Alphabet Inc (GOOGL) Challenges BlackBerry Ltd (BBRY) With Android Automotive

GOOGL wants Android to power your car

Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) has been battling Apple Inc. (NASDAQ:AAPL) for control of your car’s infotainment system for several years now. Google’s Android Auto and Apple’s CarPlay are now mainstream and offered in hundreds of new vehicles and third-party car stereos.

Alphabet Inc (GOOGL) Challenges BlackBerry Ltd (BBRY) With Android Automotive
Source: Google

However, these two systems don’t go deeper than that in-dash display and require a smartphone to be present.

One of the announcements from last week’s Google I/O changes that. Android Automotive is a new initiative that integrates Android much deeper, letting Google’s operating system control systems like the air conditioning and power windows.

Google is pushing to make Android an embedded OS that runs your car’s systems — not just an infotainment system that runs on top. It has its first two partners in Volvo and Volkswagen AG (ADR)’s (OTCMKTS:VLKAY) Audi. This is a development that should be worrying to BlackBerry Ltd (NASDAQ:BBRY) as it represents a direct attack on that company’s profitable QNX division.

Google Announces Android Automotive

While much of Google I/O 2017 was dominated by artificial intelligence and AI-powered smart camera features like Google Lens, Android Automotive was also introduced.

Audi and Volvo both showed off concept vehicles that use Android Automotive instead of a proprietary embedded operating system. According to Google, both auto makers are building Android into their next generation of cars.

Android Automotive Is Not Android Auto

While the naming of the two systems is confusingly similar, Android Automotive is not the same thing as Android Auto.

Like Apple CarPlay, Android Auto is a layer than runs on top of a car’s existing infotainment system. It relies on a user’s smartphone to interact with and it is focused on services like playing music, navigation and playing back messages.

Conversely, Android Automotive is a version of Android designed to be an embedded operating system — the software that runs that infotainment system. It can support apps without a smartphone present. It can control other functions in the car, such as power windows and seats, the sunroof and the car’s heating and cooling system. Critical dashboard display info like speed usually has its own dedicated system, but Android Automotive could also control other information in that instrument cluster.

In other words, Google is gunning for the territory where BlackBerry’s QNX division is currently a leader. However, Google will have the advantage of integration potential with billions of other Android devices, ranging from smartphones to smart speakers, along with massive third-party developer support.

Android Automotive Is Also Not Waymo or Project Titan

Google has a long-standing self-driving car project, now known as Waymo. Apple also has self-driving automotive system ambitions in its Project Titan.

Android Automotive is not another stab at self-driving automotive technology. It’s an embedded operating system that sticks to the non-essentials. It’s not trying to drive the car, control the brakes or run the cruise control system. The intention is to have an operating system that runs the non-critical stuff, including that infotainment system. It’s designed to be an OS that can be deployed by any car manufacturer, saving them money from developing their own system (or paying QNX). Like Android on a smartphone, car makers can skin Android Automotive to look like their own software, and they can even run Android Auto or CarPlay over top of it.

So what does Google get out of Android Auto?

According to Bloomberg, just like other hardware that runs its Android operating system, Google won’t be getting a cut from car makers that choose Android Automotive. That alone should worry BlackBerry, which does charge a licensing fee for use of its QNX software. What Google does get is a shot at making Android even more ubiquitous, with the potential to be in millions of cars (QNX is estimated to be in 50 million cars). Each car that’s powered by Android Automotive extends the reach of Google’s Android Assistant and provides a larger potential market for Android app developers.

As a Google rep told The Verge in an interview at Google I/O 2017:

“If they’re using Google services in the car, whether it’s Google maps or Google Assistant and they have a good experience, they’re more likely to use those services on other devices, where maybe we do have a way to monetize through ads or something else.”

Android Automotive is Google’s play to get in with car makers and dominate the way Android has in smartphones. That extends Google’s reach with consumers, boosting the likelihood they’ll invest in other products like a Pixel Phone or Google Home smart speaker. Volvo says it will start rolling out its first cars powered by Google’s operating system sometime in the next two years, so that’s when we’ll find out if Android Automotive lives up to the billing.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/05/alphabet-inc-googl-blackberry-ltd-bbry-android-automotive/.

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