Let us dive into a topic every techie loves and loves to hate and hates to love: Android vs. iOS. Now this has been done a million times, so what could I possibly add to it? Some thoughts on one of the new IT battlegrounds: mobility.
I say mobility because this is the term used by giants like Daimler and BMW. At this point everybody knows that the future of mobility is a blend of car sharing on the one hand and autonomous driving and companies like Uber and Tesla in the long term on the other. So, the new game is to bring people from A to B while never letting them leave your own platform by whatever means neccessary.
This is why Daimler bought MyTaxi, BMW launched DriveNow with Sixt (ReachNow in the US), Daimler launched Car2Go and why BMW and Daimler are fusing everything together into ShareNow hoping to counter Silicon Valley and not remain as anonymous to end users as Airbus and Boeing in the future (do you remember what plane you flew on last? exactly.) Hell, they will gladly rent you bikes as long as you keep using their apps. Imagine telling this to a board member in Stuttgart or Munich 30 years ago.
More specifically I am going to be talking about the reason why Android slowly has the upper hand by being patient and refusing to introduce a walled garden experience by looking at the automotive sector as a new super-market for IT giants.
Enter Apple and Google. While Waymo, Google’s autonomous driving spin-off, recently valued by Morgan Stanley to the tune of 175 billion (!) USD, is more than real, we just keep hearing unsubstantiated rumors of the so called Apple Car. Apple has kept hiring and firing engineers for its automotive activities left and right for quite some time now. At this point I am not sure what “Tim Apple” is doing. In the meantime we have CarPlay and Android Auto and let’s face it — CarPlay wins hands down. I love iOS, I love Apple and I will never buy an Android phone again. There we have it. Right? Fanboiii? No. I think that Apple has missed the point while selling high margin sheets of glass and steel for the past decade. With all their unbelievable success of becoming the iPhone company they did not realise how big of a market they will lose by not providing an alternative in newer OS markets like the automotive sector. Enter Android Automotive; often mistaken with Android Auto — definitely not the same thing. We will come back to this in a minute.
Currently Apple makes pretty decent software, which delights most users — nobody cares* that Apple makes amazing chips in their own hardware division — and it keeps them coming back to Apple (same with the Mac). The problem is that this software is exclusively attached to extremely expensive devices that will not get any cheaper anytime soon. In fact they have been getting more expensive to the point that for the first time ever an exec from Apple, Jeff Williams, said the following:
“We do not want to be an elitist company […] We want to be an egalitarian company, and we’ve got a lot of work going on in developing markets.”
Wow. Now imagine an Apple Car. Right. Ok. But then there are the never ending rumors regarding Apple “needing” to buy Tesla. I also think that this is unrealistic. Why take over a complex manufacturing operation without any domain knowledge to get into a lower margin market? GM’s net income was around a 1/7 of Apple’s net income in 2018. Apple will soon start making more money with their services (if they have not done so already) than GM ever could by selling millions of cars every year.
While Apple was busy buying Beats and launching Apple Music because it wanted some of Spotify’s pie (justifiably by the way since iTunes was/is pretty much dead with the younger demographic at this point), Google used its incredible open source super powers with the Android Open Source Project (AOSP) — this is the core Android project that allows OEMs to create their own versions of Android — to launch Android Automotive.
In case you are not familiar with the basic architecture of Android (AOSP), here is a brief overview:
What you may not know as an end user of cars is how complicated it is to build new software for legacy automakers compared to Tesla and its OTA (over the air) updates. If Tesla was around since the 90s, their in-car infotainment would be just as bad — technical debt is a part of software development. I know as I work with legacy automakers every day. Google understands this and knows how powerful AOSP is beyond phones — it can morph into any new or old hardware product category and since Google does not need to own the hardware like Apple, the sky is the limit. The Android runtime is almost always exactly the same and you sort of end up changing your HAL — Hardware Abstraction Layer depending on your device type and your UI if we are e.g. talking about smart watches or in this case cars.
Now we are back to what in my mind is even more valuable than Waymo — Android Automotive:
Essentially Google has provided a solution for all legacy car manufactures — a fully customisable OS, which can be run on any and all cars they have with the ability to implement their own UI. And if a manufacturer is interested — customers get all the Google Services as well. Sweet deal for Google. This is huge for the industry believe me. And everyone is experimenting with it. You can let Android developers start building apps for your boring cars and delight millennial customers around the world; without needing to go back in time to murder Elon Musk.
This is why Android will win or in fact already has: AOSP is not bound to specialised hardware and while Apple keeps reaping the profits of the smartphone market for now, Google’s software will eat the world. Apple is not only losing the automotive market, it has showed that it cannot be competitive without owning the whole value chain, which will become very hard going forward. For these corporate leviathans to keep growing with a pace anywhere close to the last decade, they will need to become more creative when entering new markets as the rest of the corporate world has already awoken to the knowledge that software is magic that can be translated into cash for shareholders.
*I actually love Apple’s in-house chip team and I care. Keep rocking.