Here's How Microsoft Corporation Can Grow in the Connected Car Market

Microsoft wants to enter the connected car market. Will Apple and Google allow it to succeed?

Apr 21, 2014 at 11:00PM

Microsoft (NASDAQ:MSFT) recently showed off its Windows in the Car concept. The solution will compete with Apple's CarPlay. It is also coming on the heels of Google's Open Automotive Alliance initiative. Critics say Microsoft's biggest hurdle is that its Windows OS owns just 3% of the smartphone market. But Microsoft's extensive vehicle infotainment experience, its link with the Mirrorlink connectivity standard, and the company's planned new features will give it a chance to succeed in connected cars.

Extensive experience
Microsoft has been in the in-vehicle market for more than 15 years. Many of the cars on the road use Windows or Windows CE Automotive. With Microsoft's experience, it will keep supporting existing customers and be in a position to woo new ones. Analyst Thilo Koslowski believes that 80% of new vehicles will be equipped with infotainment units by 2020, up from just 40% today. The market has a space for a company with an extensive experience in the sector.

The Mirrorlink connection
Analysts point out that Microsoft will face challenges in the infotainment sector, but the company is not in a hopeless situation. It is building Windows in the Car with the Mirrorlink connectivity standard. The standard is compatible with Windows Phone and Android. According to Gartner, Android is on the course to surpass one billion users across all devices in the operating system market in 2014. In other words, Windows in the Car will gain steam if Microsoft collaborates with Android.

Microsoft planned new features
Critics complain that the Mirrorlink technology has lost a significant part of its market share in the past few years. They claim it might hamper Microsoft going forward. However, Microsoft can mitigate the challenge with planned new features in Windows in the Car. It plans to reduce the cognitive load during driving. Additionally, it also wants to replace virtual buttons with more voice commands and minimize effects of different screen sizes. According to Transparency Research, the global connected car market is expected to reach $131.9 billion by 2019. With new features in its system, Microsoft stands a chance of getting a slice of the market.

Apple's CarPlay enables consumers to control different activities in the car. It has already debuted in vehicles from Ferrari, Mercedes-Benz, and Volvo. Apple is interested in the connected car market based on its growth prospects. IDC believes that the new market for intelligent systems -- often referred to as the Internet of Things -- could grow as large as $1.7 trillion by 2017. There is going to be a lot of demand for connected cars.

Google wants to stage a coup in the auto market with its Open Automotive Alliance. The alliance was introduced to establish a common platform for Android integration in vehicles. The global connected car market will be worth $54 billion in 2018, according to research firm SBO and the GSMA. Google's initiative can be a means to sustain its revenue growth through the sector. 

Foolish takeaway
While Microsoft's Windows in the Car concept may be the future of the infotainment sector, the product will still face obstacles. However, Microsoft's extensive experience in the sector, the connection with the Mirrorlink standard, and the company's planned new features give it a chance in the sector.

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Mark Girland has no position in any stocks mentioned. The Motley Fool recommends Apple and Google-Class C Shares. The Motley Fool owns shares of Apple, Google-Class 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.

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