“Driveables” are one of the hottest trends of 2013 and money is flying at this space from all directions. Car manufactures, technology companies, startups, venture capitalists, telecom corporations — everyone wants to get in on what Forrester has called the “distinct fourth environment for computing.”

Forrester recently issued a report titled “Connected Cars — Prepare for the Next Computing Environment,” which explores this sector and provides a 10-year outlook. Widespread connectivity, “abundant” sensors in smartphones, powerful analytics in the cloud, and continued technological innovation are transforming the automobile industry.

“Persistent broadband Internet connectivity has transformed many industries, primarily via smartphones and applications but also by embedding network connections into devices and environments,” said Forrester analyst Charles Golvin. “Now broadband mobile connectivity is about to become the default in vehicles, adding a new computing environment beyond office, home, and on-the-go.”

Golvin broke down connected car applications into four types — infotainment/media, advanced telematics, vehicle-to-X communications, and autonomous driving capabilities. Anyone developing products in these areas has to keep cars’ unique circumstances in mind. Cars often have multiple people in them and thus “in-vehicle computing must accommodate both the driver and the passengers.” Drivers also need to focus on the road and are interacting with more than one system. This means “the interaction model must enable user control and deliver vital information while minimizing driver distraction.” Furthermore, cars tend to be moving — they speed up, they slow down, they stop, and applications built for cars should respond accordingly.

Americans spend more than a hundred hours a year commuting (although this number is going down). These hours spent driving and stuck in traffic can get really boring, and consumers want access to music, news, communication tools, and games to make the time less dull. There are also significant opportunities to promote safety and security by creating more fluid navigational tools, sending alerts when something needs maintenance, and calling for help when necessary. Vehicle-to-vehicle communication technology can also support safer roads by making cars and their drivers more aware of their surroundings and potential risks. Further down the road (ha) are self-driving cars, which Google is famously working on along with DARPA. This technology has the power to transform America’s highways for the better by reducing accident rates and cutting down on traffic jams.

Consumers now expect a “smartphone-like experience in the car,” Golvin said. They are used to rapid cycles of innovation, and they have a greater range of transportation alternatives through companies like Zipcar and Getaround. Studies have shown that people are now driving less and buying fewer cars, and car makers, which are already facing significant challenges, need to respond accordingly if they want to remain competitive. According to Golvin, the greatest potential to create new revenue is with data brokerage and analysis and the ability to turn data collected by vehicles into actionable information.

Creating a positive connected car experience requires input and cooperation from a number of players, and partnerships are a key way to achieve that. IBM and Sprint recently announced a partnership to enhance Sprint’s connected car platform with new data management capabilities, Intel is collaborating with Toyota, Hyundai, Kia, and BMW and has a $100 million connected car fund, and AT&T is partnering with GM’s OnStar, to name a few. Application developers will also need to get involved, which may be a challenge.

“OEMs recognize that, when it comes to new in-vehicle experiences, their own internal developments will not deliver the necessary pace of innovation,” Golvin said. “They will need to entice smartphone and tablet app developers to embrace the connected car opportunity. But despite the obvious longterm potential, developers are unlikely to prioritize in-vehicle apps because other opportunities will dwarf those offered by connected cars, platforms will remain highly fragmented, and the learning curve will be steep and bumpy.”

There are also regulatory agencies and insurance companies to think of.

Research firm SBD predicts that the global connected car market will swell to nearly $53 billion in 2018. This is still a nascent sector and there are so many things that need to be figured out. Golvin predicts that in the next 10 years, infotainment and media applications will remain dominated by smartphones, telematics will become more predictive and personalized, vehicle-to-X communications will expand to all the car’s surroundings, and autonomous vehicles will clear final regulatory hurdles and prepare to enter the market. He also said that connected cars will “change the auto industry’s economics” and that most of the large auto manufacturers won’t be able to make the “visionary leap” necessary to make this transition.