Is there a similarity Between International Business Machines Corp. (IBM) In 1982 And Auto Industry Today?

Share on FacebookTweet about this on TwitterShare on Google+Share on RedditShare on LinkedInPrint this pageEmail this to someone

What is happening today is that the automobile industry is behaving much like International Business Machines Corp. (NYSE:IBM) back in the days when it didn’t foresee the mistake of losing platform market to Microsoft Corporation (NASDAQ:MSFT). Like IBM in 1985, automakers are ceding the control of dashboard to Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL).

There are of course a few dissenters in the auto industry, but several dozen car makers are giving up their messaging and infotainment functions to Apple’s CarPlay or Google’s Android Auto. Some automakers have even surrendered to both CarPlay and Android Auto.

For the time being, many automakers have gone with a hybrid in the middle approach using BlackBerry Ltd (TSE:BB)(NASDAQ:BBRY)’s QNX and developing custom systems on top of it to differentiate. This solution still leaves automakers in a similar position to Android manufacturers attempt to differentiate. As time passes, the ability to different software and technology will become more important.

Losing control of destiny

The danger of handing over the keys to Apple and Google for dashboard control is that people will no longer bother which car brand they are buying. The decision will come down to the operating system on the car, which is actually equivalent to the automobile industry losing control of its destiny.

International Business Machines Corp. (NYSE:IBM) once controlled both the platform and PC hardware market, but the company lost the platform to Microsoft’s Windows. Without the platform, IBM fell to narrow margins territory and became vulnerable to intense competition. Further than that, IBM lost the control of its destiny.

Connected market

It is expected that the next phase of connected devices will be on the road. An estimated 250 million connected cars will to be on the road by the next five years. The related industry of infotainment, digital diagnostics and system navigation is expected to reach $270 billion by that time up from the $47 billion currently.

The situation for the automobile industry today is similar to that of International Business Machines Corp. (NYSE:IBM) in 1985. The unfortunate thing is that the auto industry could end up in IBM’s position of endless struggles if it doesn’t take the control of the dashboard from the likes of Apple and Google.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

You may also like...

Google Inc (GOOGL) and, Inc. (AMZN) Expand In India

Google Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) and, Inc. (NASDAQ:AMZN) are scaling up their operations in India to take advantage of the available...