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Connected car market to take off, opening vast opportunities for mobile space

connected car

As a growing number of cars feature mobile-enabled Internet connectivity going forward, revenues from associated services are expected to triple by 2018 compared with 2012 and reach $53.62 billion, according to a new report from the Groupe Speciale Mobile Association.

The report forecasts that connected car associated revenues from in-vehicle services such as traffic information, call center support and Web-based entertainment will reach $32.84 billion in 2018, up from $12.47 billion. Revenues from the sale of hardware will reach $9.25 billion, up from 1.61 billion, while revenues from the delivery of telematics services such as customer relationship management will reach $6.03 billion, up from 2.41 billion.

“There are two things that are really driving the news right now with regard to connected cars,” said Francesca Forestieri, director of mAutomotive and the Connected Living Programme at GMSA, London. “There is quite a bit of work going on with regulatory mandates, which changes the landscape for connected car services because of embedded technology and there are opportunities to build value added services on top of that.

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“We are also seeing more car OEMs announce plans for LTE services, which opens up the types of services you offer in a vehicle,” she said. “Audi announced in January that it will be launching LTE services for 2015 models and GM recently announced plans with AT&T.”

Regulatory mandates
The report forecasts that revenues from the provision of connectivity, including revenue from mobile data, will reach $5.5 billion, up from $1.1 billion.

Most new cars are expected to have some form of connectivity by 2015. The trend toward connected cars is opening up new opportunities for mobile-based services around safety, security, infotainment, traffic information, navigation and vehicle diagnostics, according to a new report from GSMA.

These changes point to the need for the mobile and automotive industries need to work together to deliver scalable connected experiences.

The growth in embedded mobile technology is being driven by regulatory mandates in the European Union, Russia and Brazil.

For example, the European Commission recently mandated that all new car models in member states from 2015 have embedded mobile technology as part of its European eCall system, which will connect a vehicle to emergency services following a collision and provide location and impact information.

Similar mandates could be announced by other countries in the future.

At the same time, mobile tethering and smartphone integration are also growing.

Safety and security
More than 35 million of the expected over 100 million car shipments in 2018 will come with embedded mobile technology, per the report. This puts embedded mobile technology at a 31 percent penetration rate, ahead of other connectivity means.

In comparison, 18 percent of cars are expected to be fitted with smartphone integration by 2018 while nine percent will have tethered solutions.

Safety and security will be the most common services supported by connected cars, shipping in 41.7 million vehicles globally in 2018, up from 7 million in 2012.

In-car infotainment services such as news, weather, social networking and music streaming are expected to be supported by 32.1 million cars, up from 4.3 million in 2012. Navigation services are set to ship in 28.5 million cars in 2018, compared with 5.12 million in 2012.

Key opportunity for carriers
Vehicle management applications, such as remote diagnostics and maintenance, will be supported by 14.8 million cars, compared with 5.5 million in 2012.

Wireless carriers are expected to play a larger role in connecting all new cars by 2025. They are also well positioned to expand their offerings and provide value added services in this space, with companies such as Verizon, Sprint and AT&T already making moves in this direction.

“We think the automotive sector is interesting in terms of the embedded mobile space, so the M2M space, and when you look at the growth that’s forecast,” Ms. Forestieri said. “A little over 2 billion M2M connections are being forecasted by 2020 and automotive is more than half of those.

“So there is really a key opportunity here,” she said. “The way that the operators are positioning themselves in terms of providing new value added services is changing and they are more and more aggressive in this space.”

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Research, connected cars, automotive industry, GSMA, Francesca Forestieri, mobile marketing, mobile

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