Apple's Next Big Thing: The Car


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Apple's (AAPL) fiscal third-quarter earnings were aided by the continued strength in iPhone sales. However, Apple has been plagued about where it goes next. The car might wind up being Apple's next area of growth, if the conference call is any indication.

On the earnings call, CEO Tim Cook said that having a product in the car is something that's very important to Apple. "It [iOS] is a part of the ecosystem, and so just like the app store is a key part of the ecosystem and iTunes and all other content are key and the services we provide from messaging to and (inaudible) support," Cook said on the call. "Having something in the automobile is very, very important, it's something that people want and I think that Apple can do this in a unique way better than anyone else. So it's a key focus for us."

In recent months, Cook has positioned Apple as more than a hardware company, continually talking up Apple's software and services, and the potential they have to generate additional revenue for Apple. Last quarter, software and service revenue accounted for $4 billion in revenue, up 25% year-over-year.

Mercedes Benz has already begun to integrate Siri into some of its cars, as part of the Drive Kit Plus. Siri will be put into the A-Class Mercedes Benz line, and allow iPhone users to send texts, listen to music, update statuses on social networks.

With the introduction of Apple's iTunes Radio last month, this may be another way Apple attacks the car market. Pandora has seen a strong reception in cars, as more than 2.5 million people have signed up for the service in cars, highlighting the popularity of Internet radio in cars.

However, Pandora does not have the suite of products that Apple does. That includes its own operating system, iOS, as well as iTunes, Siri, Maps and other applications that could be used for cars.

Apple has a few executives with ties to the car industry, which should be able to aid the tech titan's movement into the industry. Phil Schiller, senior vice president of marketing, is a car aficionado, according to his Twitter account. Eddy Cue, who is Apple's senior vice president of Internet Software and Services, is on Ferrari's board of directors. The pedigree is there at Apple to attack the car industry, as Cook said on the conference call, and do it "in a unique way better than anyone else."

Apple may never may as much money selling its software and services to car manufacturers as it does selling iPhones and iPads, which accounted for 73% of Apple's $43.6 billion in revenue last quarter. However, with Cook's recent emphasis on software and services playing an increasing role at Apple, the car may just be "one more thing" that Apple shareholders have to look forward to.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , Technology , Earnings , Travel and Lifestyle
Referenced Stocks: AAPL

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Chris Ciaccia

Chris Ciaccia

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