Why an Apple smart car might disappoint Carl Icahn

Major auto companies could stand in the way of the success of a driverless Apple car, despite bullishness from activist investor Carl Icahn, according to the CEO of a top analytics company.

Rumors of an autonomous car from Cupertino, CA-based Apple surfaced earlier this year.

In a letter to Apple CEO Tim Cook made public on Monday, Icahn was optimistic about the upcoming vehicle and said it would be enough to "move the needle" for the technology giant.

"We believe the rumors that Apple will introduce an Apple-branded car by 2020 and we believe it is no coincidence that many believe visibility on autonomous driving will gain material traction by then," Icahn wrote.

"It seems logical that Apple would view the car itself as a the ultimate mobile device to which it could bring its peerless track record of marrying superior industrial design with software and services." (Tweet this)

Car competition

But with established automakers pouring money into "connected" cars—ones with Internet access that may provide automatic notifications of speeding or crashes—and autonomous or driverless cars, Apple could find itself up against stiff competition, according to the chief executive of IHS.

"I would question the car comment (by Carl Icahn). You look at BMW, Ford, talking to their CEOs, they're investing a huge amount of money in analytics around the automotive experience and I don't think those OEMs (original equipment manufacturers) are going to give that to Apple," Scott Key told CNBC on Tuesday.

Apple store
Adrees Latif | Reuters

Ford opened a research center in Silicon Valley earlier this year and upped the number of researchers to look into new technologies, including driverless cars. BMW and Mercedes were among some of the carmakers to show off their autonomous concept vehicles at the Consumer Electronics Show in Las Vegas in January.

In addition, technology companies from Uber to Google are working on their own versions of autonomous vehicles.

Watch opportunity

IHS's Key said Apple's success in the near term would be driven by its current product range, given that the iPhone continues to perform well, with sales rising 40 percent year-on-year in the second quarter of 2015, according to official data.

In particular, the Apple Watch will perform well, Key said. Quoting a recent IHS teardown of the Apple Watch, Key said the profit margin on the device was 76 percent, higher than any other product from the company and that this would continue to drive strong profits for Apple. (Tweet this)

"As smartphones kind of level off and they see a take-off in these new opportunities…there's a lot of cash and a lot of profits going to fall out of that," the IHS CEO said.