Back to Main

Apple Is Starting to Innovate Again, But Wait For More

By: Chris Ciaccia
Posted: 3/3/2014 12:35:00 PM
Referenced Stocks: AAPL

At the heart of every technology company lies innovation. You either innovate or you die, it's that simple. Enter Apple’s (AAPL) CarPlay.

CarPlay, previously known as iOS in the Car, allows users who have iPhones to control their entire in-car entertainment experience, all with the help of Siri. Once the iPhone is connected to the car, Siri can access contacts, make calls and listen to voicemails. There's also an eye-free experience, which allows you to respond to incoming texts using voice commands. It even reads your texts for you.

CarPlay gives "users an incredibly intuitive way to make calls, use Maps, listen to music and access messages with just a word or a touch." Right now, it's coming to Ferrari, Mercedes-Benz and Volvo, but other auto makers, including BMW, Ford, GM, Toyota and a host of others will have CarPlay available in their models as well.

“CarPlay has been designed from the ground up to provide drivers with an incredible experience using their iPhone in the car,” said Greg Joswiak, Apple’s vice president of iPhone and iOS Product Marketing in a statement released to the press. “iPhone users always want their content at their fingertips and CarPlay lets drivers use their iPhone in the car with minimized distraction. We have an amazing lineup of auto partners rolling out CarPlay, and we’re thrilled it will make its debut this week in Geneva.”

The opportunities for the connected car market are vast, with some expecting the market to surpass $100 billion in revenue by 2019.

Photo courtesy of ShutterstockPhoto courtesy of Shutterstock
CarPlay isn't going to drastically boost iPhone unit sales (Apple's recent deal with China Mobile is likely to do this in a greater scale), it does increase iPhone usage numbers, something which Apple and CEO Tim Cook care deeply about. However, it could boost Apple's software and services revenue, a segment that is still growing quite nicely for Apple.

In Apple's fiscal first-quarter, iTunes/Software/Services revenue rose 19% year-over-year to $4.397 billion, and a 3% rise sequentially.

It's likely that CarPlay is the first of many initiatives we see from Apple this year, as it starts to aggressively move into new product categories, including wearable technology, mobile payments, and potentially, the long-awaited, oft-rumored, but never seen, Apple television set.

As the company moves into these other areas, it's possible that institutional investors begin to move back into Apple, thus elevating the stock. In a research report last week, Morgan Stanley analyst Katy Huberty noted, "We view low institutional ownership relative to other large cap mobile technology stocks as underestimating Apple's ability to participate in new categories like wearables and services."

Cook and his engineering and design teams, led by Jony Ive, Craig Federighi, Bob Mansfield and others are clearly working on new products to come later this year. If they weren't, there wouldn't be the media blitz of interviews with Cook, most notably the recent one in The Wall Street Journal where Cook said "any reasonable person" would consider what Apple is working on a new product.

It looks as if 2014 is starting to shape up as an exciting year for Apple, and CarPlay is just the start. Full speed ahead.