AT&T, like other wireless carriers, long ago realized that while a customer may come looking for just a single service, persuading them to sign up for additional ones makes it inconvenient for them to leave for a competitor. With the recent announcement of AT&T Drive, the Dallas-based telecommunications giant looks set to apply the same principle to its relationship with automakers.
Auto news out of CES has focused on AT&T’s deals to provide 4G LTE service in upcoming 2014 models from Audi and GM. But AT&T has larger plans that involve a much deeper relationship with carmakers. The company is seeking to position itself as a one-stop shop for the design, implementation, and management of all your car’s wireless features.
In an interview with title="Gigaom">Gigaom, AT&T President of Emerging Enterprises and Partnerships, Glenn Lurie, said that AT&T isn’t trying to build the software platforms – Google is eager to claim that territory – but provide services to leverage the car’s diagnostic data, develop dashboard interfaces, and handle the billing infrastructure for all the mobile data that connected car owners will be gobbling up. So instead of just providing the cellular connection embedded in the car, AT&T could have a hand in several aspects of user access and payment processing. The upside is potentially very lucrative. While the 4G-enabled car is still years away from becoming the norm for a majority of drivers, the global connected car market is expected to reach USD 131.9 billion by 2019, according to Transparency Market Research. And with slow growth among the traditional customer base for wireless companies, taking a broad view of the connected car space as a new revenue stream makes sense.
Of course, AT&T is not the only one trying to get in the game. Sprint is also said to be pursuing similar plans. Verizon, which used to power GM’s OnStar service, spent $612 million to buy Hughes Telematics (a key player in connected car services) in 2012. AT&T has upped the ante though, with its own Atlanta-based R&D shop, called Drive Studio, that will soon offer automakers a garage/workshop environment to try out new designs and technologies. Lurie tells CNET, it will be, “a place to go to try and rip a car apart and replace things and test things.” The appeal for carmakers is that they won’t have to invest in the constantly changing technologies that would be required to do this work in-house.
These are very early days in the connected car world. The features and services that customers want, and more importantly, will be willing to pay for, are really anybody’s guess at this point. What the car industry is hoping for are the killer apps and services that will soon make us wonder how we managed to get along without them all this time. But however it all plays out, it seems clear that wireless providers are going to become an even bigger part of our daily lives, and budgets.