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Global Apps Integration Software Units to Reach 370 Million Units by 2020; Google Projected Mode to Lead, According to IHS Automotive

The global auto industry will see more than 370 million Smartphone apps integration software units in-use by 2020, according to a recent report and forecast from IHS Automotive, part of IHS Inc. (NYSE: IHS), the leading global source of critical information and insight.

Original equipment manufacturers (OEMs) are expected to continue today’s trend of integrating smartphone apps that are controlled via a vehicle’s HMI or as part of an infotainment system controlled by the vehicle’s HMI through the remainder of the decade. The recent introductions of Google Projected Mode and Apple CarPlay have changed the industry landscape dramatically and both companies are expected to become clear leaders in Smartphone apps integration.

Cars with Google Projected Mode software are expected to top 100 million units by 2020, up from just 86,000 units in 2014. Cars with Apple CarPlay, with 105,000 units in 2014, will exceed 94 million units in 2020, a compound annual growth rate of 210 percent. These volumes will contribute significantly to the nearly 370 million Smartphone apps integration units expected in the automotive industry by 2020, from just 6.9 million units in 2014. MirrorLink, Aha by Harman, Ford SYNC AppLink and others are also included in these numbers.

“Apps for autos are growing rapidly and will have a profound impact on auto infotainment and connectivity in the next decade,” said Egil Juliussen, the report’s co-author and research director at IHS Automotive. “Auto apps will influence the competitive landscape among auto manufacturers and will even change the brand market share between them. OEMs will have to keep up to remain competitive.”

North America expected to lead apps integration

At a regional level, North America is expected to continue to lead the industry in automotive apps integration, with more than 115 million expected by 2020. This is due to the U.S. being the pioneer in deploying such systems and high Smartphone penetration and with extensive Smartphone apps usage. Western Europe will remain in second place through 2019 and will have over 65 million apps integration enabled cars in use by 2020. China will grow rapidly and will surpass Western Europe in 2020, with over 71 million apps integration enabled cars. As the apps integration technology and market matures, the growth will be driven by car sales, Smartphone penetration and apps availability.

OEM adoption and integration of apps in vehicles is expected to be led by General Motors, for whom embedded apps development for infotainment systems will continue to increase. GM also is using HTML5 as its apps platform, which is well-known by developers and predicted to continue as the standard for web apps and web content. This platform also creates a larger knowledge and competency base that the auto industry can leverage for growing a large auto apps portfolio.

Apps developed for an OEM’s Software Development Kit (SDK) are just beginning to gain interest in the automotive market and will grow in importance in the next decade, the IHS report says. “We anticipate the most innovative apps will come from apps developers using OEM SDK’s,” said Juliussen. GM is currently the leader in the embedded apps category.

Embedded infotainment apps currently have two approaches: current SDKs are either OEM-specific or multi-OEM specific. Growth in these sectors also is expected, though will not be as aggressive as some of the other options.

More than 36 million apps-enabled vehicles will be in use with Apple CarPlay in 2020, up from just over 0.1 million in 2014, according to the IHS Automotive forecast. Google Projected mode apps are expected to be included in more than 40 million vehicles in 2020, from less than 0.1 million in 2014.

“The in-car app market is a new frontier for Apple and Google’s mobile competition,” said Jack Kent, mobile analyst at IHS Technology. “Each is aiming to use their established expertise in delivering mobile apps and content into the new realm of automotive entertainment and services.”

Global app spending to hit $40 billion by 2020

World consumer spend on mobile apps is set to grow from $24 billion in 2014 to more than $40 billion by 2020. “While games will dominate, other services such as music, location and navigation will contribute to revenue growth,” Kent said.

IHS research shows that apps are the fastest growing digital content category. The rise of devices that connect to smartphones and tablets including cars and also wearable and other smart devices will further increase mobile app downloads and revenues.

App stores will be the key distribution channel for auto apps. “App stores have revolutionized how consumers access digital content and services, providing a global distribution, discovery and billing platform that will reach well beyond smartphones and tablets,” Kent said.

About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs more than 8,000 people in 31 countries around the world.

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. © 2014 IHS Inc. All rights reserved.

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