Car apps: the future of the vehicle industry

Car companies are trying to get social, and 2011 could be the year of the car as a major platform for social and other types of apps. Projects like Toyota Friends, a social network run on for Toyota owners, Ford’s American Journey 2.0 and the decade-old Sync and OnStar show that car companies want to capitalize on social but don’t quite know how to make it work. That’s a perfect opportunity for new apps and app developers. In a new GigaOM Pro report, I examine the in-vehicle app landscape, focusing on the different types of car apps, the major players in the space, what each has to offer and how those will fare as more and more apps come to the vehicle industry.

Two years ago most auto companies were preparing to go through app stores and the developer community. Enthusiasm stalled, however, over safety concerns. Now, even though companies like Toyota and Ford are actively courting developers, the process of getting an app onto an official car platform is stringent, with none of the benefits of quick sign-up, cheap SDK and turnkey retail apps.

That means that opportunities actually lie not only in cars themselves but also in transportation in general. Carmakers are toying with the idea of dashboards in the cloud, but the real business opportunities are going to be seen in big data, the use of location technologies, video, parking, road pricing and new ways of approaching mobility.

That is not to dismiss the car as an app platform. The new-car market and aftermarket comprise 800 million consumers globally, which is a distinct vertical opportunity when you look at per-mile or per-time-of-day road pricing, insurance discounts for good driver behavior, adaptable parking revenues and data systems that bring accurate up-to-the-minute data on traffic conditions into the car.

Many carmakers are agonizing over what they can do in-car, but smart movers like BMW are adjusting to a new horizon. BMW has invested $100 million in a mobility solutions VC fund and incubator in New York City called BMW iVentures. The first investment, startup MyCityWay, provides information about public transformation, parking availability and other urban information. BMW has also launched a car-sharing service.

These moves signal a dramatic shift by a major carmaker away from the traditional model of the car consumer — a person whose pleasure is derived as much from owning a particular car as it is from getting around. Changes in ownership taste and a preference for alternate modes of transport over ownership will be significant factors as the car industry transforms.

These alternate modes of transportation raise the stakes on the promise of connectivity and convergence. Carmakers have consistently failed to stay connected with the overwhelming majority of their buyers, but this too could now change. Mobility convergence (car, bus, train, plane, smartphone, infrastructure) offers an opportunity to build new relationships with a much broader public than the buyers of, say, a BMW 3 series.

Many carmakers are also focusing their efforts on electric vehicles and convergence with the smart grid. In this area, opportunities to develop new diagnostic and battery data services will probably happen after 2015. But the other convergence – transport modes – is different and is already further in process. Here the market is a big one: those 5 billion people who own mobile phones.

Thus short-term opportunities for the app landscape rest in the integration of the mobile phone with car control and car entertainment systems. Long-term opportunities, though, lie in how we as consumers, as well as the industry, can reconceive the concept of mobility.

To read more about the future of the in-vehicle app landscape, as well as to find out more about individual carmakers’ in-vehicle app efforts, see the full report at GigaOM Pro (subscription required).

Image courtesy Flickr user Yutaka Tsutano