* Market seen reaching $47 bln in 2016, $36 bln for OEM
* Says 20,000 to 25,000 Asteroid radios sold to individuals
* Three products to be launched in September
* Two car makers have picked Parrot's Android-based
By Alice Cannet
PARIS, June 1 Parrot, an upstart
French technology company, is betting that drivers want their
cars to be fitted with an all-in-one "infotainment" device based
on Google's popular Android operating software to give
hands-free control of its smartphone, radio, music and satellite
Best known for hands-free car phone kits, Parrot has spent
the last three years and tens of millions of euros developing
the first-ever car radio based on Google's Android, gambling
that it will become a must-have for drivers wanting more than
just a good stereo system and a cradle for their smartphones.
Instead, the 250 million-euro ($312 million) company
believes they will want its voice-controlled, multi-purpose
"Asteroid" radio, the first version of which it launched last
year. The company says it has sold between 20,000 and 25,000
radios so far to individual buyers for around $290.
The current version features relatively few apps but
Android's "open-source" platform means that any software
developer can modify the code of existing apps to adapt them to
the car as well as create and share new apps that might appeal
specifically to drivers and as first-mover this could be a
potential "game changer" for Parrot, said Roger Lanctot,
associate director for the global automotive practice at
To this end Parrot has now made a software development kit
available online for developers, inviting them to create new
apps around the themes of geolocation, driving assistance,
contact management and music.
"Because they embraced it early, they certainly have some
advantages in terms of their experience in working with Android
and apps-based platforms in a system in a car," Lanctot said.
But it still faces seemingly daunting odds in taking on
audio specialists like Harman International, Pioneer and
JVC-Kenwood as well as GPS satellite navigation
manufacturers such as Garmin and Tomtom and
is now hoping to get major automakers to pre-install its
Android-powered technology in their new car models.
"It's a market that will be battled over by a huge number of
people," Eric Beaudet, analyst at Natixis said. "Undoubtedly,
this is a market that will develop very quickly."
Parrot, which was hitherto an indirect supplier to major
carmakers including Toyota, Renault, BMW
and Volkswagen by providing the microchips
necessary to component companies such as Delphi,
Siemens VDO and Visteon, could now find itself rivalling
those partners by becoming what is called a Tier-1 or direct
supplier to carmakers.
"The Android proposition is something new and different
because most of the Tier 1 suppliers have not really embraced
Android. So this very much sets Parrot apart," Lanctot said.
"Their focus on Android does put them in a position to be a
Tier 1 candidate, he said."
Following the launch of its first Asteroid radio in the
consumer market last year Parrot now hopes to persuade carmakers
to adopt it directly as well.
"They already have a foot in the door with all those
carmakers and have good relationships with car parts and radio
makers," Thomas Delhaye, analyst at Genesta Equity and Bond
In September Parrot will release three new products within
the same range that work with any smartphone brand, hoping to
get a stronger foothold in the market ahead of the expected
arrival of fourth generation (4G) mobile networks in 2013-14.
And the company has also won agreements from two as yet
un-named carmakers who want to use its Android-based technology
in their new car models, Parrot's founder and chief executive
Henri Seydoux told Reuters in an interview.
"After preaching in a desert for a long time, it so happens
that now the automakers find that it is a quite interesting
difference to have a good multimedia system," he said.
"We tell them: 'this is one thing, but a system under
Android is even better'."
Although analysts say Parrot is likely to remain a secondary
player in the automotive market its first-mover advantage in
deploying Android could still give it a worthwhile share of such
a large market for in-car devices.
Revenue from 'infotainment' systems sold to carmakers is
expected to reach $36 billion dollars by 2016, up from $23
billion last year, according to Strategy Analytics research.
Including the after-market, it is expected to rise to $47
billion in 2016.
But Parrot has to move fast to maintain its lead. Later this
year French carmaker Renault is due to release in
partnership with satellite navigation device maker Tomtom an
Android-based integrated tablet computer.
"I don't believe they (Parrot) will ever be the
market-leader, they are too small and it would require tens, or
even hundreds of millions of euros in investments and they don't
have those kind of resources," Beaudet said.
"But even if they grab only a small share, they have an
attractive growth trajectory ahead of them," he added.
Parrot, which has no factories and only sub-contractors to
make the radios and the chips it designs, says it invested 30
million euros over the past three years developing its Asteroid
technology, encouraged by the proven success of Android in
"The effort deployed by Google to make Android is huge and
far exceeds anything the automotive industry does to make
connected products, so adapting this effort to the car, we
believe, has fantastic added value," Seydoux said.
Parrot declined to provide precise forecasts of potential
revenue from its Android-based technology, but Seydoux said the
group was hoping for growth of more than 20 percent per year.
"We have an Apple-like or even Google-like strategy. We do
not care about having one client, or a specific revenue, as long
as we believe in it," Seydoux said.
Parrot's shares, which were listed in 2006, are up 4.7
percent since the start of the year, valuing Parrot at 223
million euros, though they are still down 22 percent from their