Together, Apple and Alphabet have set the agenda for integrating smartphones with vehicle entertainment systems for nearly three years, in the form of Apple’s CarPlay and Alphabet’s Android Auto. However one of the events from CES 2017 was the emergence of a consortium of automakers coming together to back SmartDeviceLink, a technology which could present a serious challenge to Apple and Alphabet for automotive smartphone integration. Semicast sees smartphone integration as a revolutionary shift in the auto experience.
The driver connects their smartphone to the infotainment or navigation system, typically using Bluetooth, USB or WiFi and the familiar app icons including phone, music, maps, messages and internet radio are displayed on the centre stack. The phone apps are controlled from the infotainment or navigation system using the buttons and dials already in the vehicle, the touchscreen on the centre stack display, or voice input such as Siri or Google Assistant. There is no technical setup and from the driver’s perspective smartphone integration is more or less plug and play. CarPlay and Android Auto are not the only options for smartphone integration; MirrorLink supports many of the same functions, but looks unlikely to survive in the long term; Bosch has developed mySPIN, which works with both iOS and Android operating systems and allows automakers to customise both the functionality and user interface to meet their own specifications; in China, Baidu’s CarLife is the leading solution.
Semicast judges Apple and Alphabet to have made two tactical errors in the development of smartphone integration. First, both CarPlay and Android Auto require automakers to surrender control of the user interface, which results in a standardised look and feel of the entertainment system that is more smartphone than automotive; this offers little opportunity for automakers to differentiate themselves across vehicle segments and brands. Second, Apple and Alphabet have created somewhat of a walled garden of compatible apps to suit their own agendas, becoming more flexible with automakers only as it benefits them. A good example is navigation; CarPlay only supports Apple Maps and Android Auto only Google Maps. Events are changing rapidly, but third party navigation apps such as CoPilot, TomTom and Waze are not supported, while both Apple Maps and Google Maps require a high speed cellular connection to maintain the navigation guidance. Try that out in your rental car on vacation say in the Scottish Highlands, where the scenery is breathtaking and the 4G coverage isn’t, and the multi-trillion dollar tech industry suddenly doesn't look so smart.
Colin Barnden, Principal Analyst at Semicast Research, commented: “Alongside autonomous driving, electric powertrains and driver assistance, Semicast sees smartphone integration and vehicle connectivity as two of the most exciting changes coming to the automotive industry over the next decade. The automotive entertainment systems market is at the early stages of substantial change, away from legacy CD/FM audio towards the video-based infotainment and navigation systems necessary for smartphone integration and high speed connectivity.” Semicast forecasts global sales of light vehicles with smartphone integration to rise to almost 95 million in 2023, from around one million in 2015, a growth rate over 70%. In an environment of such rapid change and with Apple and Alphabet poised to gain a position in almost every light vehicle, automakers have to reclaim the agenda; one way to achieve that could be SmartDeviceLink.
First released in 2013 as Ford’s proprietary SYNC with AppLink, SmartDeviceLink is the open-source version of the technology that is available to other automakers. Such is the dominance of Apple and Alphabet that the existence of SmartDeviceLink has so far been comprehensively drowned out by media coverage of Carplay and Android Auto. However Semicast judges that its profile will rise dramatically in the next two years, in particular following the announcement of the SmartDeviceLink Consortium at CES 2017, with other automakers such as Mazda, Peugeot, Subaru, Suzuki and Toyota coming on board. SmartDeviceLink is also backed by Harman and Panasonic, which Semicast judges to have been the two largest suppliers of OE infotainment systems in 2016, and by Pioneer who was the leading supplier of aftermarket infotainment systems. SmartDeviceLink overcomes many of the previous restrictions of both Carplay and Android Auto, thus enabling automakers to customise the look and feel of the user interface and to have much greater flexibility of app compatibility. Critically it also offers automakers an opportunity to regain the initiative of smartphone integration, which had been moving rapidly into the control of the tech industry.
In the decade ahead, automakers collectively face an existential threat from a tech industry which is looking to cherry-pick the newest and most exciting areas of the auto industry, while simultaneously dumping the toxic legacy of the internal combustion engine and emissions regulations onto existing automakers. Just consider Waymo and Tesla for autonomous driving, and Tesla again for electric vehicles, all neatly avoiding the emissions fiascos and legal liabilities which threaten to overwhelm Volkswagen and potentially other automakers too. Looking at the market capitalisation of some of the key players reveals a clear picture: Ford (~$50bn), G.M. (~$55bn) and Volkswagen (~$80bn) collectively produced around three hundred times more vehicles last year than Tesla (~$40bn), suggesting a substantial market premium for the exciting new contender and a discount for the plain old automakers. Compared with Apple (~$630bn), Alphabet (~$560bn), or even Amazon (~$385bn) or Facebook (~$365bn), the challenge facing the legacy automakers from the tech industry is clear and substantial.
Barnden summed up: “After decades of fighting each other, it is to be hoped that automakers comprehend the threat posed to their existence from a lean and disruptive tech industry. An automaker-led initiative to provide an automotive industry standard for smartphone integration would send a powerful message.”