How BMW’s new annual fee for Apple CarPlay could define the IoT

Apple calls CarPlay “the ultimate co-pilot.” BMW calls it the “smart and fast way to conveniently use your iPhone features while in your car. … You can control your iPhone and use apps with the touchscreen display, the iDrive Controller or voice commands.”

However you describe it, though, Apple’s CarPlay system suddenly finds itself in the center of what could be a defining conversation about the future of the internet of things (IoT).

You see, the German luxury carmaker’s plans to charge $80 a year to access CarPlay have suddenly become the talk of the internet, from tech blogs to car sites. The hue and cry makes CarPlay the perfect illustration of the promise—and the pitfalls—of the IoT.

First, the facts: BMW’s website now reveals that beginning with the 2019 model year, it’s turning the CarPlay interface between iPhones and the vehicle’s infotainment system into a subscription service. While most car manufacturers that offer CarPlay make it available free of charge, owners of the “ultimate driving machine,” will get free access for only the first year. After that, BMW drivers will need to pony up $80 a year—or $300 for 20 years—to keep using it.

An “outrageous” fee?

Some observers are labeling the new fee “outrageous,” and it’s not yet clear what Apple thinks about BMW’s pricing policy. For me, though, it’s both a shining example of the amazing new revenue opportunities generated by the IoT, and a terrifying warning of how the IoT could add new cost and complexity to everyday activities.

Look at this as a glass half full, and BMW is cleverly finding a new revenue stream by offering valuable functionality to a target market that has already demonstrated a willingness to pay for high-end functionality. The IoT and connected cars offer a new and better experience, and BMW is leveraging that to boost its business. It’s the power of capitalism at work, and if BMW drivers don’t value the CarPlay functionality, no one is forcing them to buy it.

In some ways, the subscription business model is similar to that of satellite radio or GM’s OnStar system. The automaker builds in the equipment needed to offer the service, and car owners can choose to avail themselves of it if they feel it’s worthwhile. Or not.

A particular bit of usury

But that’s only one perspective on what’s happening here. Look at it another way, and you could paint a very different picture. For one thing, as noted above, other car makers that offer CarPlay do not charge anything extra for it. BMWs are relatively expensive vehicles, and nickel-and-diming affluent consumers does not seem like a path to great customer loyalty. Think of the annoyance surrounding the fact that budget motels typically make Wi-Fi available for free, while luxury properties charge guests through the nose. (With the rise of 5G networks, though, that particular bit of usury may not last much longer.)

Making matters worse, CarPlay is really just internal connectivity between your iPhone and your car’s infotainment system. There’s no actual service involved, and no real justification for a separate fee, other than the fact that BMW can charge for it. It seems more like getting charged a monthly fee to connect your own phone to your own big-screen TV (like Apple’s AirPlay) or hooking up your smart light fixture to your home assistant or—I don’t know—putting your lamp on your coffee table! It just doesn’t feel right.

Dangerous long-term implications?

Sure, if this kind of thing takes off in the larger world of the IoT, it could lead to a significant amount of new revenue—at least in the short run. But over time, it could easily backfire, encouraging consumers to view IoT vendors as greedy and to question the costs and benefits of everything from smart houses to connected enterprises. That could turn out to be a drag on the overall IoT market.

That would be a shame, and it doesn’t have to be that way. If BMW had merely buried the CarPlay costs in the price of the equipment or options, or in the sticker cost of the car itself, nobody would be worrying about it. But just like breaking out the costs of checked baggage on airplane flights, charging a subscription for CarPlay makes it seem like a combination of bait-and-switch and price gouging. And that’s exactly what the IoT industry doesn’t need. If the goal is to maximize the growth and acceptance of the IoT, vendors should strive to make IoT users feel like they’re getting great functionality at a fair price.

That’s often exactly what many IoT devices and IoT-based services do, so it shouldn’t be too hard to avoid screwing it up.