Alibaba Group Holding Ltd’s Connected Car Strategy Threatens Apple, Google

Alibaba Group Holding Ltd’s Connected Car Strategy Threatens Apple, Google
By Charliepug (Own work) [<a href="">CC BY-SA 4.0</a>], <a href="">via Wikimedia Commons</a>

U.S. brick-and-mortar retailers are already scared of Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA). Retailers are not the only ones facing challenges from Alibaba. Tech giants such as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOGL) have been strengthening their positions in the connected car market.  But Alibaba seems to have even bigger ambitions in this segment.

Alibaba and SAIC focus on B2B revenue generation model

The online retailer has partnered with China’s SAIC Motor Corporation Limited (SHA:600104) to address the connected car market. The two companies plan to develop an Internet-connected car in the next two years. Google and Apple are focused on in-car app and smartphone experience. But Alibaba is also eyeing cloud computing and predictive data analytics.

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SAIC and Alibaba will take the Inkanet connected car platform to a new level. Sarwant Singh of Forbes says that the connected car space holds huge potential in terms of customer retention, where revenue will be generated at the B2B level. Now the trend is shifting from B2C revenue-generation to long-term customer retention.

Alibaba’s expertise in analytics and cloud will help it make inroads into loyalty, customer behavior analysis and CRM-focused apps. After raising $25 billion in its historic IPO, the company could buy Internet-connected car firms and create a strong ecosystem with multiple apps and services. Earlier this year, Baidu Inc (ADR) (NASDAQ:BIDU) signed a deal with BMW to develop an autonomous car technology.

Alibaba will turn cars into an extended ecosystem

BMW and Baidu’s car includes Alibaba’s Yun operating system. It will be connected to the e-commerce giant’s cloud services, navigation tools and other apps. Clearly, Alibaba is looking to build a much broader car platform than Apple’s CarPlay. Further, the Jack Ma-led company is planning to go even beyond connected cars. It is turning cars into an extended ecosystem that connects “multi-modal journeys.”

Frost & Sullivan analysts believe that the Hangzhou-based company will leverage its e-commerce, connected cars, and travel websites to create an integrated journey platform.

Alibaba shares inched up 0.18% to $110.09 at 12:57 PM EST on Wednesday.

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