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ABI: Connected Car Trend May Be More Hype Than Revenue Opportunity, For Now

January 22, 2015 By Finley Engineering in

Some of the nation’s largest carriers – including AT&T and Verizon – are aggressively pursuing the opportunity to provide connectivity to connected cars. But according to ABI Research, carriers shouldn’t count too heavily on that revenue stream.

Growth in connected, in-car telematics will be steady over the next five years, the technology will not reach “mainstream” status before the end of the decade, ABI says.

Just over half (52 percent) of the new vehicles sold worldwide in 2020 will come equipped with embedded telematics, up from 13.4 percent in 2014, ABI researchers say.

Connected Car Telematics Forecast

“Built-in vehicle connectivity will only go mainstream if and when it becomes a ‘must have,’ integral part of vehicles for new automotive paradigms not expected to fully materialize before the 2020 time horizon,” ABI states in a press release. These “new paradigms” include:

  • Car sharing: remotely locating, tracking down, and unlocking vehicles;
  • Electrification: remote monitoring of electric vehicle battery status;
  • Autonomous driving: real-time “electronic horizon.”

OEMs face a difficult challenge trying to convince new car buyers to pay for built-in connected car services. Although options such as the ability to add connected car systems to shared data plans will boost uptake, mass adoption is unlikely to be achieved through consumer-led drivers alone, ABI says.

Furthermore, the perceived value of safety services or in-car Wi-Fi hotspots isn’t big enough according to ABI — at least not yet. Tethering standards such as CarPlay and Android Auto that will let consumers integrate smartphones with their cars for free also will present challenges for carriers.

On the positive side, network-based auto safety and security services and new regulations will help drive growth in connected car telematics out to 2020, according to ABI. Uptake by fleet operators also will drive demand, as will automotive manufacturer initiatives to use telematics, researchers said. Examples of the latter include diagnostics, prognostics, preventive maintenance via Over the Air (OTA) updates, and product design improvements.”