As Apple Launches CarPlay, Should Google Investors Worry?

Google has formed the automotive alliance, so its investors shouldn't be worried about the "infotainment" sector. But will BlackBerry and Apple allow them to show confidence about the new industry?

Mar 15, 2014 at 9:00AM

Apple (NASDAQ:AAPL) is going into the auto "infotainment" sector. It has just released an actual product in the business. It is called CarPlay, which will allow you to do just about anything with your iPhone while driving. As Apple invades this industry, will Google's (NASDAQ:GOOGL) ecosystem become less significant? I believe Google investors shouldn't worry about the development. Google has plans for other devices, too. The tech giant recently announced the formation of the Open Automotive Alliance for the infotainment sector. The company will be introducing an Android software development kit for wearable devices in the near future. Also, Android appears poised to continue its operating system's market share grab.

A new frontier to conquer
The goal of the Open Automotive Alliance is to manufacture cars that can be connected with Android devices. The alliance consists of a group of technology and automotive companies. They include firms like General Motors, Honda Motor, and NVIDIA. They want to customize Google's popular mobile operating system for vehicles. The companies will get an opportunity to place their wares into hundreds of millions of cars. MarketsandMarkets states that the total in-car infotainment market is expected to reach $14.4 billion by 2016. This represents a compound annual growth rate of 12.1% from 2011 to 2016. If Google gets a significant share of the market, it will boost its revenue.

The vision for the wearable market
The Android software development kit will be free for manufacturers. It will afford Google the opportunity to attract developers into an ecosystem powered by its software. As part of the project, Google will be launching its smart watches within the next few months. Google has lots of prospects in this sector. IMS Research predicted the wearable market would grow from 14 million devices shipped in 2011 to as many as 171 million units shipped by 2016.

Another area for a Google upside
Google's Android is still gaining a substantial share of the mobile operating system's market. And given the robustness of Google's gains, it looks like the trend should continue. Android maintained a 10.1% lead over Apple's iOS in January. Also, Google has opportunities to show a revenue growth. IDC predicts Android will continue to be the dominant mobile operating system through 2016, attaining 63.8% market share. This will represent a compound annual growth rate of 16.3% from 2012 to 2016. Even a high-single-digit growth rate will have a meaningful impact on Google's finances. So, Android's continuing popularity as the leading operating system is good news for Google investors.

Competitors
Apple unveiled its CarPlay last week at the Geneva Motor Show. The feature is a means for an iPhone to power a touchscreen on a new car's dashboard. The interface is iOS-like, but vastly simplified compared with what's seen on a phone or tablet. Worldwide auto sales in 2014 are seen rising 3.4%, according to research firm HIS. The new infotainment system market could be big by 2020. Apple has wasted no time in taking an early lead.

(NASDAQ:BBRY)

Foolish bottom line
Apple has positioned its CarPlay system as the smartest way to use its iPhone in a car. However, Google investors should not worry that Apple is invading this sector. Google has big plans for the in-car infotainment sector, and is about to introduce its software kits for wearable devices. Finally, Android is poised to continue its operating system's market share grab. 

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Mark Girland has no position in any stocks mentioned. The Motley Fool recommends and 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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