Google (GOOG) seems to be vying for in-car supremacy. Google's plans to implement in-car mobile technology in Audi vehicles powered by its Android operating system were reported recently.
However, that now appears to be part of a much bigger deal, as not just Audi, but many other auto-makers such as General Motors Co. (GM), Honda (HMC), Hyundai and chip-maker NVIDIA (NVDA) have formed an alliance to introduce Android to in-car infotainment systems and navigation.
The main idea behind this alliance is to provide a common platform to automakers to easily bring cutting-edge technology to drivers and passengers in a safe and scalable manner.
However, the main challenge facing this alliance until such time that driverless cars become a reality is the ability to deliver apps and services that are both helpful and that don’t cause distractions for drivers.
This is not the first time that Google has formed such an alliance to target a new vertical. Earlier, in 2007, it was a part of the Open Handset Alliance which, in turn, helped in transforming Google’s operating system from a mere entrant in the market to a pioneering force.
Google’s entry into the Open Automotive Alliance follows the launch of Apple’s (AAPL) iOS in the Car technology, which enables the coupling of the iPhone with vehicle dashboards.
The inclusion of Google's technology into popular high-end vehicle models could improve brand awareness and solidify Google's position in the in-car technology market.
Google generates revenues primarily from the sale of advertising space on its online properties. It is focused on protecting and growing its position in the search market through continued innovation, quality improvements and expansion into various spheres.
We, however, anticipate that going forward Google will be burdened with margin pressure as a result of increasing competition from companies like Facebook (FB) and LinkedIn (LNKD), as well as the growing hardware business.
But Google has shown superb execution to date, which has kept the shares buoyant. As a result, its share price has appreciated 27.9% over the past year.
Currently, Google has a Zacks Rank #2 (Buy).
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