Jeff Kagan: AT&T, Verizon, Sprint Connected Car Opportunity

Jeff Kagan |

We have watched the wireless space grow and change over the years, and change other industries as well. Healthcare, for instance, and especially automotive. AT&T (T) , Verizon (VZ) , and Sprint (S) see this as a huge, new opportunity. The next question is when will other wireless carriers stick their toes in this water? Now is the time.

The AT&T Drive Studio is under their Emerging Device Organization. At Verizon it’s called Verizon Telematics after they acquired Hughes Telematics, a competitor to OnStar. Sprint Velocity is handling their connected vehicle platform under the Sprint Enterprise Solutions business.

AT&T’s looks like they are in the lead with a current lineup for connected cars including Volvo, GM, Audi, Tesla, BMW and the Ford Focus Electric. They also have SiriusXM for their mobile connectivity with Nissan and Audiovox for their Car Connection Elite telematics device.

Verizon currently works with carmakers such as Volkswagen and Mercedes-Benz. They provide assorted services like emergency services, navigation and remote vehicle diagnostics.

Sprint says they provide a solution for auto OEM’s including the telematics platform, development and integration of complex components. They currently partner with Chrysler supporting their Uconnect Access service.

This is such an exciting new space, and we are still in the very early stages. The connected car is one of the greatest growth opportunities for the wireless carriers.

Glenn Lurie, President of Emerging Devices at AT&T Mobility says, once you add high speed broadband, wirelessly to cars, the car becomes a smartphone on four wheels.

And that says it all when it comes to this brand new, enormous opportunity for both the wireless and automotive space.

Cars will be able to automatically send data and download updates to its software. That means the car will always run better and the customer doesn’t have to take the time to drive to the dealer. Customers love this. So do the automakers.

The connected car also provides all sorts of user features like live traffic, weather, email, text messaging, finding destinations, surfing the web, watching live television or downloaded movies and so much more.

The mobile Internet in the connected car is the birth of an entirely new growth segment. By the end of this decade we are expecting to see 65 to 75 percent of all new vehicles to be connected. It will start as an add-on feature with some carmakers for higher end vehicles, and then over time become standard for most.

It’s about automotive performance and communicating with the factory. It’s about next gen infotainment. It’s about working together with smartphones. It’s about automotive apps. This is the exciting new world that lies ahead.

This is all an enormous opportunity for the wireless industry and for the automotive industry.

Expect to see marketing and advertising in the auto sector start to change. While we are used to seeing them talk about safety, power or gas mileage, they will start to talk about being connected and how that will change our lives.

It will create a desire in the marketplace for the connected car. Something the average user has no idea about yet. However it will hit them right between the eyes in coming quarters.

However along with this opportunity there is also a risk. This connected car is one more area where the automakers must continue to hit the nail on the head. They must connect with the customer and give the customer what they want and need, even before they know it.

They must improve their conversations with the customer. There will be lots of home runs and lots of strikeouts. Live traffic reports and weather on the dash are winners. Self-parking cars, not so much.

Remember however that this is a brand new sector. We are still in the crawling stages. Just wait for this kid to get up and start to walk and run. Watch out. We still have to build the entire industry segment. It will take time. Yet it will be rapid growth.

Either way I think it’s important to keep your eyes on this space. We will see enormous growth in this space for both the wireless carriers, and the auto industry. It will start with the high end cars then move into the mass market.

This is a long-term growth opportunity that will continue to change over time. And this is the kind of change that we can see the wireless carriers like AT&T, Verizon, Sprint and all sorts of smaller companies really sink their teeth into going forward

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
S Sprint Corporation 8.48 -0.26 -2.97 19,560,796
VZ Verizon Communications Inc. 51.49 0.36 0.70 10,101,462
T AT&T Inc. 40.38 -0.03 -0.07 17,105,180
PLSB Pulse Beverage Corp 0.03 0.00 0.00 284,500

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