Why the favorable commodity market helped Apple's gross margins (Part 4 of 5)
Apple looking to sell more iPhones to car drivers
In the prior parts of the series, we have been discussing Apple’s (AAPL) growing businesses—Mac and App Store. However, there’s another potential growth business that Apple is looking to capture—selling more iPhones to car drivers through attractive features such as CarPlay. Apple introduced CarPlay early this year. It’s a system that allows users to control a car’s native interface or voice control button on the steering wheel to activate Siri. Siri is an application that recognizes human voice and responds with an answer or action.
During the conference call to announce the fiscal third quarter earnings, Apple’s management mentioned that CarPlay is now being integrated with 29 car brands, which includes notable car players such as Ford (F), General Motors (GM), Honda (HMC), Toyota, Volvo, Audi, and BMW. Apple plans to capture the time people spend in their cars through CarPlay in a safe way. With CarPlay, Apple is trying to capture a big market of car drivers to replace their mobile phones with the iPhone. According to WardsAuto, which captures statistics regarding vehicle population, there were more than a billion vehicles in the world in 2010.
Google also entered into this market
Google (GOOGL) introduced Android Auto a few weeks ago. It’s a voice-based tool that connects an Android-based smartphone to a car. Similar to Apple, Google is looking for car drivers to replace their phones with Android based phones through Android Auto. According to a report from Comscore and as the previous chart shows, Android leads the U.S. smartphone platform subscriber market with a share of more than 50%. However, Apple isn’t far behind. It has a share of 41%. Capturing millions of car drivers’ time is an important way to grow the smartphone business for these players.
Browse this series on Market Realist:
- Part 1 - Why Apple’s gross margins were helped by the commodity market
- Part 2 - Why price cuts drove Apple’s Mac business
- Part 3 - Why the App Store continues to grow business for Apple
- Information Technology
- Technology & Electronics