Apple Inc. (AAPL, Financial) has unveiled what it considers ground-breaking technology for the hands-free mobile market. Essentially a luxury accoutrement for iPhone users, CarPlay is geared towards increasing safety and providing the ultimate hands-free driving experience. This in-car technology makes it possible for users to enjoy seamless integration between a dashboard and a smartphone.
Among the purported features that are available are iTunes radio and various third-party apps. Presently a handful of car manufacturers already support this integrated software, including General Motors, Ford, Honda, Jaguar, Mitsubishi, Nissan, Land Rover, BMW and others. Cars that are equipped with Bluetooth technology or a USB jack are capable of supporting this upgraded software. Since iPhone is increasingly dominating global sales, the technology is geared towards users on the upper end of the financial spectrum. CarPlay creates a mirror site on the dashboard, of your iPhone screen. Users are able to navigate, call, text and perform other functions with hands-free technology. Since this is catering to higher income consumers, cars valued at under $20,000 have been discounted from consideration.
Apple is tapping ever deeper into its product range and this latest foray into the luxury car market is designed to give it an edge over Android. This latest innovation from Apple is designed to help the stock recover from mediocre performance of late, and to become an innovator once again. AAPL stockholders are not entirely convinced that the move will affect stock prices positively just yet. Shares are up by 22% over the course of 2013 in tandem with the S&P 500 overall. This is a big step up from Apple's performance during 2012. Over $90 billion in annual sales are generated from iPhones. CarPlay will hardly make any significant difference to the bottom line. If car sales meet the predicted figure of 16 million during 2014 and 8 million cars adopt CarPlay, Apple will receive $500 per vehicle that is equipped with the technology. This translates into $4 billion annually – just 2% of Apple's total revenue.
Android's Response to CarPlay
The global popularity of Android smartphones and tablets cannot be ignored when it comes to the wireless technology in automobiles. Since it is foolhardy to hitch your wagon to only one operating system, car companies are likely to consider Android in all future decisions. The fact of the matter is that Android dominates the smartphone market and this is not lost on car manufacturers. For example the 2015 Mercedes C Class – which will be featuring CarPlay – is receptive to showcasing a similar product by Android, when it becomes available. For its part, Mercedes-Benz is fully aware of Android's capabilities for entertainment and information (infotainment) with an Android in-car system.
The ability of these technology companies to meet the exigencies of the markets by maximizing screen size, functionality, usability and mobility is paramount. Analysts agree that Google Android and Apple Inc. are fairly evenly matched in the car/smartphone market. Other software and technology giants that may be facing pressure to compete for market share include BlackBerry and MS Windows Phone. It’s important to note that Apple and BlackBerry already have a functional working relationship because BlackBerry provides software – QNX software – that supports CarPlay technology. Presently, QNX has a 50% market share of the infotainment systems in the automotive industry and it counts Apple among its biggest clients. CarPlay will be available as an iOS 7 update and will be compatible with multiple iPhone versions including iPhone 5s, iPhone 5c and iPhone 5.
