Google, Apple Forge Auto Ties - Wall Street Journal

Dec. 29, 2013 5:58 p.m. ET

Technology giants Google Inc. GOOG +0.08% Google Inc. Cl A U.S.: Nasdaq ^$1118.40 +0.94 +0.08% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 1.53M AFTER HOURS ^$1118.45 +0.05 0.00% Dec. 27, 2013 7:57 pm Volume (Delayed 15m): 37,195 P/E Ratio 31.71 Market Cap $373.64 Billion Dividend Yield N/A Rev. per Employee $1,059,710 12/29/13 Google, Apple Forge Auto Ties 12/27/13 How Google Penalized RapGenius 12/27/13 Israeli IPO Wave Expected in 2... More quote details and news » and Apple Inc. AAPL -0.68% Apple Inc. U.S.: Nasdaq ^$560.09 -3.81 -0.68% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 7.96M AFTER HOURS ^$559.98 -0.11 -0.02% Dec. 27, 2013 7:59 pm Volume (Delayed 15m): 103,522 P/E Ratio 14.03 Market Cap $503.93 Billion Dividend Yield 2.18% Rev. per Employee $2,127,850 12/29/13 Google, Apple Forge Auto Ties 12/29/13 Inexpensive Stocks Take Lead i... 12/27/13 Nokia Drops Maps App from iPho... More quote details and news » are about to expand their battle for digital supremacy to a new front: the automobile.

Next week at the Consumer Electronics Show in Las Vegas, Google and German auto maker Audi AG NSU.XE 0.00% Audi AG Germany: Xetra ^€660.00 0.00 0.00% Dec. 27, 2013 5:36 pm Volume : 384 P/E Ratio 6.79 Market Cap €28.38 Billion Dividend Yield 0.53% Rev. per Employee €711,921 12/29/13 Google, Apple Forge Auto Ties 12/27/13 Audi to Invest $30 Billion Thr... 12/14/13 Audi RS7 Quattro Is a True Fai... More quote details and news » plan to announce that they are working together to develop in-car entertainment and information systems that are based on Google's Android software, people familiar with the matter said.

They also plan to disclose collaborative efforts with other automotive and tech companies, including chip maker Nvidia Corp. NVDA +0.57% NVIDIA Corp. U.S.: Nasdaq ^$15.76 +0.09 +0.57% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 5.25M AFTER HOURS ^$15.76 0.00 0.00% Dec. 27, 2013 4:27 pm Volume (Delayed 15m): 23,542 P/E Ratio 20.47 Market Cap $8.96 Billion Dividend Yield 2.16% Rev. per Employee $513,274 12/29/13 Google, Apple Forge Auto Ties 12/17/13 Jury Begins Deliberating Insid... 12/13/13 Dell CIO Booting 'Shadow IT' W... More quote details and news » , to establish Android as an important technology for future vehicles, these people said. The aim is to allow drivers and passengers to access music, navigation, apps and services that are similar to those widely available now on Android-powered smartphones, these people added.

The coming announcements signal Google's response to an initiative launched last June by Apple to integrate iPhones and other devices running its iOS operating system with car makers' dashboard control panels. Apple so far has the support of BMW AG BMW.XE +1.03% Bayerische Motoren Werke AG Germany: Xetra ^€85.42 +0.87 +1.03% Dec. 27, 2013 5:35 pm Volume : 805,858 P/E Ratio 10.73 Market Cap €54.80 Billion Dividend Yield 2.93% Rev. per Employee €721,448 12/29/13 Google, Apple Forge Auto Ties 12/20/13 BMW Takes Positive Step in Ele... 12/03/13 Buyers Illegally Shipping BMW ... More quote details and news » , Daimler AG DAI.XE +1.36% Daimler AG Germany: Xetra ^€63.15 +0.85 +1.36% Dec. 27, 2013 5:35 pm Volume : 2.13M P/E Ratio 9.07 Market Cap €67.55 Billion Dividend Yield 3.48% Rev. per Employee €420,678 12/29/13 Google, Apple Forge Auto Ties 12/23/13 Daimler to Decide on Second Ca... 12/19/13 Tougher Safety Standards Mean ... More quote details and news » 's Mercedes-Benz division, General Motors Co. GM -1.40% General Motors Co. U.S.: NYSE ^$40.94 -0.58 -1.40% Dec. 27, 2013 4:04 pm Volume (Delayed 15m) : 10.02M AFTER HOURS ^$41.12 +0.18 +0.44% Dec. 27, 2013 7:59 pm Volume (Delayed 15m): 29,991 P/E Ratio 15.93 Market Cap $56.86 Billion Dividend Yield N/A Rev. per Employee $724,174 12/29/13 Google, Apple Forge Auto Ties 12/27/13 GM to Recall 1.5 Million Cars ... 12/23/13 Ally Receives Fed Approval for... More quote details and news » and Honda Motor Co. 7267.TO +0.47% Honda Motor Co. Ltd. Japan: Tokyo ^¥4320 +20 +0.47% Dec. 30, 2013 11:30 am Volume : 1.69M P/E Ratio 19.66 Market Cap ¥7789.14 Billion Dividend Yield 1.85% Rev. per Employee ¥57,240,600 12/29/13 Google, Apple Forge Auto Ties 12/16/13 Japan's Auto Market Gets Tough... 12/05/13 Toyota Hits Back in Battle of ... More quote details and news »

Apple and Google already compete fiercely in an array of digital businesses, ranging from smartphones and tablet computers to mobile apps and Web browsers. With 80 million new cars and light trucks sold each year, automobiles represent a significant new opportunity for Internet-based software and services.

"The car is becoming the ultimate mobile device," said Thilo Koslowski, an analyst at the research firm Gartner Inc. IT -1.39% Gartner Inc. U.S.: NYSE ^$70.23 -0.99 -1.39% Dec. 27, 2013 4:03 pm Volume (Delayed 15m) : 363,395 AFTER HOURS ^$70.23 0.00 0.00% Dec. 27, 2013 4:27 pm Volume (Delayed 15m): P/E Ratio 36.39 Market Cap $6.47 Billion Dividend Yield N/A Rev. per Employee N/A 11/14/13 Four Out of Every Five Smartph... 11/04/13 Salesforce.com Pitches Private... 10/17/13 Coming Soon and in Billions: D... More quote details and news » who specializes in advanced in-car electronics. "Apple and Google see that and are trying to line up allies to bring their technology into the vehicle."

The annual event known as CES has in recent years become an important showcase for advances in automotive electronics, including the kind of autonomous driving technologies that Google has helped pioneer.

Besides its partnership with the Internet company, Audi is expected to demonstrate new technologies that allow cars to drive themselves in certain situations and for short periods, and to lay out a timetable to offer them on new models due to arrive over the next four or five years, people familiar with the matter said.

A year ago, Audi used the trade show to demonstrate a car that could navigate through a parking garage and pull into a parking space without a driver at the wheel.

Ford Motor Co. F -0.20% Ford Motor Co. U.S.: NYSE ^$15.30 -0.03 -0.20% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 21.67M AFTER HOURS ^$15.32 +0.02 +0.13% Dec. 27, 2013 7:31 pm Volume (Delayed 15m): P/E Ratio 11.12 Market Cap $60.35 Billion Dividend Yield 2.61% Rev. per Employee $855,585 12/29/13 Google, Apple Forge Auto Ties 12/27/13 GM to Recall 1.5 Million Cars ... 12/18/13 Ford Expects Major Venezuelan ... More quote details and news » is expected to demonstrate an autonomous vehicle it has developed at CES next week. BMW, based in Germany, has also invited reporters to a demonstration of related technology.

The developments, some of which were discussed in an article in electronics trade publication EE Times earlier this month, come as car makers keep adding more computer chips to their new models. Some, such as GM and Audi, have announced plans to equip cars with fourth-generation cellular chips to connect to the Web without requiring a smartphone. GM, for example, plans to equip almost all of the company's 2015 models with the technology to provide a constant wireless broadband connection, said Phil Abram, the auto maker's chief technology officer, during a recent conference call with analysts.

Car makers also are adding powerful processors based on technology that ARM Holdings ARM.LN +1.00% ARM Holdings PLC U.K.: London ^GBp1106.00 +11.00 +1.00% Dec. 27, 2013 4:35 pm Volume : 1.68M P/E Ratio 99.64 Market Cap GBp15.49 Billion Dividend Yield 0.38% Rev. per Employee GBp288,336 12/29/13 Google, Apple Forge Auto Ties 12/23/13 European Stocks Reach 3-Week H... 12/13/13 ARM Makes a Play in Videogame-... More quote details and news » PLC of Britain licenses to smartphone chip makers. Such processors require operating systems, and Google's free Android software is an emerging option.

"We are starting to see an uptick of Android use in car makers, starting in Asia and working its way across the world," said Rajeev Kumar, a world-wide director of business development for Freescale Semiconductor Inc., a large supplier of chips used in cars.

As they approach the auto market, technology providers are compelled to create offerings that don't require drivers to take their eyes off the road or their hands off the steering wheel. Apple has some key technology in that field.

The Silicon Valley company's voice-based Siri technology, for example, can read out incoming text messages and emails, and let the driver dictate a reply.

Honda, based in Japan, is now starting to roll out new models that allow the driver to activate Siri from a button on the steering wheel and to talk to Siri using the car's hands-free audio system. That enables a driver to use Siri to read out newly arrived email or text messages, check weather, set the navigation system or enter appointments on the iPhone's calendar—all while keeping both hands on the wheel.

With its "iOS in the Car" initiative announced last June, Apple hopes to turn the iPhone into a kind of brain for operating dashboard electronics, using the car's built-in display to interact with services such as maps and traffic information.

Apple has said that it expects a dozen car brands to adopt the technology in 2014. An Apple spokeswoman declined to comment for this article.

Google and the company's partners, by contrast, hope to have Android and related applications running on the car's own built-in hardware, people familiar with the matter said. The company has provided its map technology to a range of auto makers since 2006, including Audi, Toyota Motor Corp. 7203.TO +0.47% Toyota Motor Corp. Japan: Tokyo ^¥6420 +30 +0.47% Dec. 30, 2013 11:30 am Volume : 5.03M P/E Ratio 14.38 Market Cap ¥22032.70 Billion Dividend Yield 2.34% Rev. per Employee ¥71,033,100 12/29/13 Google, Apple Forge Auto Ties 12/17/13 Holman Jenkins: Will Tort Law ... 12/16/13 Japan's Auto Market Gets Tough... More quote details and news » of Japan and Tesla Motors Inc. TSLA -2.82% Tesla Motors Inc. U.S.: Nasdaq ^$151.12 -4.38 -2.82% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 5.45M AFTER HOURS ^$150.50 -0.62 -0.41% Dec. 27, 2013 7:59 pm Volume (Delayed 15m): P/E Ratio N/A Market Cap $18.53 Billion Dividend Yield N/A Rev. per Employee $575,104 12/29/13 Google, Apple Forge Auto Ties 12/29/13 Inexpensive Stocks Take Lead i... 12/27/13 Top 10 MoneyBeat Posts of 2013 More quote details and news » A spokesman for Google said that it doesn't comment on rumors or speculation.

Filip Brabec, Audi's head of product strategy, declined to discuss the auto maker's coming announcements at CES. But he acknowledged that future vehicles will need computer operating systems to support the kind of apps and functions that consumers want to access while driving.

"Cars are becoming more complex, and with the computing power that is going into vehicles, you need that type of system in the car," he said.

The increased focus on in-car electronics underscores a significant challenge for auto makers. Where earlier buyers based purchase decisions on characteristics such as horsepower or fuel economy, consumers now have grown up with the Web and mobile devices and expect to remain connected while on the go.

"When they get to the dealership, the first thing they may ask is what does this thing do and point to the dashboard," said Charles Koch, a manager of new-business development at Honda's U.S. unit.

Ford attributes rising sales in the U.S. in part to the voice-activated Sync system it started offering in 2007, developed with help from Microsoft Corp. MSFT -0.40% Microsoft Corp. U.S.: Nasdaq ^$37.29 -0.15 -0.40% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 14.38M AFTER HOURS ^$37.24 -0.05 -0.13% Dec. 27, 2013 7:28 pm Volume (Delayed 15m): P/E Ratio 13.81 Market Cap $311.30 Billion Dividend Yield 3.00% Rev. per Employee $810,010 12/29/13 Google, Apple Forge Auto Ties 12/26/13 WSJ's 2013 Business News Quiz 12/26/13 Snowden Effect Dominates 2013 ... More quote details and news » The complex electronics has at times become a double-edged sword, however; a follow-up version called MyFord has proved confusing to some customers, hurting Ford's scores in some automotive-quality studies.

The push toward smarter cars, meanwhile, has caused big-name chip makers such as Intel Corp. INTC -0.39% Intel Corp. U.S.: Nasdaq ^$25.60 -0.10 -0.39% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 12.78M AFTER HOURS ^$25.56 -0.04 -0.16% Dec. 27, 2013 7:46 pm Volume (Delayed 15m): P/E Ratio 13.47 Market Cap $127.26 Billion Dividend Yield 3.52% Rev. per Employee $498,581 12/29/13 Google, Apple Forge Auto Ties 12/18/13 Intel Joins Techie 49er Sponso... 12/13/13 Verizon, Intel Close to Forgin... More quote details and news » and Qualcomm Inc. QCOM +0.44% Qualcomm Inc. U.S.: Nasdaq ^$73.80 +0.32 +0.44% Dec. 27, 2013 4:00 pm Volume (Delayed 15m) : 4.42M AFTER HOURS ^$73.88 +0.08 +0.11% Dec. 27, 2013 7:55 pm Volume (Delayed 15m): P/E Ratio 18.50 Market Cap $124.68 Billion Dividend Yield 1.90% Rev. per Employee $802,129 12/29/13 Google, Apple Forge Auto Ties 12/13/13 Qualcomm Names Mollenkopf as I... 12/13/13 Stocks to Watch: Anadarko Petr... More quote details and news » to step up efforts to penetrate the car business. Rival Nvidia says 4.5 million cars on the road are already equipped with its processors, and predicts an additional 25 million cars in four or five years will be using its technology.

"Right now, we are just scratching the surface," said Danny Shapiro, Nvidia's senior director for automotive applications.

—Don Clark contributed to this article.

Write to Neal E. Boudette at neal.boudette@wsj.com and Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com

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