The World of Connected Cars and its Burgeoning Apps Economy

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By 2020, 191 million vehicles worldwide will be enabled for Google Projected Mode or Apple’s CarPlay; the car is the new frontier for Apple’s and Google’s mobile competition.

Smartphone apps integration software from Apple and Google are forecast to be sold in more than 55 million cars by 2020 in Europe, the Middle East and Africa (EMEA), according to a new study released today by IHS Inc., a global research company.

Apple CarPlay

EMEA represents a significant growth market for original equipment manufacturers (OEMs), Apple, Google, and for app developers. In 2014, IHS Automotive forecasts that Google Projected Mode and Apple’s CarPlay will only be available in 7,000 and 52,000 cars sold, respectively. A similar research by Juniper Research predicts that a fifth of cars in North America and Western Europe will be app-enabled by 2017.

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However, by the end of this decade these numbers are forecast to skyrocket.

IHS says by 2020 Google Projected Mode software will be sold in more than 28 million cars and Apple’s CarPlay software will be sold in more than 27 million cars. These cumulative sales will be greater than sales in China during the same period.

Globally, cars with Google Projected Mode software are expected to top 100 million units by 2020, up from just 86,000 units in 2014. Cars with Apple CarPlay, with 105,000 units in 2014, will exceed 94 million units in 2020, a compound annual growth rate of 210 percent. These volumes will contribute significantly to the nearly 370 million Smartphone apps integration units expected in the automotive industry by 2020, from just 6.9 million units in 2014 – which includes other players in the market including MirrorLink, Aha by Harman and Ford SYNC AppLink.

“Apps for autos are growing rapidly and will have a profound impact on auto infotainment and connectivity in the next decade,” said report author Egil Juliussen, research director at IHS Automotive. “Auto apps will influence the competitive landscape among auto OEMs and will even change the brand market share between them.  OEM’s will have to keep up to remain competitive.”

“The in-car app market is a new frontier for Apple and Google’s mobile competition,” said Jack Kent, mobile analyst at IHS Technology. “Each is aiming to use their established expertise to develop mobile apps and content into the new realm of automotive entertainment and services.”

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Currently, Western Europe leads the entire EMEA region in Smartphone apps integration software due to its lead in automotive sales and Smartphone app sales. But by 2020, Eastern Europe, the Middle East and Africa will see spikes of growth of their own. By 2020, cumulative car-enabled sales of Apple’s CarPlay and Google’s Projected Mode in the Middle East and Africa will top sales in Korea and sales in Eastern Europe will top sales in Japan.

Globally, North America is expected to continue to lead the industry in automotive apps integration, with more than 115 million expected by 2020. This is due to the U.S. being the pioneer in deploying such systems and high Smartphone penetration and with extensive Smartphone apps usage. Western Europe will remain in second place through 2019 and will have over 65 million apps integration enabled cars in use by 2020. China will grow rapidly and will surpass Western Europe in 2020, with over 71 million apps integration enabled cars. As the apps integration technology and market matures, the growth will be driven by car sales, Smartphone penetration and apps availability.

Almost 200 million units sold globally by Google and Apple CarPlay by 2020

While Apple is the current leader in announced OEM design wins for Smartphone apps integration in EMEA and worldwide, Google will take the number one place in EMEA and worldwide sales by 2020. IHS forecasts that Google Projected Mode software will be enabled in nearly 100 million cars. Apple’s CarPlay will be a close second place with 92 million cars sold with CarPlay software. Many cars sold will have both Apple CarPlay and Google Projected Mode as the OEM does not know which Smartphone their buyers will have.

Audi, GM, Google, Honda, Hyundai and NVIDIA have joined together to form the Open Automotive Alliance (OAA), a global alliance of technology and auto industry leaders committed to bringing the Android platform to cars starting in 2014. The OAA aims to provide a common platform that will drive innovation, and make technology in the car safer and more intuitive for everyone.

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Global app spending to hit $40 billion by 2020

World consumer spend on mobile apps is set to grow from $24 billion in 2014, to more than $40 billion by 2020. “While games will dominate, other services such as Music, Location and Navigation will contribute to revenue growth,” Kent said.

IHS research shows that apps are the fastest growing digital content category. The rise of devices that connect to Smartphones and tablets, including cars and also wearable and other smart devices, will further increase mobile app downloads and revenues.

App stores will be the key distribution channel for auto apps. “App stores have revolutionized how consumers access digital content and services, providing a global distribution, discovery and billing platform that will reach well beyond Smartphones and tablets,” Kent said.

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