The intertwining of the automotive and consumer industries is fostering new ways to get the latest technologies into vehicles. Application software developers and automotive companies are currently employing a range of distribution models to bring the benefits of apps to the auto industry.
Smartphones are getting a lot of attention as their numbers grow astronomically. One market researcher, comScore, said smartphone subscriptions in the U.S. exceeded 100 million at the start of this year. These subscribers are often fairly affluent, making it important for automotive marketers to tap this market.
Those who create apps for these smartphones are devising programs aimed at the automotive market. One of their big challenges is to figure out how to get their apps into the hands of vehicle owners.
“We’ve got a couple distribution models,” said Mark Scalf, Director of Automotive Products at TeleNav. “One is to build apps for companies that put their name on them, like AT&T or Sprint. As app stores emerged, we started putting apps up in places like Apple's iTunes and the Android stores.”
Companies that are more established in this industry are taking different approaches. Automakers sometimes create their own apps. They’re also teaming with existing partners who will provide software that’s proven to run efficiently without interfering with in-vehicle systems.
“One way is via direct sourcing with automotive OEMs,” said T.C. Wingrove, Senior Manager, Global Electronics Innovation, at Visteon Corp. “In this case, we are sourced business and build an app specifically for an OEM. We would then facilitate sales and support of the app via an app store of their choice (for example, the OEM’s proprietary app store).”
Some vendors feel that these distribution strategies may segment by vehicle types. “In general, premium vehicle buyers have navigation that’s prepackaged,” Scalf said. “Entry-level demographics are more smartphone based.”
Once app suppliers set up their distribution models, they have to figure out how to make a profit. A plethora of commercial apps are being given away, and that scenario seems likely to occur in vehicles, too.
“Thus far, most of the solutions on the market have been provided to consumers for free,” Wingrove said. “This, however, is likely due to the relative immaturity of the app ecosystem in the automotive world. Expect to see several different types of apps in the future: free, free with advertising, and paid.”
Given the resourcefulness of software companies, those categories are already being split by vendors with different approaches. For example, navigation can be free on a cell phone, but links to the vehicle will cost extra.
“It’s up to app developers to build technologies for revenue,” Scalf said. “We use what we call freemium services. We offer free turn-by-turn navigation, but if they want to use it in the car, they pay a small extra fee.”