The world’s second largest smartphone player Apple today forayed into the automotive sector in a much bigger way by announcing its latest offering “CarPlay” at the 2014 Geneva Auto Show. Apple’s CarPlay is s first major step by Apple to expand its business model by monetizing its software & services instead of hardware.
With CarPlay, Apple looks forward to bring iOS based platform which has been designed ground-up to revolutionize the in-vehicle dashboard. The entire ‘Applesque experience’ in the car is centered around its popular cloud-based voice-assistant Siri, Apple maps and Apple iTunes encompassing the major forms of content being used in the car. Apple has announced multiple marquee partners at the launch and more to follow which will be rolling out CarPlay in select models and select markets globally:
This opens up a whole new opportunity for the Cupertino vendor, entering a new vertical with new offering. CarPlay will be the halo service to catalyze the sales of iOS devices for the car owners with CarPlay in-dash. While this is a step in the right direction but we caution the challenges for Apple are plenty in this new space stopping it from becoming the “the gold standard” in the automotive industry.
1. Apple Maps: The quality of the Apple maps is highly questionable even in US plus a sub-par user-experience and limited POI database. Apple needs to license quality maps from providers such as Nokia’s HERE since it has already un-friended Google.
2. Apple Siri: The Siri performance will be strongly challenged on the road especially and will need a highly reliable network connection in future for use-cases beyond in-vehicle push-and-hold types.
3. Niche Target: Apple is trying to revolutionize Apple iOS devices (iPhone or iPad) experience in the car with CarPlay but leaves out millions of non-iPhone car owners in the dark.
4. Limited third Party Ecosystem: iTunes alone won’t be to catalyze the in-vehicle media usage and Apple will need to eventually expand / partner with the third party apps and services (e.g. Pandora, Spotify, NetFlix, Games etc.) to bring more content and stickiness to the dashboard.
5. Business Model: Apple has been making significant profit margins by selling premium hardware & locking-in the users with its software and services. This time its the other way round and will be interesting to see how Apple monetizes its platform and services to gain comparable margins or if CarPlay will remain just a minimal break-even product enabling multi-screen play to drive further iPhone or iPad sales.
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