In-vehicle apps to proliferate thanks to Apples CarPlay: report
By Chantal Tode
May 28, 2014
Apple's CarPlay will soon be available in some cars
In-vehicle applications will become widespread in the next five years, with global revenues from consumer and commercial telematics expected to reach nearly $20 billion by 2018, according to a new report from Juniper Research.
Helping to drive the momentum will be services such as Apple's CarPlay, which is expected to be available this year via in-car integrations from companies such as Pioneer Electronics, Honda, Hyundai and Mercedes-Benz. The growth in the connected car market will be key for automotive manufacturers as it will enable them to generate revenues throughout the lifetime of a vehicle rather than just at the point of sale.
Vehicle manufacturers are taking telematics extremely seriously as models of connectivity can make or break the sale of a much more valuable item, that is, the vehicle itself," Anthony Cox, associate analyst at Juniper Research, Hampshire, England, in the report.
"However it is not yet clear how connectivity in the vehicle will ultimately be paid for and how the money from activities such as infotainment will be distributed between the vehicle manufacturer, the telecom provider and the content provider," he said.
The integration of apps into vehicles through smartphone-tethering and direct integration is expected to get a boost from the launch of service such as Apples CarPlay, which was announced earlier this year and integrates the iPhone with in-car entertainment systems.
With car connectivity increasingly important to consumers when choosing which car to purchase, automakers are taking telematics very seriously. Telematics is the use of wireless technologies and in-vehicle IT to improve the driver experience and provide additional information to the driver. Revenues for the segment will reach $20 billion by 2018.
However, it is not clear yet how such connectivity will be paid for and how the money from activities such as infotainments will be distributed between the vehicle manufacturer, the telecom provider and the content provider.
Most in-vehicle apps are expected to be free of charge, according to the Juniper report Connected Cars: Consumer & Commercial Telematics and Infotainment 2014-2018.
The growth in smartphone-tethering and in-vehicle apps will continue to drive down the price of automakers own embedded infotainment services.
Additional soft revenues will be generated from areas such as car servicing, Big Data enabled by telematics and enhanced customer service. However, these soft revenues will remain a major untapped revenue source for the consumer telematics industry.
With regulation in key markets such as Europe and Latin America expected to mandate the inclusion of SIMs in all new vehicles, automakers will also be able to develop revenue streams around the embedded SIM model.
Juniper also expects split billing to become increasingly important, with granular billing for infotainment and other services leading to new business models.
Other key findings include that the use of 4G LTE is becoming widespread in developed markets for telematics and infotainment, particularly in North America and Europe.
"Smartphone tethering and the integration of apps into the head-unit will have a significant influence on telematics revenues," Mr. Cox said.
Chantal Tode is associate editor on Mobile Marketer, New York
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