No, not cars that move quickly — cars that move data quickly via fast built-in connections. Today, GM announced that most of its US and Canadian 2015 model year Buick, Cadillac, Chevrolet, and GMC vehicles would come equipped with built-in LTE connections — supplied by AT&T — powering a range of OnStar safety, security, diagnostic, and infotainment services. No surprise in cars getting LTE or in GM's leadership — the next logical step in the connected car chain that started with GM's launch of OnStar in 1996. More noteworthy are:
- AT&T winning GM's business. Verizon Wireless powers the existing OnStar service, and, considering how vital coverage is to OnStar's safety and security services, Verizon's superior LTE coverage (273.5 million people versus 170 million for AT&T today) would seem to make it a logical choice for GM. Apparently GM was convinced by AT&T's public commitment to cover 300 million US consumers by year end 2014 — in addition to the ability to use the same technology globally and the superior performance of AT&T's network when LTE is unavailable.
- The breadth of the launch. It's typical for vehicle makers to introduce new technologies in premium models. Whether it was built-in navigation, parking sensors, heads-up displays, or adaptive cruise control, an OEM like Toyota was more likely to offer the tech to a Lexus LS buyer than someone shopping for a Camry. But GM plans to embed AT&T's LTE connections into most of its cars, trucks, and crossovers — irrespective of brand, from Chevy to Caddy. Using 2013 estimates for GM's US market share and forecasted US auto sales, after the first year of sales the company could have well over 2 million LTE-connected vehicles on the road.
Alas, we'll still have to wait for answers to these compelling questions raised by the announcement:
- What's the retail model? It's clear that OnStar will remain the primary channel for GM's customers to purchase OnStar services, especially those tied intimately to vehicle data such as emergency notifications, ignition blocking, and vehicle tracking. But what about basic connectivity, such as a Wi-Fi hotspot using the car's LTE connection? AT&T could treat the car as simply yet another device on a customer's Mobile Share plan and use the data already allocated on that plan, with GM receiving a customer acquisition bounty or even a share of the connection fee (though I wouldn't bet on the latter). When we talked to AT&T's President of Connected Devices, Glenn Lurie, he demurred on the general point but said that AT&T and GM will investigate many potential business models. Relying purely on the same retail model OnStar has used to date will surely diminish uptake.
- Where will the apps come from? One would also assume that GM/OnStar will maintain an application store exclusively devoted to apps designed for use in their vehicles. But, as with the retail question, other models might simultaneously obtain. For example, insurance providers such as Esurance or Progressive might want to extend their existing apps to be able to access vehicle information in order to offer drivers premiums that reflect their actual driving habits — without having to be forced to download and/or purchase a custom version from the GM/OnStar store. With the greatest value deriving from the information in the vehicle rather than simply enabling app purchasing to garner a share of app sales revenue, a more open application store model makes more sense.
- Will consumers bite this time? OnStar has had a hard time retaining paying customers following the gratis first year of service — as of May 2012 GM reported it had more than 6 million subscribers in the US, Canada, and China. It's reasonable to ask: will adding LTE make any difference? We think so. Today's always-connected consumers already rely on high-speed data connections in their vehicles, both for drivers and passengers, and the built-in connection offers distinct advantages: a more powerful antenna to improve signal quality, a constant energy source to power that connection, and an integrated design that is optimized for in-vehicle use. The extent of that embrace, however, will greatly improve with retail and application delivery models that incorporate into customers' existing accounts and ingrained behavior.
Of course, this is the just the first of what will be many announcements as carriers around the world jockey for position with each of the automotive OEMs. Stay tuned, it's going to be a bumpy ride.