State of the automotive app store, part I

The big roulette wheel in the sky has turned, and new bets on the best strategies to deliver apps to the connected car are being placed. On one hand, the OEM-run app store remains a sexy concept that has limited real-world availability. On the other hand, the popular and easier-to-implement approach of letting drivers download and run apps on their smartphones with an interface to the car has revealed some limitations. What is the best approach? It depends on whom you talk to.

Smartphone integration remains entrenched

Egil Juliussen, research director analyst, IHS Automotive, believes distribution of apps will follow the smartphone model, with cars shipping with some built-in apps but most others being available through the likes of iTunes App Store and Google Play and delivered to the car via a tethered mobile phone. In the end, he thinks, "The app store is the most efficient way to get applications to end users," he says.

Using the smartphone to obtain and run automotive apps provides several advantages:

· Quicker time to market for the OEM

· Affordability for consumers and lower cost for manufacturers

· Ability to leverage the large mobile developer ecosystem

· A seamless download experience thanks to Google's and Apple's app stores

· A clear and simple application upgrade path

· Consumers don't need to manage phone and car apps separately

· Auto-related apps on the phone are available in any car

But it also creates challenges:

· The necessity to provide individual APIs for mobile apps to ensure safety and reliability

· Getting drivers to search for apps within crowded third-party app stores

· A disconnect between the mobile phone experience and the driving experience

· Difficulty for the OEM in generating and collecting revenue

Ford, the first OEM to offer in-car apps via the smartphone, is wedded to the concept: Apps from iTunes App Store, Google Play or BlackBerry App World are downloaded to a mobile phone and appear in the head unit via Ford’s SYNC AppLink.

AppLink started out with a handful of radio and location-based services, but it keeps on expanding. Just this January, Ford announced four more integrations: Parkopedia, a parking space finder, Parkmobile, an app that makes it possible for users to pay for parking with their smartphones, Pulse, a security app provided by ADT, and a partnership with Domino’s Pizza.

The last two integrations are interesting as they highlight a departure from driver-centric apps into services unrelated to the car or driving.

With Pulse, Ford owners will soon be able to arm and disarm home security systems, grant remote entry and even adjust home heating and lighting while on the road. Likewise, those with a registered Pizza Profile on their Domino's mobile app will be able order a pizza with just a few, voice-activated steps.

Because all apps are available via third-party app stores, there is no need for an actual Ford-run app store, according to Julius Marchwicki, a connected services product manager at Ford.

But this can be a problem when it comes to locating the AppLink apps among the millions of other apps out there. Ford owners can, for course, go to Ford's website, but how will they know to look there?

With its HondaLink Next Generation, Honda is also placing more chips on the smartphone model for distribution of apps.

Charles Koch, manager of new business development for American Honda, says this approach answers an ongoing consumer demand: "Why can't I get the content from my phone into the head unit?"

App stores arrive in the car

Still, Renault and a number of other OEMs believe building and running their own dedicated app stores is the way to go.

Of course, that does not mean that an OEM-run app store is only accessible via the head unit, nor does it mean that it's installed there. Most OEM-run app stores will be in the Cloud and accessed via an embedded modem in the car, and/or a website or mobile app.

The advantages to OEMs of providing dedicated app stores include:

· Centralized place for consumers to find relevant apps and services

· The OEM has opportunity for collecting sales revenue and up-selling

· Over-the-air software updates can be provided by the OEM

· The OEM has the ability to track app usage

The disadvantages include:

· Limited, one-size-fits-all packages

· Consumers must learn a new interface for searching and buying apps

· Cost of embedded modem and app development

· Requires either mobile wallet implementation or unwieldy credit card entry

· Billing and revenue sharing must be handled by the OEM

· Over-the-air software updates must be handled by the OEM

· Some kind of data plan must be enabled

The technology to provide a true OEM-run app store in the car exists today, according to Arturo Pereyra, senior director, marketing and business development, Oracle. But it is not a simple undertaking.

According to Pereyra, key capabilities must include the ability to quickly create and bundle personalized offerings and products, to communicate with customers over all touchpoints, to charge and collect for digital goods and services, and to handle partner settlement for sharing revenue collected from app sales.

Renault, working with Worldline, became one of the first OEMs to provide its own branded app store that delivers apps to the car itself. It is part of Renault’s R-Link connected platform.

The French automaker has not released sales or usage figures, and Emmanuel Bonbon, general manager for ADAS, telematics and multimedia, acknowledges that there are drivers who have never been to the app store, let alone purchased an app. But he says Renault is planning for the long term.

According to Pascal Pediroda, global product manager, connected vehicle & machines, Worldline, the R-Link app store lets drivers buy apps from within the car using a mobile wallet, and it is capable of providing a complete e-commerce offering that will allow drivers to also purchase various services and even physical accessories.

The same services and goods can also be purchased from car dealers or online. "We want to leverage all digital channels to sell," Pediroda says.

Another enhancement is the ability for Renault to create different packages of services and apps based on region or market relevance. For example, in one country, Renault may offer a service free for a year, while, in another, it may design a premium package. "Each sales director of each country can define its go-to-market," Pediroda says.

General Motors is also betting on the OEM-run app store concept. It's published an SDK for its MyLink platform that will make it possible to run third-party apps in the car's infotainment system, and it plans to open as many as 100 APIs to outside developers who can come up with very specific, car-centric uses of these APIs.

The automaker also has a team of some 50 programmers developing exclusive apps in-house.

In addition to MyLink, which allows drivers to access apps running on their smartphones, GM is also developing App Shop, a Chevy app store that will let car owners download applications directly to the car.

(For more on automotive app stores, see Content and Apps for Automotive Europe: Beyond the app store.)

(Return next week for the second part of the series.)

Susan Kuchinskas is a regular contributor to TU.

For all the latest telematics trends, check out Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.

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