Last week, Microsoft (NASDAQ:MSFT) showed off its Windows in the Car concept at its Build conference last week, which is aimed at competing with Apple's (NASDAQ:AAPL) CarPlay system and comes on the heels of Google's Open Automotive Alliance announcement earlier this year.

While Microsoft's Windows in the Car concept may be the future of automobile infotainment, the company faces some serious challenges before it gets there.

What is Windows in the Car?
Windows in the Car mirrors what's displayed on a smartphone onto a vehicle's in-dash infotainment screen. Some user interface modifications are also made, so that only the most relevant information is displayed.

The Windows in the Car system can tap into navigation, texts, sending and receiving phone calls, radio apps, and other applications. For now, the smartphone is connected via a USB port, but Wi-Fi connectivity is also in the works.

Why Microsoft needs this
There's a shift in the auto industry right now, away from separate software systems in vehicles that have little or no commonality with mobile operating systems. It's not unlike the bring your own device, BYOD, trend that's pushed IT departments to use standards to allow employees to use their personal mobile devices for work.

Apple's CarPlay is the first full-functioning BYOD system for cars, and it's already debuted in vehicles from Ferrari, Mercedes-Benz and Volvo, with more coming. CarPlay lets users access Siri, Maps, and iTunes; make phones calls; and access texts by tethering the vehicle's infotainment system to an iPhone 5, 5c, or 5s.

Not to be left out, Google wants to bring a version of Android to cars through its Open Automotive Alliance it set up a few months ago. On the alliance's website, Google said, "We're also developing new Android platform features that will enable the car itself to become a connected Android device."

Microsoft's hurdles and advantages
Let's talk difficulties first. One of them being that BYOD for cars is still unproven. While it may make sense that people want to use their own smartphone systems in the car, we don't know how well it'll play out for Microsoft or the other tech companies. I'm optimistic that it's what users want, but we just don't know yet.

Microsoft also has to sell Windows in the Car as its Windows Phone OS sits as just over 3% smartphone market share. That's not a promising number as carmakers decide which system to implement into their vehicle.

But Microsoft's biggest hurdle right now is the fact that Ford just dropped the company's current infotainment system, Sync. Ford was a longtime Sync partner and was Microsoft's largest client for the tech. That doesn't bode well for Microsoft as it tries to sell new companies on its latest infotainment concept.

The upside though, is that Microsoft has extensive vehicle infotainment experience. Google and Apple can't claim that. Apple likes to keep control over its systems and will likely be a less flexible partner than Microsoft.

Microsoft's last advantage is that it's building Windows in the Car with the Mirrorlink connectivity standard that many automakers and third-party vendors use. Mirrolink was originally created by Nokia, but the tech behind is now controlled by Car Connectivity Consortiumm, a large group of automobile and tech companies. Apple's CarPlay platform can only handle Apple's iOS (surpise!) while Mirrorlink can handle Windows Phone and Android, and could be tweaked to handle iOS as well.

Foolish final thoughts
Right now Microsoft, Google, and Apple are in a race to take over automobile infotainment systems, and it's really anyone's game. Microsoft tapping into the Mirrorlink standard will help, but the company really needs to build its OS market share to get users, developers, and automakers to get on board with Windows in the Car. Apple has the jump on Microsoft as CarPlay debuted earlier and is already in some vehicles, while Windows in the Car is still in the concept stage. In the end, consumer preference will drive which in-car OS people use, which means Microsoft has its work cut out for it.

The fully connected car is coming
After in-car operating systems, comes the "connected car" which will be able to transmit accident and location information to other vehicles, powered by the Internet of Things. But cars are just a small part of the IoT world, and much more is coming. For investors, the real trick is to find a small-cap company set to grow from a world filled with connected devices, all talking to each other. Our expert 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 eye-opening report.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Ford, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Ford, Google (A shares), Google (C shares), and 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.

Compare Brokers