Slicing Apple's Automotive Influence

Not so long ago, carmakers set the agenda for in-car entertainment — and you were happy to get that premium sound system with Dolby and a CD player. Then along came the iPod and Apple's dominance among connected in-car devices, sending OEMs scrambling to keep up with consumer demands through tethering and somewhat frustrating interfaces.

Now that smartphones have brought a nearly pervasive, always-on Internet connection to the car, the paradigm is shifting again. Apple has competition, carmakers have options and consumers have more choices. But one thing hasn't changed, although the new age of car electronics has brought an old adage into clearer focus and with more serious consequences: Constantly play catch-up or get out of the way.

Apple Takes Over
The journey to this current crossroads started taking twists and turns into unfamiliar territory for the auto industry when the iPod debuted a decade ago. By the time the iPhone followed in 2007, Apple had already revolutionized portable electronics and the way most drivers access music. And the company was poised to do the same by bringing navigation, traffic and other information into the car via apps. Within just a few years, that expensive premium sound system with no way to interface with an Apple product became antiquated.

"Five years ago the auto industry was scrambling to have an iPod interface in the dash," said Micky Bly, GM's lead electronics executive. But Apple wasn't exactly knocking down the door at automakers, like traditional suppliers. Instead, it was the car companies that had to come to Cupertino, which was a huge shift for an industry used to dictating terms to its suppliers. Automakers suddenly found themselves at the whim of a hugely popular global electronics brand that seemed indifferent to their entire industry.

"They're not your typical supplier," said Thilo Koslowski, an analyst with Gartner. "The auto industry wants to align behind closed doors, so a company like Apple can be a headache. If [Apple] wants to change the configuration on a charger for its devices, they just do it. They don't ask permission first."

That example isn't hypothetical. When Apple changed the charging voltage on its proprietary 30-pin connector from 12 volts to 5 volts in the summer of 2008, it immediately made previous OEM and aftermarket iPod-integration systems obsolete — and left millions of drivers with dead batteries on their devices. And when iPhone users upgraded to iOS 4 software last summer, playback problems with vehicle interfaces were widespread.

The latter issue has been resolved through Apple updates. But there's still the problem for automakers of accommodating Apple's proprietary connector. "It creates a headache if an OEM hasn't produced a cradle or other way to accommodate the device," said Roger Lanctot, an analyst with Strategy Analytics. "It also seems backward to accommodate an iOS connection with an elaborate piece of hardware that might not work with the next-generation device."

In the process of reporting this story, a number of sources — both OEMs and suppliers — told stories of Apple's apparent disdain at having to work at all in the automotive market. Some said it was a matter of the company being more focused on the consumer electronics market, while others went as far as to say that Apple would rather not have anything to do with the auto industry because it doesn't see the sector as a money-maker. Lanctot shared a common refrain that sums up the company's attitude toward the car industry: "The car is an accessory to the iPhone in Apple's eyes," he says.

Attack of the Droids
While Apple still largely dictates by default how automakers approach in-car connectivity, the landscape has begun to shift. Android smartphones have emerged as a real competitor and in some instances, such as with Bluetooth audio, Apple has been slow to react. The case of Scosche, a respected supplier of aftermarket electronics-integration products, is an example of the widening path away from total domination by the Cupertino cabal.

As one of the first aftermarket companies to go all-in on Apple accessories, Scosche for years flew the Made For iPod/Works With iPhone flag. But Scosche VP Kasidy Alves said that after focusing on Apple, the company is broadening its Android offerings. Scosche is currently working on a device that will block text messaging capabilities via Bluetooth while driving. What's notable is that the Android version of the product will be out by Christmas — before the iOS version. "Apple can be harder to work with when it comes to tapping into iOS," Alves said, "especially when Android is open-source."

The car is an accessory to the iPhone in Apple's eyes.

While Google's open-source approach poses a threat to Apple's wall garden way of doing things, everyone we spoke to noted that Google has a similar indifferent attitude toward automotive. But they added that Google comes across as more accommodating since the company is less controlling.

OEMs certainly haven't dropped Apple to exclusively promote Android compatibility. And there's plenty to complain about with Android, such as fragmentation of versions and the dizzying array of phones. But Google's success is still seen as an opportunity to take some of the car infotainment eggs out of the Apple basket. As a result, the industry buzz phrase has shifted from 2009's "iPod/iPhone compatible" to today's "device-agnostic." "We design [our cars] to be as compatible as possible with whatever users bring in the vehicle," said Ford Product Development Manager Gary Jablonski.

"Unlike others that are wed to one particular operating system, we're creating a more agnostic environment," added Jon Bucci, Toyota's VP for advanced technology, of Entune, Toyota's infotainment system that's also Android- and BlackBerry-compatible. "It's the democratization of infotainment."

Bluetooth Bites Apple
Apple's late adoption of Bluetooth audio and insistence on in-car wired tethering for so long is credited in part with prompting carmakers to look beyond the iPod and iPhone. "Bluetooth is critical," added Bucci. "It's a standard that helps enable the Entune system."

Apple has now hopped aboard the Bluetooth audio bandwagon. But the company's conspicuous absence from the game for a few years allowed systems like Ford's Sync to make their mark first. Some of Sync's recent advances, such as AppLink, connect via Bluetooth, not with a cable. And Chevy's new MyLink system and Cadillac's CUE focus more on Bluetooth connectivity than compatibility with iOS.

In fact, the focus in car infotainment systems is now less about specific devices and more about specific apps. If they don't already offer it, most OEMs are working on some form of Pandora Internet radio integration. But for those that follow the world of streaming music, Pandora is already old news. Newer services like Rdio, MOG, Spotify and other cloud-based offerings allow subscribers to play any song on demand, unlike Pandora's radio-styled format, and from libraries many times larger.

This rapid electronics evolution also exposes a perennial problem for carmakers. "The auto industry is now trying to keep up with the 18 months or less development cycle for consumer electronics," said GM's Bly. It's a tall order for an industry that measures its own such cycles in years, not months.

Apple's recent unveiling of its new iPhone 4S and iOS 5, the latest version of its mobile operating system, serves as further evidence of this problem and its lack of consideration for infotainment integration. The big new feature in iOS 5 is Siri, a voice assistance program that still requires you to touch the phone to operate it. Apple seems to have missed a big opportunity here to improve on iPod Out by adding support for Siri, leaving OEMs and aftermarket brands no doubt scrambling for a solution once again.

One possible remedy is for automakers to stop playing a game of constant catch-up and simply get out of the way. This could be accomplished with a blank-canvas in-dash system with just a screen that integrates wirelessly with devices brought into the car and stays current via over-the-air updates.

Saab showed an Android version of this idea at the 2011 Geneva Motor Show in its Phoenix concept. And a group of automakers, suppliers and consumer electronics companies recently formed the Connected Car Consortium to push for an open, updateable standard that will help the auto industry keep pace — and keep consumers from getting frustrated with quickly outdated car tech.

Standing Out From the Crowd
QNX, a company owned by BlackBerry-maker Research in Motion, is in a perfect position to take advantage of this approach, and also give some perspective on the feasibility of true open-source automotive infotainment. QNX provides the operating system and a sandbox for automakers to make sure apps integrate and look just right on each in-dash display. The company's technology is the foundation for Entune, MyLink and OnStar, among others. Its systems can be skinned to match each OEM's brand look and feel, and portray the differentiation that all carmakers crave.

Could this approach be the beginning of a new, standardized in-dash operating system, bringing the app store model popularized by mobile devices into the car environment? "Probably not," answered QNX's Product Marketing Manager Andy Gryc. "Carmakers are still all about taking market share from each other," Gryc said, "and that makes brand equity that much more important. It's very important to them to distinguish themselves in every way."

So car infotainment standards are out for the time being, and that's not good news for consumers struggling to get their new phone to work well with their new car. But even if standardization isn't on the immediate horizon, OEMs are beginning to talk more like tech leaders that believe all information wants to be free. "We can't do a walled garden that we completely own and operate, or we won't be able to see over the wall," said Toyota's Bucci.

Wow, an auto exec talking like Google. There's no way that's good news for Apple.

Editor's note: Inside Line contacted Apple for comment on this story, but our calls and e-mails were not returned.