Alphabet’s GOOGL Google has struck a major deal with the largest auto alliance comprising of Renault, Nissan and Mitsubishi.

Per the recent multi-year partnership, Google will deploy its Android operating system (OS) for infotainment purpose in the cars manufactured by the auto alliance. This will enable people driving the car to access Google Maps, Google Assistant, Play Store and other important apps from the car’s dashboard.

Reportedly, the three car manufacturing giants are gearing up to feature Android infotainment system in their next generation cars which are set to be rolled out in 2021.

The latest move of the company is likely to expand its user and download base of Google Apps. Further, it will boost the installation base of Android OS which will strengthen its position further in the operating system space.

Coming to the price performance, shares of Alphabet have returned 10.8% on a year-to-date basis against the industry’s decline of 10.1%.

 

Vehicle Infotainment Space Holds Promise

Google’s recent Android automobile deal bodes well for its concerted efforts toward expanding presence in the in-vehicle infotainment market.

Per the latest report from Research and Markets, the global automotive infotainment system market is expected to witness a CAGR of 14% between 2018 and 2022.

Further, a report from Statista suggests that the infotainment services in the worldwide connected car market are projected to yield revenues of $4.2 billion by 2022 at a CAGR of 30.4% between 2018 and 2022.

We believe Google is likely to gain momentum in this rapidly growing market on the back of its innovative apps and user friendly android operating system which features open ecosystem.

Alphabet Inc. Revenue (TTM)

Alphabet Inc. Revenue (TTM) | Alphabet Inc. Quote

Strengthening Competitive Position

Google’s latest move provides it a competitive edge against the other tech giants such as Apple AAPL, Amazon AMZN and NVIDIA NVDA which are also leaving no stone unturned to bolster presence in the vehicle infotainment space.

Apple’s CarPlay with inbuilt Siri allows the car drivers to use their iPhones in a smarter way while driving. By incorporating it in the car infotainment system, it displays messages, calls, directions and many other notifications on the car’s dashboard. Reportedly, Toyota’s Entune 3.0 infotainment system includes Apple CarPlay and now is working on the integration of Alexa.

Further, Amazon has recently unveiled Alexa Automotive Core SDK or Auto SDK, its first software development kit which will help the car developers to incorporate Alexa into cars seamlessly. In fact, car companies like BMW, Toyota, Ford, Hyundai and General Motors are working with Amazon to integrate Alexa into their cars.

Moreover, Alexa skills have been already incorporated into many vehicles of Ford, Toyota and Mercedes Benz.

Additionally, NVIDIA’s DRIVE which is an autonomous computing platform for vehicles also supports car infotainment systems.

Nevertheless, Google’s Android Auto, which has inbuilt Google Assistant, aids people in playing music, getting directions, making calls and controlling home in a smart way with the help of voice commands.

Moreover, the company is working with Audi and Volvo to deploy Android into the infotainment systems of the next generation cars of these automobile companies. Further, Google Earth is already incorporated in the Audi’s in-car navigation system.

Notably, all these endeavors along with strong preference for Android all over the world will continue to aid Google’s growth in the automobile and in-vehicle infotainment areas.

Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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