Can Apple Corner the Connected Car Market?

Google (GOOGL -0.15%) has another high-tech rival to contend with in the race to integrate its mobile platform into the connected car. Apple (AAPL -1.92%) 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.

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 (GM -0.04%) 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.

Source: Apple CarPlay.

Competitive challenges abound
Apple also faces tough competition in this space, not only from tech rival Google but Ford (F -0.57%) 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 (MSFT 0.52%), 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.