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Expanded Coverage Will Drive Connected Car Market

Aug. 29, 2014
To fulfill the needs of consumers, mobile network operators must provide seamless network connectivity for the market to thrive by 2024.

With 48% of passenger cars worldwide expected to have embedded connectivity by 2024, it seems the connected-car industry is about to take off. Statistics compiled by Analysys Mason for its new Connected cars: worldwide trends, forecasts and strategies 2014-2024 report, help support this claim.  However, mobile network operators (MNOs), a main focus of the report, must seamlessly deliver connectivity, value-added services, and dependable road coverage in order to advance the market.

Today’s nearly all-electronic cars come fitted with various computer components and LTE connectivity for navigation, multimedia, and diagnostics. An embedded, networked connection, though, would foster compliance with emerging entertainment apps, such as Apple CarPlay. Such a network must support machine-to-machine (M2M) communications and all multimedia forms, all the while providing uninterrupted service. To that end, deals between vehicle manufacturers (VMs) and MNOs reportedly will bring connected car models to market by 2015.

The report advises MNOs eyeing the connected-car market to broaden their “connected lifestyle” credentials. Beyond offering additional services, MNOs must strengthen automotive connectivity support –namely, avoid interference and bad coverage along roads. Mobile data growth is in the cards, though, if MNOs can provide, say, cloud-based services and automotive multi-device shared-data plans.

By the end of 2014, approximately 20 million cars will feature embedded connections. Forecasts show that number will balloon to 654 million (a compound annual growth rate of 36%, CAGR) by 2024—with 89% of new cars sold integrating embedded connectivity. Mobile tethered devices, which enable drivers to access smartphone applications, should also see a major market upswing. Devices with tethering-enabled cards are expected to rise from 4 million to 654 million between 2014 and 2024, a CAGR of 65%.

Analysys Mason’s report also homes in on the aftermarket, specifically the manufacturing, distribution, retailing, and installation of vehicle parts post-sale from original equipment manufacturer (OEM) to consumer. Usage-based insurance (UBI) and commercial vehicle fleet tracking will account for 191 million connections worldwide by 2024, opening up a good opportunity for MNOs to serve the aftermarket. Solutions in this realm include consumer telematics for remote management, commercial-vehicle fleet-tracking telematics, and UBI telematics. However, the opportunity is limited—the market will likely flatten in and around 2018 and come to a halt in 2021, being replaced by embedded-connectivity solutions.  

So what’s the plan of attack for MNOs? Foremost, mobile-network planning must evolve to deliver a more enriched, seamless experience. Value-added services (e.g., cloud-based media content) will help operators move up the value chain. Also, regardless of whether or not MNOs have partnered with VMs, integrating smartphones into vehicles will increase the volume of mobile data traffic. Embedded connectivity’s success will ultimately be driven by new-car sales, buttressed by strong M2M module form factors and progress in SIM-card technology.

What isn’t clear right now concerns the price consumers will pay for connected-car services. When surveyed, only 22% of consumers said they would pay extra for connected car services. This could create added issues in terms of demand, considering semi-autonomous vehicles will be rather commonplace by 2024.

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