Pioneer’s “App Radio” – Will it grow market share?

Pioneer's App Radio could be a major game changer because of its potential to reach out to savvy smartphone users in the U.S. and Europe with an app that can give them greater freedom in their cars.
By Jack Bergquist, IMS Research June 6, 2011

Pioneer’s aftermarket automotive division has recently announced the U.S. and Western European release of its new “App Radio”, due to hit the shops towards the end of June 2011. This unit will be the first head unit released in the OE or aftermarket space to solely leverage content from a user’s smart phone – in this case an iPhone 4 or iPod touch. The planned retail price of the unit is around $500 in the US and should be similar in Europe.

This product is very interesting and certainly has the potential to cause a stir in the market, not least for Pioneer’s existing business. Pioneer is currently the market leader for aftermarket navigation head units but, with the advent of this system, there will undoubtedly be some impact on the sales of its more expensive embedded navigation head units, especially with the substantially lower cost of the new system. However, it will also offer the opportunity to grow overall market share by targeting a larger portion of customers, particularly ‘tech savvy’ users of smart phones.

One key question that does spring to mind when looking at this system is whether Pioneer is limiting itself by only releasing an iPhone specific model at this stage. Currently, Android smart phones have a larger market share in the US and Europe than Apple, and the potential customer base is further limited by the fact that the system only works with the iPhone4. As such, an Android version does seem a must to fully capitalize on the potential of this head unit.

So, I’m sure the key question you are asking yourself is how well will this unit sell? There is obviously the current annual market for navigation/AV head units, plus iPhone 4 owners who may be tempted to fit such a system to their new cars to leverage the functionality and interface of their beloved smart phone. Also, with the potential of a future release compatible with Android, the market could be even larger. So I say to the industry, watch this space over the next 6 months as this could be a game changer!