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Why Apple’s new CarPlay system should help push iPhone sales

Puneet Sikka

Apple announces its CarPlay system

On March 3 at the Geneva International Motor show, Apple (AAPL) announced that the leading auto manufacturers such as Ferrari, Mercedes-Benz, and Volvo will premier CarPlay. CarPlay is a system through which users can 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. For example, Siri can help make calls, return missed calls, play songs, or provide directions. CarPlay would help car drivers use their iPhone with minimal distraction and use Siri to control all the car’s functions. Currently, only a few cars have CarPlay integration built in, and the integration will work only with the iPhone 5, iPhone 5S, and iPhone 5C.

Apple plans to capture people’s time spent in their car

Car driving has become an integral part of people’s lives across the world. People spend a major portion of their time driving from home to work and vice versa. People generally make calls, receive calls, text message, listen to music, use maps for directions, and more while driving. Apple plans to capture the time people spend in their cars through CarPlay in a safe way. By offering a service that adds value to the driving experience, Apple has just found another way to become a daily and essential part of consumers’ lives. We believe this is a good move on Apple’s part, as it’s trying to capture a big market of car drivers to replace their mobile phones with the iPhone.

Apple will hugely benefit if car drivers opt for the iPhone

WardsAuto, which captures statistics regarding vehicle population, estimates that there were more than a billion vehicle in the world in 2010. The key for Apple would be to convert other smartphone users to the iPhone through services such as CarPlay. Taking a hypothetical case, if we assume that about 30% of car owners convert their existing mobile phones to iPhone 5 and above, this would mean an additional sale of 300 million iPhones for Apple.

According to IDC, Apple sold about 150 million iPhones in 2013, out of a total of a billion smartphones sold globally in 2013. Google’s (GOOG) Android operating system dominates the smartphone OS market, with 79% market share. Apple’s iOS is a distant second at 15%. Microsoft’s (MSFT) Windows Phone (which acquired Nokia’s (NOK) mobile phone business last year) and BlackBerry (BBRY) each have a negligible market share. If our hypothetical case of an additional 300 million iPhone sales for Apple proves true, it would mean that iPhone sales would triple with time. The iPhone is a very valuable business for Apple, as the company not only gets more than 50% of its revenues from iPhone, but also each iPhone sale generates more profit compared to Apples other devices such as iPad and Macintosh computers.

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