Apple Taking the Driver’s Seat

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Smart cars are the next “next big thing,” and Apple Inc. (NASDAQ: AAPL) plans to dominate the space just as it has dominated MP3 players, smartphones, and tablets. At the Geneva Motor Show opening on Thursday, Apple is expected to launch an in-car operating system with carmakers Ferrari, Mercedes-Benz and Volvo.

The latest idea, of course, is to connect the cars to the Internet and integrate all the services a person can now get in the living room into a car — your car is just a big smartphone with seats, wheels, a motor, and a high-definition display. But the big idea is to lead the way to the age of driverless cars — connectivity is just the beginning and an in-car operating system like iOS is the first step.

It’s also worth noting that Volvo is owned by one of China’s largest car makers, Zhejiang Geely Holding Group. Just in case you were wondering why a company that is not a luxury car maker and sold only 427,840 cars globally last year is included on Apple’s initial list. Gaining a toehold in China is crucial to the success of any project these days.

Google Inc. (NASDAQ: GOOG), with its driverless cars, is also committed to being the leader in new technology for automakers. Microsoft Corp. (NASDAQ: MSFT) and International Business Machines Corp. (NYSE: IBM) are other contenders for platform dominance.

Apple’s reported inquiries to acquire Tesla Motors Inc. (NASDAQ: TSLA) fit right into a scenario where Apple’s iOS becomes the operating system for a new type of technological carmaker. Cars would no longer be just expensive hunks of metal, but mobile social media devices. (It should be noted that Tesla CEO Elon Musk recently called a sale of the company “very unlikely.”)

But there’s kind of a chicken-and-egg thing going on here. Which should come first, the in-car OS or the driverless car. The in-car OS is leading because it’s merely an extension of technology that has been widely adopted already. But without the driverless feature, is it really going to fire consumers’ imagination? That’s the challenge for Apple and the others.

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