By: Nathan Bomey, Detroit Free Press/MCT
General Motors and Ford took a page out of Apple’s book, or smartphone, when at January’s Consumer Electronics Show they invited outside software developers to create applications for their vehicles.
How this generates revenue is not yet clear. For Apple, third-party apps are a significant source of profit.
The consumer electronics giant keeps 30 percent of app sales and gives 70 percent back to developers. Apple has booked $5 billion in revenue since launching the App Store in 2008.
General Motors North America President Mark Reuss said in an interview that the automaker would be willing to share revenue with app makers.
“Yeah, for sure,” he said. “There’s got to be a reason why they would want to do it. We’re in it to satisfy the customer first and make money while we try to do it.”
The decision by GM and Ford to ask app makers to help was symbolically significant: It recognized that vehicles can be better with the help of software, and that software will be more creative if done by independent developers.
“We’re a car company. We’re not an app company,” Reuss said.
Automakers must strike a delicate balance by offering interesting apps while avoiding the sensory overload that troubles safety advocates and distracted-driving watchdogs.
GM signaled a willingness to consider apps like iHeartRadio’s streaming application or the Weather Channel, while Ford is already offering apps like Glympse, which shares a person’s location, and the on-demand music service Rhapsody.
But carmakers need to avoid the temptation to turn the car into a “smartphone on wheels,” said Thilo Koslowski of technology research firm Gartner.
Koslowski said the auto industry should focus on encouraging the development of apps that “enhance the driving experience.”
“This is not going to be an app store like Apple has,” he said. “Having Facebook in the car, having Twitter capabilities in the car, isn’t really all that useful.”
Auto industry executives view connectivity as essential for reaching millennials – those born between 1980 and 2000 – who see their smartphones as crucial to their lifestyle.
In a McKinsey study released last month, 83 percent of 18- to 39-year-olds said they would be willing to pay for in-car access to the Internet.
Of all drivers, 35 percent use their smartphones while driving, the study found. Within that group, 68 percent use their phones for navigation, 39 percent for text-messaging and 31 percent for access the Internet, social networks, email or apps.
“The car presents an all-new opportunity for developers, especially the millennial market, and we’re looking forward to seeing what results,” said Hau Thai-Tang, Ford vice president of engineering and global product development.
But Koslowski said carmakers shouldn’t confuse a desire for digital connectivity with a desire for car-based apps.
“There’s one huge competitor to any automotive company trying to attract apps in the car, and that’s the smartphone,” he said.
GM and Ford have provided the technical specifications to developers to make apps that can work in a vehicle. Once apps start rolling in, they’ll examine the offerings closely to decide whether to offer them.
Apple similarly signs off on outside apps before enabling them to be downloaded to the iPhone, iPad or iPod.
GM said it would welcome a wide range of ideas, but it’s particularly interested in apps that deliver information about the vehicle to the driver. For example, an app could analyze vehicle performance to deliver recommendations on how to maximize the vehicle’s fuel economy through an optimal route.
The apps would be delivered through existing infotainment systems such as Chrysler’s Uconnect, the Cadillac User Experience or MyFord Touch.
“I want to find the next parking spot while I’m driving into the city, I want to get the latest map updates – those kinds of things consumers are looking for,” Koslowski said.
The number of ideas offered will depend on how much automakers are willing to pay. Their biggest challenge is the mathematical fact that smartphones outnumber cars worldwide by 169.2 million to 80 million, according to 2012 data compiled by Gartner. Only a small fraction of those 80 million cars and trucks are new enough to offer touch-screen technology.
Another unanswered question is: Will consumers pay for apps in the car?
“The scale that an automobile manufacturer has will never be as attractive as what some of these smartphone platforms have,” Koslowski said.
Nonetheless, app development presents automakers an opportunity to differentiate themselves from their competitors.
Right now, most vehicles with an infotainment system have just a few applications, such as navigation, weather data or perhaps online music streaming.
The more automakers focus on informing drivers about the condition and performance of the car, the more successful the software will be, Koslowski said.
For example, applications can act like constant car mechanics.
“Remote diagnostics will be a given in the future,” he said. “Every vehicle that has connectivity will tell you if a part needs to be replaced.”
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