Will Google Partner with Audi Again?

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Reportedly, Google, Inc. (GOOG) and Audi are expected to forge a partnership during the upcoming Consumer Electronics Show at Las Vegas. The partnership aims at implementing in-car mobile technology in Audi vehicles.

The in-car entertainment system will be controlled by Google’s Android operating system. Audi users will now be provided with all the facilities that are usually available in smartphones and that too while traveling.

The idea of accessing all the features available in a smartphone while driving seems innovative and interesting but it has its demerits too. It may prove to be a source of distraction for the drivers, thus leading to accidents.

This is not the first time that both the companies have come together. They already have an existing deal as per which all the data services and maps for Audi’s Multi Media Interface are being provided by Google.

The partnership will also benefit Nvidia (NVDA), as it will supply the processors needed to run the mobile operating system.

This move is believed to be an attempt on Google’s part to retaliate to Apple’s (AAPL) "iOS in the Car" technology, which enables the pairing of the iPhone with vehicle dashboards.

The inclusion of Google's technology into popular high-end vehicle models could improve brand awareness and solidify Google's position in the in-car technology market.

Google generates revenues primarily from the sale of advertising space on its online properties. It has therefore focused on protecting and growing its position in the search market through continued innovation, quality improvements and expansion into various spheres.

We however anticipate that going forward Google will be burdened with margin pressure as a result of increasing competition from the likes of Facebook (FB) and a growing hardware business.

But Google has shown superb execution to date, which has kept the shares buoyant. As a result, its share price has appreciated 27.9% over the past year.

Currently, Google has a Zacks Rank # 2 (Buy).
 

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