will be built into the 2014 Civic and the 2015 Fit. Subsequently, Google (NASDAQ: GOOGL) formed a partnership with Volkswagen's (NASDAQOTH: VLKAY) luxury Audi brand that, according to the Wall Street Journal, will be announced at next week's Consumer Electronics Show in Las Vegas. Let's take a look at what these systems have to offer and how they might impact the future of these companies.
The "iOS in the Car" system The iPhone serves as the brain of Apple's "iOS in the Car" system. In other words, many of the platform's features are accessible only when an iPhone is connected via a wire, or wirelessly through Bluetooth or Wi-Fi. Once the device is connected, a touchscreen in a center console gives drivers access to Siri, maps, music, and more. Users can utilize this touchscreen or can employ "Eyes Free," which allows them to access the same features with nothing more than voice commands.
Apple CEO Tim Cook described the "iOS in the Car" system as "very, very important" and "a key focus" for the company. So far, the endeavor has proven successful, considering Apple has already forged several strategic partnerships with the following major auto manufacturers: Ferrari, Mercedes-Benz, Jaguar, Honda/Acura, Nissan/Infiniti, Chevrolet, Kia, Hyundai, and Volvo. As the company continues to establish more of these partnerships, it can expect to see increases in licensing revenue and marginal increases in iPhone sales.
The Android system Unlike Apple, Google's system will not require a device. Instead, the company wants to run the Android software off of hardware built into the car. Reports guess that the in-car Android platform will be a cross between an information system and an entertainment center, giving drivers and passengers access to Google Maps, music, Play, and more.
Although Google will announce Audi as its first official automotive partner, the company will likely seek out more auto partnerships in the months to come. As it does so, Google can expect similar increases in licensing revenue.
The outlook may be less rosy for Audi. In general, Audi is perceived to be a high-class brand, targeting an affluent, high-end customer base. Conversely, Google's Android-based devices target a somewhat less affluent, lower-end demographic.
Putting Android software in Audi vehicles creates a bit of a perceptual disconnect that may ultimately deter consumers and drive down sales volumes.
Final foolish thoughts
Only time will tell which of these in-car systems proves dominant. For now, this new integrated frontier is vast, leaving room for both Apple and Google to see substantial increases in revenue. Although auto makers will have to carefully evaluate which tech giant to side with, the tech giants themselves are poised to grow bigger.
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