Cars offer significant growth market for mobile carriers

by Matt Klassen on June 10, 2016

2016-05-30-image-8For the last six months connected car customers, that is, customers who sign on to contracts to activate in-vehicle mobile technology, are the leading growth sector in the wireless industry, accounting for more new customer activations than any other segment. In fact, over Q1 of 2016, 32% of new cellular customers were connected vehicles; meaning as carriers continue to fight over generally the same customer base, the area that created the most new customers was cars.

While there’s nothing particularly new about the news that connected cars present a huge growth opportunity (AT&T’s Q3 2015 numbers evidenced this same trend), it should be noted that what we’re seeing here is not connected car technology overtaking smartphones or tablets as the dominant mobile device, only the beginning of likely yet another arm of the mobile market, as when one compares the “net adds” over the first quarter (that is, new devices connected to the network, not new accounts) the numbers are fairly even.

But with the American mobile market having already reached a point of almost total saturation, the emergence of the connected car market is a welcome boon for the wireless industry, as carriers can finally get back to fighting over new customers, instead of worrying about how to reduce the churn rate of the old ones.

As a report from Chetan Sharma Consulting illustrates, in a saturated mobile market new smartphone and tablet connections are becoming relatively rare, as new device activations generally go to already existing customers. But as mentioned, smart cars outpaced all other categories in new additions, perhaps not surprising given that it’s still a fledgling niche technology.

Although AT&T clearly stands as the current leader in car connectivity—Ma Bell accounts for more connected cars in the U.S. than all competitors combined—the fact that connected cars outpaced phones and tablets likely means that it will only continue to become standard vehicle technology.

“Connectivity will start to become ubiquitous, almost expected,” said Karl Brauer, senior editor for Kelley Blue Book. “Right now, it’s a whiz-bang tech thing, but eventually it’ll be as common as a big-screen TV.”

But again, let’s not inflate the importance of these numbers, I would guess that any new mobile technology (wearables watches the notable exception) would see initial growth numbers like this. The fact of the matter is that the total car connections are still miles behind other more established mobile segments, and the true test will be to see if connected car technology continues to grow at this pace. Give it a year, and then we’ll know just how important in-vehicle mobile technology will be.

All that to say, despite the fact that it’s easy to dismiss the early growth of a new market like connected cars as a statistical blip, with wireless carriers, tech giants, and automotive titans all viewing connected cars as the new frontier of technological development there’s a good chance we’ll only continue to see strong growth in this market, as cars quickly become the next mobile platform.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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