Huge success paves the best way for entry into the automotive business

Craig Federighi, Apple’s senior vice president of software engineering, speaks about CarPlay on stage during Apple’s Worldwide Developer Conference on June 5, 2017 in San Jose, California.

Josh Edelson | AFP | Getty Images

In the early 2010s, automakers and their suppliers were excited about creating sophisticated auto dashboard apps that went beyond a CD player and tiny LED screen.

Automakers worked with companies like Microsoft to develop maps, music, and road assistance services that are often bundled into one upgrade package. They joined large consortia to create industry standards for connecting smartphones to cars.

Then Apple came in and changed everything.

Apple introduced CarPlay in 2014 to integrate the iPhone and the dashboard of a car. Since then, it has become ubiquitous in new cars.

Over 80% of new cars sold worldwide support CarPlay, Apple said last year. That corresponds to around 600 new models, including cars from Volkswagen, BMW and Chrysler. One of the longest-running holdouts, Toyota began recording CarPlay in 2019.

It’s also a top feature for many drivers and car buyers. 23 percent of new car buyers in the US say they “must have” CarPlay, and 56 percent are interested in having CarPlay when buying a new vehicle, according to a 2017 Strategy Analytics study. When Ford’s highly anticipated electric F-150 hits stores, it will support CarPlay.

Apple has been able to fit in between customers and car companies, making sure the user interface is what every iPhone user wants while on the move. It is an underrated triumph for one of the most successful companies in the world. CarPlay does not directly contribute to Apple’s sales or profits. But it ensures the continued loyalty of iPhone users and gives Apple a path into the auto industry if it wants to expand.

The performance of the smartphone

Control your music easily in CarPlay with iOS 13.

Most cars use an infotainment operating system based on Linux, BlackBerry QNX, or Google’s Android Automotive to run a screen embedded in the car’s dashboard. The infotainment systems often have their own music or map software and automotive companies sell wireless subscriptions and other updated features for them.

CarPlay runs on these infotainment operating systems and allows iPhone owners to access their most important apps while driving in a way that is safer than looking at their phone. Via CarPlay, users can access Apple or Google Maps, play Apple Music or Spotify, or dictate a text message to be sent home. All processing is done on the phone itself.

CarPlay and a competing Android program, Android Auto, are not auto operating systems. It really is phone software, said Mark Fitzgerald, an analyst at Strategy Analytics. Ultimately, it’s like using your car’s display as an external monitor for your phone.

“What’s in your car when you plug it in is essentially a client software client that just renders data from your phone to your infotainment system’s display,” said Fitzgerald.

Many users find this to be all they need.

When users have both CarPlay and an integrated system, they typically use CarPlay. 34% of CarPlay users surveyed by Strategy Analytics in 2018 said they only use CarPlay in the car and 33% said they mainly use CarPlay. Only 4% of the users surveyed state that they use the embedded system in favor of CarPlay.

Apple has also expanded CarPlay over the years to make it more valuable to iPhone owners.

When CarPlay first came out, a cable was required to connect your phone to your car. Apple has been supporting Bluetooth wireless connections since 2015, so users can start CarPlay by simply getting in the car and connecting their phone. While it took a few years for new cars to support this feature, it has now become widespread.

Last summer, Apple and BMW announced that users could use their iPhone to unlock car doors or even start the engine. Apple participates in a standard group to extend the function to other automakers.

Google has similar software called Android Auto that extends its Android operating system into the car’s dashboard. CarPlay and Android Auto are not mutually exclusive – a car that supports one usually supports the other. It’s popular as its Android app was downloaded 100 million times by 2020.

When automakers realized that smartphones’ computing power and software would improve much faster than they could improve their built-in infotainment systems, they tried to adapt them.

The Car Connectivity Consortium, to which most of the top car manufacturers and major suppliers belong, has developed Mirrorlink, an open standard for connecting smartphones to car systems. It was introduced in 2011 but was quickly superseded by Apple and Google.

Samsung, the biggest supporter of the standard and who also owns a major dashboard vendor, stopped supporting Mirrorlink in its phones last year. No other major Android brand supports this yet, and the consortium’s website only lists a few older devices as supported devices.

A big leap to self-driving cars

The new dashboard mode in CarPlay.

Mack Hogan | CNBC

Apple’s success with CarPlay explains the auto industry’s interest in rumors that Apple is planning to build its own car. If Apple has had so much success in adopting the dashboard, the company may be able to turn that into a competitive vehicle.

According to media reports, Apple has been researching at least the software for a self-driving electric vehicle since 2014. Earlier this year, Hyundai said in an official statement that there were talks with Apple about making its car before it went back, most likely due to Apple’s strict confidentiality requirements. Hyundai finally said it was no longer in talks with Apple.

Automotive executives showed outward confidence but respected the challenge an automotive Apple could pose. The CEO of Volkswagen said he was “not afraid” of Apple’s entry into the market. The BMW CEO said he “sleeps peacefully at night” in response to questions about Apple’s plans. Toyota’s CEO warned that making a smartphone is much different than making a car.

Apple’s final plans remain unclear. According to a Reuters report, Apple could still choose to sell software and hardware – an autonomous driving system – to automakers rather than designing its own vehicle.

However, if Apple were to enter the auto world, it would require a fundamentally different strategy than CarPlay.

CarPlay is mainly about making the iPhone more desirable. It also offers other benefits to Apple, such as: B. Increase the value of Apple Music subscriptions. Users want to play music in their car but need an easy way to control it while driving. In a March release, Citi analyst Jim Suva estimated that CarPlay could increase Apple’s annual service revenue by $ 2 billion.

But CarPlay itself is not a money maker. Right now, CarPlay is free in most new vehicles, from base models to luxury SUVs. BMW used to charge users a monthly fee to access CarPlay, but it was discontinued in 2019 after customers complained.

Apple says automakers don’t charge any fees for using the software. It’s not a licensing deal. (If it did, Apple could pool it at $ 750 per unit and sell 9 million units by 2025, which Suva estimates will generate $ 6.5 billion in revenue.)

Apple could get a foothold in the car to support more of its ambitions. It already uses its App Store sales platform to encourage software developers to optimize their apps for the car, in categories such as finding a car charger, ordering groceries, or finding a parking space. These features would be a key part of an Apple in-car experience. Apple also collects data necessary to run CarPlay, and even if that data is anonymized to ensure user privacy, Apple provides a lot of raw data on what people are doing in their cars.

However, CarPlay has not been able to power a self-driving car, which requires various chips and special hardware that are qualified for use in the car.

If Apple were to sell software to self-driving automakers, it would take a different form from CarPlay. Google’s automotive industry fragmentation is a good example: it is building Android Automotive as its car operating system, Android Auto as its CarPlay competitor, and funding the development of Waymo, a self-driving tech company and auto service that is now a sister company within Alphabet.

However, CarPlay’s success could lead to strong demand for an Apple Car – or at least ensure that consumers don’t dismiss the idea as crazy.

Apple usually presents updates to its CarPlay software at the annual WWDC developer conference, which begins on June 7th this year.

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