Last December, engineers at General Motors' (GM) OnStar unit hunkered down in a dingy basement conference room plastered with whiteboards. Their mission: to reimagine the car as a device capable of running applications similar to those made for smartphones, tablets, and TVs. "It was an explosion of ideas," Steve Schwinke, director of advanced system development at OnStar, who attended that meeting, said in an interview.
The first fruit of that session came Oct. 28, when OnStar released downloadable software that lets car owners use their smartphones to unlock doors, check tire pressure, or even start a car. The app works on the Apple (AAPL) iPhone and devices that run Google's (GOOG) Android operating system and is designed for more than 20 new Cadillac, Chevrolet, Buick, and GMC models.
Besides GM, Ford Motor (F), Nissan Motor (NSANY), and BMW (BMW:GR) are also working on technology that lets cars run apps, communicate with devices such as phones, and, in some cases, download videos, music, and applications via wireless connections. Alpine Electronics (6816:JP) and other makers of car entertainment and navigation equipment are also getting in on in-car apps.
The number of global users of automotive apps may rise to more than 28 million in 2015, from 1.4 million in 2010, according to consultant ABI Research in Oyster Bay, N.Y. "We are starting to see a change toward more segmentation," Schwinke said. "You are trying to provide more services that satisfy very well smaller segments of the population."
Nissan's electric Leaf, due to go on sale in December, will let iPhone users remotely check the car's electric charge and receive text messages if a charger malfunctions. The same month, owners of the 2011 Ford Fiesta will be able to download new software called AppLink, which will let cars run a variety of smartphone applications. Owners of Android phones and Research In Motion (RIMM) BlackBerrys will get in-car access to such services as Pandora Media online radio.
Ford expects to announce more car-friendly smartphone applications in the coming weeks. In early October the automaker said it's reviewing more than 1,000 app ideas from developers. "You are seeing a rapid acceleration in the application space," Doug VanDagens, director of connected services at Ford, said in an interview.
Automakers view apps as a way to make cars more appealing. Ford said it's benefiting from outfitting autos with Sync, an in-car system that lets people do business searches and get driving directions. "Vehicles with Sync move twice as fast off our dealer lots," VanDagens said. After viewing demonstrations of Sync, non-Ford owners are three times as likely to consider the brand, according to Ford's research. Sync will support AppLink.
Used cars equipped with Sync, on average, sell for $200 more in auctions than those without it, Ford says.
Alpine's iDA-X305S, a digital media receiver that offers in-car access to Pandora, sells for $400, $50 higher than an earlier model without the Internet radio service. The device's display shows album art, and its knob lets customers mark songs with thumbs up or down. The company plans to include Pandora in more models in the 2011 lineup, Steve Brown, product promotion manager at Alpine, said in an interview. "We see Pandora as a very popular option," he said.
Some electronics companies are using acquisitions to enter the in-car app market. Harman International Industries in September bought Aha Mobile, which provides streaming audio versions of Facebook news feeds, short blogs from Twitter, national news updates, and traffic reports. The service will become available in some devices sold through specialty stores in 2011, and will be built into cars released in 2012, Robert Acker, general manager of Harman Aha Radio, said in an interview. "It's an opportunity to redefine the in-car radio experience," Acker said, "the opportunity to translate the Web experience to the car." Aha expects to more than double its staff by yearend, to 15 to 20 people, he said.
More widespread adoption may hinge on whether automakers and electronics manufacturers can ensure that apps are safe to operate while driving. "If a customer were to look at an app while driving and potentially have an accident, the manufacturer would be responsible," said Paul Hawson, a product planner at Nissan.
Those concerns aren't standing in the way of Nissan's app development, he said. Dominique Bonte, practice director at ABI Research, said in-car apps will eventually "become a standard option on all cars."