Google (NASDAQ:GOOG) (NASDAQ:GOOGL) formally unveiled Android Auto, its version of Android for cars, at the Google I/O developers conference on June 25.

Android Auto is similar to Apple's (NASDAQ:AAPL) CarPlay in that it mirrors a streamlined version of the smartphone's interface onto the vehicle's dashboard, where it can be operated via touchscreen or voice commands. 

Android Auto. Source: Google.

The dashboard also features buttons for navigation, phone control, music, and other typical infotainment functions. Drivers can use Voice Search to search for and navigate to locations, or speak an artist's name to listen to songs from Google Play Music. Email and text messages can also be read and replied to via speech-to-text dictation. 

The app can also use data regarding driving habits collected from Google Maps and Google Now to proactively search for time-saving shortcuts. For example, if Android Auto knows that you need to get to work by 9:00 every morning, it will search for shortcuts based on traffic and map out a new route by the time you get in the car.

Over 40 partners across the automotive and tech industries, including General Motors, Ford, Honda, LG, and Panasonic, are supporting Android Auto through the Open Automotive Alliance (OAA) -- an alliance that was announced at CES 2014 in January. Android Auto certainly seems like an ambitious effort, but can Google unify the fragmented auto industry as it did with mobile phones and tablets?

The business of smart cars
The upcoming battle over "smart cars" has a lot in common with the battle over smartphones that started in 2007 with Apple's introduction of the iPhone. Four of the key players are the same -- BlackBerry (NYSE:BB), Apple, Microsoft (NASDAQ:MSFT), and Google -- but this time BlackBerry has the upper hand.

BlackBerry's QNX, a Unix-like operating system for embedded devices, powers roughly 50% to 70% of all automobile infotainment systems. Auto manufacturers modify QNX for their own vehicles, in the same way that Samsung, HTC, and Sony can modify Android's appearance for their handsets. QNX is easy to develop apps for, since it is compatible with Java, HTML5, OpenGL, ES, and Android packages. Since QNX is so flexible, it has attracted just as many partners as the OAA.

Therefore, rather than develop a full system to compete against QNX, Google's OAA partners will run Android Auto on top of QNX, meaning that the app will merely "take over" as the car's infotainment interface. Apple's CarPlay also runs on top of QNX.

Apple's CarPlay. Source: Wikimedia Commons.

In other words, neither Android Auto nor CarPlay are actually operating systems, but rather driver-facing apps that "hook" onto an underlying operating system like QNX to mirror a phone-based app.

Where does that leave Microsoft?
QNX's only real competitor in full vehicle operating systems is Microsoft's Windows Embedded. However, Windows Embedded's market share is fading fast, due to QNX's versatility and Windows Embedded's reputation for poor functionality.

Back in February, Ford replaced Windows Embedded Automotive with QNX in its new vehicles in response to complaints about frozen screens, poorly responsive haptic controls, and system reboots while cars were in motion. Looking ahead, things won't get any easier for Windows Embedded, considering that both Android Auto and CarPlay were designed with QNX systems in mind (although both could eventually be made compatible with Windows Embedded).

In April, Microsoft unveiled Windows in the Car, a platform that mirrors Windows Phones' functions onto vehicle dashboards in a similar manner as Android Auto and CarPlay, with Cortana serving as a voice-operated driving assistant. Windows in the Car uses MirrorLink, a "standard language" that helps smartphones synchronize with car dashboards. MirrorLink is the official technology of the Car Connectivity Consortium, an alliance similar to the OAA. Several companies, such as GM and Honda, are members of both groups.

Microsoft's Windows in the Car. Source: Microsoft.

Windows in the Car is expected to arrive much later than CarPlay and Android Auto, which will put Microsoft in a tough starting position, considering that Windows Phones only control 3% of the global smartphone market. It's unclear if Microsoft intends to run Windows in the Car on top of QNX or exclusively on Windows Embedded, but it would make more sense to make it compatible with both.

The Foolish takeaway
In conclusion, Google's path forward in the smart car industry will be very different from the one it took with mobile devices.

With phones and tablets, Google needed to dig deeper and unify a fragmented universe of hardware with a single operating system. With cars, Google simply needs to leverage its dominant market share in smartphones (52.5% in the U.S. and 80% worldwide) to make things difficult for Apple and Microsoft. BlackBerry, on the other hand, could benefit no matter which tech giant emerges victorious.