Apple Inc.'s CarPlay vs. Google Inc.'s Android Auto: The Business of Connected Cars

By Markets Fool.com

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Apple's CarPlay (L) and Google's Android Auto (R). Source: company websites

AppleandGoogle'shave battled each other in the mobile market for years. However, that battle is now moving beyond smartphones and tablets into a new market: connected cars. Between 2014 and 2020, IHS Automotive estimates that the total number of connected vehicles worldwide will risefrom 23 million to 152 million.

Apple CarPlay and Android Auto both "mirror" mobile devices with an optimized view on a car's dashboard. CarPlay lets drivers use iOS features like voice calls, music control, iMessage, Apple Maps, and Siri. Android Auto offers similar features with apps like Google Maps, Google Play Music, and Google Search. Both platforms support third-party apps like Spotify, iHeartRadio, and TuneIn. However, mobile apps which aren't approved for in-car use are locked out from the dashboard.

Apple released CarPlay last March, while Google launched Android Auto a year later. Thanks to that head start, Apple currently enjoys a minor lead over Google among auto manufacturers, according to IHS. IHS estimates that Android Auto will overtake CarPlay next year and maintain a slight lead into 2020, but many cars will be compatible with both platforms.

Connected cars 101
There's a lot of confusion about what CarPlay and Android Auto actually do. Neither platform is actually an "operating system" for cars.

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Cars already have embedded operating systems of their own. BlackBerry's QNX controls 50% to 70% of this market, while most other cars run Microsoft's Windows Embedded. Automakers then develop their own dashboard software to access QNX or Windows Embedded's functions. CarPlay and Android Auto simply mirror smartphone functions on top of that dashboard software.

The Maserati QNX Technology Concept Car at CES 2015. Source: BlackBerry

But to complicate things further, there are overlapping communication standards for mirroring mobile displays on QNX or Windows-powered dashboards.

Google established the Open Automotive Alliance (OAA) for Android devices. while Apple made CarPlay exclusive to iOS devices. Microsoft-- which controls less than 3% of the global smartphone market -- backs MirrorLink, a universal mirroring standard for Android, iOS, Windows Phone, and other mobile devices. MirrorLink supporters belong to the Car Connectivity Consortium (CCC). Since it would be foolish to simply support just one communication standard and alienate certain smartphone users, many automakers support all three.

Growing ecosystems, not revenues
Investors should understand that CarPlay and Android Auto aren't intended to be big sources of revenue growth on their own. Instead, both platforms can strengthen Apple and Google's businesses in different ways.

Apple has been wary of the growth of Google's ecosystem on iOS. Google Now, Google Maps, and Drive now respectively challenge Siri, Apple Maps, and iCloud across its devices. To make matters worse, iOS users tethered to Google's ecosystem generate search and ad revenues for Google, and they might eventually switch over to Android devices.

That's why Apple replaced Google Mapswith Apple Maps, dropped Google for Bing in default Spotlight and Siri searches, and could do the same with Safari later this year. However, over half of U.S. iPhone users still use Google Maps, according toComscore estimates. To reduce user dependence on Google Maps, Apple beefed up Apple Maps by buying smaller mapping firms like Placebase, Locationary, Hopstop, and Coherent Navigation. It's also scanning streets to collect data for 3D maps. But most importantly, Apple locks Google Maps and Search out of CarPlay, which forcesdrivers with iPhones to rely on Apple Maps and Siri instead.

Apple Maps being used in CarPlay. Source: Apple

For Google, Android Auto is a way to gather more data on users' travel habits by replacing traditional in-dash GPS software. The more data Google collects, the more effective its targeted ads will be. Like Apple, Google has been enhancing its Maps through acquisitions of mapping and satellite firms like Waze and Skybox.

Stepping stones toward the future
In addition to being extensions of their mobile ecosystems, CarPlay and Android Auto can also be considered stepping stones toward autonomous vehicles.

By fusing mobile devices to cars, Apple and Google are setting up the foundations for autonomous vehicles to eventually operate upon. Google already demonstrated this with its prototype driverless cars last year, which can be summoned and directed with a smartphone app. Since many leading automakers believe that driverless cars will hit the road by 2020, CarPlay and Android Auto could be the first steps toward a future where your smartphone does the driving for you.

The article Apple Inc.'s CarPlay vs. Google Inc.'s Android Auto: The Business of Connected Cars originally appeared on Fool.com.

Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.