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The Connected Cars War

Apple and Google duke it out for IoT mindshare and revenue

At the Geneva Motor Show Apple officially launched its new "CarPlay" product for cars, to some excitement. Apple has enlisted a number of big name auto manufacturers into the program, so you can expect to see CarPlay in your new vehicle sometime soon.

But what's new here? At first glance this is just a computer company providing its interface expertise to car companies, just like the deal between Microsoft and Ford that was announced way back at CES 2007. The list of features - entertainment, maps, messaging, voice control - looks very similar. So what's different, and why is Apple coming along seven years later?

I'm only guessing... but it seems rather obvious that it took some time for the car companies to realize that their traditional approach to in-car electronics was doomed. When in-car entertainment consisted of a combined radio and CD player, the car companies were within their comfort zone. Entertainment was just another module to be plugged in on the production line. But as soon as the dashboard started to contain software, the car companies obviously struggled. The navigation and entertainment systems hard-wired into cars were, and still are, a whole lot less functional and more klutzy than the equivalent apps available on smartphones and tablets.

The Ford arrangement with Microsoft brought in outside expertise to the design of an in-car system. But the mission was misdirected. Microsoft Sync gave us a version of Windows designed specifically for cars, and ran inside the car's dashboard computer. But what we all wanted and needed was different: we just wanted to plug in our smartphones.

With a smartphone or tablet safely cradled, a power supply, and an interface into a sound system, we have everything we need, already there in a compact and familiar Internet-connected package: stored music, online streaming, radio stations, navigation, reminders, address book, social networks... and so on. We don't need another device built into the car; we need the ability to use the device that's already part of our everyday lives. Apple realized this too, and maybe it took a while to convince the car manufacturers to face this reality. CarPlay provides that ability to plug in, and adds some usability features that, we are told, will also make it easier and safer.

Google seems to be headed in the same direction with their Open Auto Alliance, announced at CES 2014. While the press releases are a bit vague it's clear from this picture that this too is not Android built-in to the car, it's Android brought into the car in the form of a tablet that can be plugged in.

With Apple and Google aligned in concept, this has to be seen as a major shift in the car industry. Now those of us who regularly use rental cars, share cars with others, and use Zipcars can simply bring our entertainment and information with us.

Is it also, as suggested by at least one observer, the start of a "Smart Car War" to win space inside cars, with Google and Apple battling it out? Perhaps, but maybe not more than they are battling it out already. What we have here is actually a pretty simple idea, already implemented in a half-baked way by anyone who has used a smartphone for navigation, information and entertainment while driving a rental car or a borrowed car, in preference to digging out the car manual to work out how to use the moronic built-in GPS. What Apple and Google will give us is a safer and tidier way to use our own devices. The interface between the tablet and the car is also fairly simple, although not necessarily standardized. It seems to me that since smartphones are becoming more important in peoples' lives than cars, the auto manufacturers cannot afford to partition their target markets rigidly so that (for example) only iOS users can buy a BMW, and only Android users can buy an Audi. Moreover, many families contain a mix of devices and people sometimes change brands when they buy new devices. Will we have to buy a new car when we buy a new smartphone? Probably not.

The Smart Car wars are more likely to be around Apple and Google trying to maintain exclusivity, when it is clearly in the interests of the car companies to have a generic interface that can allow any device to be plugged in. Already we see that the "alliances" are not exclusive, with Honda, GM and Hyundai in both camps, Apple and Google. (Ford is also there with Apple, but is also now working with Blackberry, which seems not only to be a deliberately contrarian move, but also leaves Microsoft out in the cold in this market, for the time being.) We can assume there will be push-back from the car companies against any solution that limits their target market, or that increases costs by creating a need to provide different interfaces as options. Moving towards a single standard interface for all devices wouldn't be technically difficult, although that's no reason to be confident that it will happen soon. While we're waiting for standardization to happen, we can look on the bright side: here's another business opportunity for someone, because Amazon will sell adapters.

What both Google and Apple are hinting at though, is something even bigger than entertainment, and something that demands new capabilities and new products, not just a better way of using existing mobile devices. This is the incorporation of smart devices into autonomous car management. In discussing this, we need to keep driver and passenger features separate from car management features. Driver and passenger features - entertainment and information, essentially - are what Google and Apple are addressing in their recent announcements. But we can be sure that both companies see this as a way to get under the hood, and the ultimate aim is to deliver real built-in automotive management, which is not something you want or need on your smartphone.

Apple and Google want to create "Internet of Things" technologies for vehicles. These are technologies and features that aim to make driving safer, more fuel efficient and less stressful, such as systems that will allow cars to communicate and interact with each other and with external traffic management systems to reduce congestion and delays; systems that can sense the presence of other cars and act autonomously to avoid accidents; systems that could override driver commands in accordance with user-defined policies for safety and fuel consumption; systems that can enable cars to group into ‘platoons' or ‘road trains' which reduce accidents and cut journey times. Road trains have another advantage: the driver can kick back and watch a movie or visit Facebook or make a business call or two: the tablet will be right there on the dashboard.

In this new world of connectedness and fluid partnerships and services, the pace of business model shifts and service complexity is rising to a level unlike anything we have seen before. Monetizing the IoT opportunity requires a billing and partner settlement platform capable of supporting today's business model while easily adapting and future-proofing tomorrow's.

More Stories By Esmeralda Swartz

Esmeralda Swartz is CMO of MetraTech. She has spent 15 years as a marketing, product management, and business development technology executive bringing disruptive technologies and companies to market. Esmeralda is responsible for go-to-market strategy and execution, product marketing, product management, business development and partner programs. Prior to MetraTech, Esmeralda was co-founder, Vice President of Marketing and Business Development at Lightwolf Technologies, a big data management startup. Esmeralda was previously co-founder and Senior Vice President of Marketing and Business Development of Soapstone Networks, a developer of OSS software, now part of Extreme Networks (Nasdaq:EXTR). At Avici Systems (Nasdaq:AVCI), Esmeralda was Vice President of Marketing for the networking pioneer from startup through its successful IPO. Early in her career, she was a Director at IDC, where she led the network consulting practice and worked with startup and leading software and hardware companies, and Wall Street clients on product and market strategies. Esmeralda holds a Bachelor of Science with a concentration in Marketing and International Business from Northeastern University.

You can view her other blogs at www.metratech.com/blog.

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