By Amy Gilroy
Within five years, about 50 percent of all new car radios in North America will feature downloadable apps. But consumers are not yet sold on the feature, according to IMS Research (IHS, Inc, NYSE:IHS).
Already every major car maker in North America either offers an app radio system or is developing one. But only 34 percent of consumers would pay for apps in the car, an IMS survey found. ”This represents a large disconnect between the number of systems in the market and the number of people willing to pay to download content,” it said in a news release.
Apps are the way car companies stop the cycle of users replacing their radios, noted IMS, but the strategy may backfire.
“The big issue that no one has yet been able to address is whether vehicle manufacturers will be able to continue to support app development and maintenance over the life cycle of a car (typically 10 years); especially with direct revenue generation from apps likely to be very low. It is clear that this is one of the largest pitfalls the industry has to overcome in the coming years. If it doesn’t, it risks alienating many second or third hand owners”
A host of companies are now surfacing that want to handle the updates for the car makers. These include Airbiquity and Livio Connect, and even the Car Connectivity Consortium with its MirrorLink standard of linking apps to radios. The companies help reduce the financial pressure on car makers to host different apps.
IMS concludes that even though demand for apps is “unconfirmed” it believes there are growth opportunities in the connected radio and car makers should “push forward with app based head units”
For the North American market sales of such head units are forecast to grow from 2.2 million in 2011 to 11.6 million in 2019.
Source: IMS Research
Amy Gilroy is the Editor of CEoutlook and a Contributing Author to Satellite Radio Playground and Market Playground. Amy has been a fan of car audio longer than she cares to admit. At age 17, she was told an amplifier could make the car radio sound better, and from then on, she was hooked. Prior to launching CEoutlook, she was a Senior Editor at TWICE magazine.
Contact Amy Giroy: firstname.lastname@example.org