Can Apple Corner the Connected Car Market?

Apple is making bold moves to conquer the connected car market. Here's a look at what investors and car fanatics need to know about the future of connected driving.

Mar 19, 2014 at 8:30PM

Google (NASDAQ:GOOGL) has another high-tech rival to contend with in the race to integrate its mobile platform into the connected car. Apple (NASDAQ:AAPL) officially entered the ring this month after unveiling its CarPlay technology at the International Motor Show in Geneva. However, it can be difficult sorting the winners from the losers in this increasingly crowded space. That's why we are taking an under-the-hood look at what investors and car fanatics need to know about the future of connected driving.

Screen Shot

Source: Apple CarPlay.

Why Apple is a backseat driver
It's no secret that cars are quickly becoming networked devices. From remotely servicing your car using over-the-air updates to Internet connectivity in the driver's seat, the future of driving has arrived. In fact, the connected car market is expected to hit $131.9 billion in the next five years, according to Transparency Market Research. Therefore, it isn't surprising that everyone from auto giants such as General Motors (NYSE:GM) to tech titans like Google and Apple want a piece of the action.

Apple is hoping to dominate the connected driving experience with its new CarPlay feature, which seamlessly integrates everything on your iPhone with your car's dashboard. The in-car software platform uses a Lightning connector to link the iPhone to a car's infotainment system, this allows drivers to access iTunes, Maps, Messages, and Siri controls through their car. Drivers will also be able to use third-party apps such as Spotify and iHeartRadio through CarPlay.

Ferrari, Mercedes-Benz, and Volvo vehicles will be the first to get Apple's CarPlay later this year. However, the California-based company says it has the support of leading car manufacturers such as General Motors' Chevrolet brand, Toyota, Hyundai, Nissan, Kia, Honda, and others as well. Yet, even with top automakers integrating Apple's CarPlay feature into their vehicles, the Mac maker is still a backseat driver when it comes to connected cars.

Ultimately, the automakers control the driving experience, as well as the look and feel of the car's dashboard interface. Looking down the road, investors will want to keep an eye on who will own the driver data from these systems. "The most important challenge this industry has in front of it is organizing systems and defining roles in Big Data from the connected car," according to Mark Boyadjis of IHS Automotive.

Screen Shot

Source: Apple CarPlay.

Competitive challenges abound
Apple also faces tough competition in this space, not only from tech rival Google but Ford (NYSE:F) as well. The American auto manufacturer's hands-free SYNC technology has been gaining ground in the connected car market for years now. Ford first launched SYNC in 2007 with the help of Microsoft (NASDAQ:MSFT), and the software darling's Windows Embedded Automotive operating system currently powers SYNC in Ford cars.

Nevertheless, Ford's existing partnership with Microsoft won't stop it from adding Apple's CarPlay to its connected cars. Ford says it will include CarPlay in future Ford models, but that it will also continue working with Microsoft and other companies including Google. In fact, many of the same carmakers that plan to integrate CarPlay are also in bed with Apple's mobile rivals.

General Motors, for example, is making its cars compatible with both Apple's CarPlay technology and Google's Andriod mobile platform. Google's Android-based Open Automotive Alliance aims to challenge Apple in the race to dominate vehicle dashboards. The tech giant so far has the support of automakers including GM, Audi, Honda, and Hyundai -- a much shorter list of participants than Apple but a list nonetheless.

Ultimately, Apple and Google are both hoping to expand their mobile platforms beyond the smartphone market and into the connected car space. For now, we'll need to wait to see CarPlay in action when it's rolled out later this year in select Volvo, Mercedes, and Ferrari models. However, at this point automakers like Ford and GM hold the power when it comes to the latest connected vehicle technologies because it's still up to them how these platforms are integrated into their car's dashboards and infotainment systems.

How you can cash in on the Internet of cars
Every investor would've loved to grab a piece of Apple before it hit it big with the smartphone revolution. After all, that's what investing is all about: getting in on revolutionary ideas before they hit it big. The problem is, most investors don't understand the key to investing in hyper-growth markets. Connected cars are still in the early stages and there's a clear opportunity for you to cash in before this technology goes mainstream. Our team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this FREE eye-opening report.

Tamara Rutter owns shares of Apple and Microsoft. The Motley Fool recommends and owns shares of Apple, Ford, and Google. It recommends General Motors and owns shares of Microsoft. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information