Winners and Losers of the Battle That's Raging in Your Car

It's Apple versus Google, BlackBerry versus Microsoft, and more overlap than you can shake a stick at. Where is the connected car market going?

Jul 7, 2014 at 10:30AM

Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) are facing off head-to-head in the connected car market. BlackBerry (NASDAQ:BBRY) is an established leader in the car infotainment field, thanks to its acquisition of real-time software platform QNX. Meanwhile, Microsoft (NASDAQ:MSFT) has battled BlackBerry for domination of the in-car experience for years -- and also wants a slice of the new market that Apple and Google are fighting for.

How will this four-way collision work out?

Dashboard
In Apple's CarPlay system, Siri will read your messages and take dictation. Source: Apple.

The latest salvo comes from Apple, which recently added nine vehicle brands to its CarPlay portfolio. CarPlay lets you connect your iPhone, iPad, or other iOS device to your car's factory-installed sound and video systems. This way, Apple's software replaces the manufacturer's navigation, communication, and entertainment options with Cupertino's own. At this point, 29 different automakers either support CarPlay today or plan to add such support in upcoming model updates.

Hot on Apple's heels, Google's Android Auto platform does the same thing as CarPlay -- only with Android-based software instead of iOS versions. Google's in-car software is, or will soon be, working with cars from 28 different makers.

Microsoft's "Windows in the car" idea is still just in the concept stage. Once again, it would offer solutions similar to Apple's and Google's in-car software, only with Windows-based tools instead of iOS or Android. This one's not shipping yet, and Microsoft doesn't have any car-building partners announced. But signing automakers up will not be a problem.

You see, Apple's 29 automobile partners and Google's 28 don't add up to 57 different brands. There aren't that many major brands in the American car market to begin with.

There's plenty of overlap between Apple's and Google's car systems compatibility. Twenty brands have promised to support both systems, including such high-volume stalwarts as Chevrolet, Ford, Nissan, and Honda. Apple only has nine exclusive agreements so far, versus Google's eight, and even these might only last until the other team of Silicon Valley guys sits down to have a talk with the car designers.

I sense an industry-standard interface happening here, which will let car makers connect to Android and iOS devices via strictly defined connections and commands. At worst, we'll end up with two fairly ubiquitous standards, kind of like having a choice between standard or high-octane fuels for the same car.

When that happens, it'll be easy enough for Microsoft and others to simply hook into these established systems. Apple may or may not be willing to open up its car-connection platform to others, and would most likely charge hefty royalties for using CarPlay work-alike technologies. Google is more likely to invite third parties to, er, the party, and is not known for adding license fees or royalties to its open technology platforms.

Microsoft will find a way to hook into those tempting factory-installed systems, probably on the back of Google's efforts. Sweet, sweet irony.

So there's plenty of room for new entrants in the bring-your-own-experience infotainment space.

Qnx
This Mercedes concept car runs on the QNX platform. Source: QNX.

Great, but that's just half the market, right?
How about the factory-original systems, then?

The short answer here is, the influx of CarPlay, Android Auto, and Windows for cars will do nothing to change the systems they hook into.

The mobile-based solutions are able to hook into various brands of in-car systems. Microsoft provides Windows Embedded software for the navigation and entertainment systems in Nissan, Ford, and Fiat today. All of these work with both Apple CarPlay and Android Auto.

Likewise, BlackBerry's QNX runs these functions in models from Audi, Hyundai, and Chrysler. Again, all three will also work with both Google and Apple. Indeed, QNX lists both Apple and Google among its supported partners for mobile connectivity. Microsoft isn't on that list (yet?), but we already looked at the Google-based workaround.

I suppose that Android and Apple could make a play for the basic systems in a handful of brand-exclusive deals. But that would be a tougher slog than Microsoft's planned invasion of the plug-in space. And when everyone and their uncle already support your mobile solution instead, why worry about penetrating deeper into the infotainment stack? It's a high-cost, high-risk idea with uncertain returns.

Apple most certainly doesn't work that way, and Google would have to partner up with a hardware specialist anyhow. What's the point?

Android Dashboard
The interface in Google's Android Auto should look familiar to Android users. Source: Google.

Where is the connected automobile market going next?
Bottom line, the factory-installed systems market should stay fairly intact for the foreseeable future, which is good news for established leaders BlackBerry/QNX and Microsoft.

The CarPlay-like market for mobile devices that essentially plug in and take over the basic system's software functions, on the other hand, is much more interesting. This is a brand new market, still building its competitive structure. Microsoft can steal some market share before the field is set in stone, and there's even room for totally new upstarts. It's a dynamic market with all kinds of built-in opportunity, and the best solutions here also score an impressive selling point for their mobile devices.

"Upgrade your car today with the best navigation and entertainment hub on the market!"

Just imagine how Microsoft's mobile fortunes would change if the company could make that claim with a straight face. Or how much face Apple or Google would lose if anybody else stole this tag line.

The automobile connectivity market is worth fighting for, thanks to these influence tendrils into the larger smartphone and tablet spaces. Expect these battles to heat up over the next few years, as the car giants in Detroit and Tokyo sit back and enjoy the show. It's always fun to have rivals fighting over your favors, after all.

Leaked: Apple's next smart device (warning, it may shock you)
Believe it or not, Apple is actually diving into brand new markets even more exciting than the in-car experience. Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Anders Bylund owns shares of Google (A and C shares). The Motley Fool recommends Apple, Ford, General Motors, Google (A and C shares). The Motley Fool owns shares of Apple, Ford, Google (A and 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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