Google Set To Challenge Microsoft And Apple In The Connected Car Market

| About: Alphabet Inc. (GOOG)

On January 6, 2014 Google (NASDAQ:GOOG) formed a new alliance that will bring Android, the world's largest open platform to the dashboard of your car. The alliance is named as Open Automotive Alliance (OAA).

Open Automotive Alliance (OAA).

To begin with, Google has teamed up with automotive and technology leaders Audi, GM (NYSE:GM), Honda, Hyundai and Nvidia (NASDAQ:NVDA). But, the company wants to extend the alliance further as it invites other automotive and technology companies to join the alliance.

As mentioned by the company:

"But this is just the beginning; we welcome other automotive and technology companies to join the OAA, to work together to build a common platform to drive innovation in the car and bring Android to the open road."


According to the release the alliance is a "new partnership that will bring Android, the world's largest open platform, to the open road."

For Google, the basic purpose of the alliance is to make Android an integral part of cars' built-in controls and in-dash display. The alliance will customize and enhance its Android platform for cars through open development model. The alliance intends to design the platform in a way that it can make driving safer, easier and more enjoyable for everyone by enabling automakers to easily integrate cutting-edge technologies in the built-in controls and in-dash display of the cars. As in the past, Android for cars will be available to developers so that they can create new apps to further make it more popular and useful.

Target market and the market size:

The company has been targeting the connected car market with the alliance. The number of cars equipped with factory-fitted mobile connectivity is expected to rise at a rapid pace due to increasing numbers of safety and security features, as well as infotainment and navigation services that can be delivered/accessed through the connected cars.

The connectivity can be achieved through embedded systems and also through smartphone based connectivity systems. Embedded systems are totally integrated into the car and both the connectivity and the intelligence are embedded into the car. Smartphone based connectivity systems need a user's smartphone to be connected to the car first.

  • Market size: forecasts that more than 50% of cars sold worldwide in 2018 will be connected, and the total connected car shipments will reach 59.86 million, representing a compounded annual growth rate of 41.2% (from 2013 to 2018). The market will present direct revenue channels from content, applications and services.

The global connected car market will be worth $98.42 billion in 2018. The market is a global opportunity as the revenue will be distributed evenly among the major geographic regions (see the table below)


The company is not the first one to enter the market. Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) were among the first tech giants to announce its plans for the market.

  • Apple's presence:

At its last World Wide Developer Conference, Apple unveiled "iOS in the Car".

"iOS in the Car" is Apple's iOS version for cars, which mirrors iPhone to in-car display and controls, and allow user to access Maps, messages, and other services without taking the eyes off the wheel. Apple is enhancing the platform in collaboration with the companies like Honda (NYSE:HMC), Mercedes, Nissan (OTCPK:NSANY), Ferrari, Chevrolet, Kia, Hyundai, Volvo, and Jaguar. It is expected that the cars integrated with "iOS in the Car" will be on-road during current year.

  • Microsoft's presence:

Microsoft is also in the market with its Windows Embedded Automotive technology/platform, which provides a highly flexible (offers variety of microprocessor technologies), robust, high-performance platform that enables car makers and suppliers to create differentiated, market-driven vehicles. The platform enables solutions that include performance-monitoring, maintenance-screening and remote-tracking. The platform also supports speech recognition, touch-interface and hands-free technologies. Microsoft is focusing primarily on the embedded systems.


The company entered mobile operating system ("MOS") market through Open Handset Alliance and became the most dominant player in the MOS market, despite the early presence of the players like Apple. Today Android holds over 80% of the MOS market (see the chart below). The key reason behind the success of the company is the fact that unlike the competing MOSs (Windows and iOS) Android is highly customizable and is open to all from handset manufactures to developers. This basic feature of Android makes it the most preferred and cost-effective mobile platform.

(Source: IDC)

With the newly formed alliance the company once again is hoping to repeat its success in the connected car market by leveraging the popularity and huge user-base of its Android platform. The company is all set to widen its Android ecosystem beyond mobiles and make it an important part of another rapidly growing multi-billion dollar market. Users' familiarity with Android will allow it to become a preferred platform particularly for the smartphone based connectivity systems cars.

All in all, a little late but much anticipated move by the company. The company's entry in the market will not only increase the competition in the market but also will further proliferate the market as being an open and most popular platform, Android will bring in huge number of developers, and the unmatched innovatory works to the market.

The company may not be able to meet similar dominant success (as in MOS market) due to very different market dynamics (financial as well as operational), and the early presence of the competitors like Microsoft and Apple. However, the company should get a decent share of the market due to the popularity of Android and its unmatched value proposition (being an open platform).

With the war of platforms clearly spreading beyond smartphones, customers will be the ultimate beneficiaries.

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