Microsoft’s Windows in the Car vs. Apple’s CarPlay: The Business of Smart Cars

Microsoft (NASDAQ: MSFT  ) recently revealed Windows in the Car, a conceptual platform to adapt Windows Phones' apps and functions into vehicle dashboards, during its 2014 Build Conference. The platform's interface resembles a hybrid of Microsoft's mobile and desktop operating systems, and the user interface is streamlined for voice commands.

Windows in the Car uses MirrorLink technology, which combines a wide array of wired and wireless technologies into a "standard language" for smartphones to synchronize with car dashboards. MirrorLink is the official technology of the Car Connectivity Consortium, a group of auto and electronic manufacturers dedicated to developing open standards for smartphone to car communications.

The consortium includes auto manufacturers Honda, Toyota, and Volkswagen, as well as car audio companies Alpine and Pioneer. MirrorLink devices are currently compatible with select Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) Android phones from Sony and Samsung, as well as older Nokia Symbian phones.

Windows in the Car. Source: Microsoft.

Apple's (NASDAQ: AAPL  ) new CarPlay for iOS devices, a similar infotainment and navigation system, is not compatible with MirrorLink. Google is also working on a similar project, known as the Open Automotive Alliance, which replaces other in-car technologies with Android.

The unexpected gatekeeper
Microsoft, Apple, and Google are clamoring for a piece of the "smart dashboard" market, but here's the ironic twist -- the auto market's gatekeeper is fallen smartphone giant BlackBerry (NASDAQ: BBRY  ) .

BlackBerry might only have a 0.6% global market share in smartphones, but it owns QNX, a Unix-like operating system designed for embedded devices. Analysts estimate that QNX has a whopping 50% to 70% market share in automobile infotainment systems. QNX is compatible with Java, HTML5, OpenGL ES, and Android packages -- making it a software developer's dream platform.

BlackBerry also leverages partnerships with Apple, Nuance, Slacker, Weather Network, and other companies to integrate iOS devices, speech recognition, streaming Internet radio, local weather forecasts into its QNX CAR platform.

It's a lucrative package, and one that convinced Ford to dump Microsoft's Windows Sync, its forked version of Windows CE, for QNX in February. Ford stated the switch was made because QNX was cheaper to license, but analysts believed that it was also because QNX was more stable and feature-rich than Windows CE.

The upcoming clash between QNX and Android
Apple designed CarPlay to work with QNX, just as Microsoft built Windows in the Car to be compatible with MirrorLink. Neither Apple nor Microsoft ever planned to design a brand new "smart" OS for cars from the ground up. Rather, both companies are rolling out new systems that are compatible with existing ones.

Apple's CarPlay mirrors an iOS display in a similar manner to AirPlay's mirror feature for iOS and OS X devices. However, CarPlay integrates an "eyes free" mode for Siri, enhanced satellite navigation, hands-free phone controls, music controls, and iMessage features into the dashboard. Apple's CarPlay is already backed by a plethora of auto manufacturers, including Ferrari, Mercedes-Benz, Volvo, BMW, General Motors, and Nissan.

Apple's CarPlay. Source: Apple.

Google, on the other hand, is planning to stage an Android-like coup of the auto market with the Open Automotive Alliance (OAA), introduced in January to establish a common platform for Android integration in vehicles. Since Android is the dominant mobile operating system in the world, the alliance has already attracted major companies like General Motors, Honda, Audi, Hyundai, and Nvidia. The alliance has a shared goal of equipping the first cars with full Android integration by the end of 2014.

Why Windows in the Car might not matter
Although QNX is installed in up to 70% of modern vehicles, the fact is that Apple and Google remain the dominant names in smartphones. Apple still controls 38.7% of the U.S. smartphone market, while Google Android devices account for 55%, according to recent figures from Kantar. Therefore, smart car technologies like MirrorLink and QNX must be compatible with iOS and Android devices, but not necessarily vice versa.

That's why Windows in the Car will have a tough time getting off the ground. Windows Phone devices only account for 5.3% of the U.S. market. To make matters worse, Microsoft's reputation in the auto industry has been on the rocks ever since Ford dumped Windows Sync.

Auto manufacturers are eager to support Apple's CarPlay and align their vehicles with Apple's sleek iPhones, but I doubt that the same manufacturers will flock to Microsoft. To top all that off, Microsoft has gone with MirrorLink tech, which has lost significant market share over the years, instead of market leader QNX.

Why Windows in the Car might matter
Those challenges are certainly daunting, but Microsoft believes that it can overcome them with new features. During its demo, Microsoft demonstrated that Windows in the Car was focused on four key goals -- reducing the "cognitive load" (need to think) during driving, the driver's "eye time" on the screen, minimizing the effects of different screen sizes, and replacing virtual buttons with more voice commands.

Ford and Windows, during happier times. Source: Wikimedia Commons.

Moreover, just because the dashboard system runs on Windows doesn't mean that it will only be compatible with Windows Phones. Not all QNX vehicles, for example, are compatible with BlackBerry phones, and not all Windows CE/Embedded Automotive 7 vehicles are compatible with Windows Phones. Therefore, Windows in the Car might gain steam if Microsoft plays nice with other mobile operating systems -- something that Apple doesn't plan to do with CarPlay.

In conclusion, the battle for your vehicle's operating system will heat up considerably over the next few years. Gartner analyst Thilo Koslowski believes that 80% of new vehicles will be equipped with infotainment units by 2020, up from just 40% today -- leaving a new battlefield wide open for Apple, Google, and Microsoft to continue their pitched battle for supremacy in cloud-connected devices.

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