GM: 4G LTE Next Big Thing for Auto Industry
Could an automobile rival an iPhone in connectivity? GM’s (NYSE:GM) chief executive doesn’t think it’s out of the question, and said the automaker has big plans for expanding mobile Internet service in the company’s cars and trucks. GM has a deal in place to bring 4G LTE service to its models and lead the industry by as early as summer 2014.
CEO Dan Akerson told the crowd at the Chief Executives’ Club of Boston that GM already has an advantage with its OnStar technology in place, according to The Detroit News. He noted that two-thirds of car buyers own smartphones, and that mobile access is increasingly important to that group. He also mentioned people are spending more time on smartphones than they are driving cars, so the overlap is ideal for drivers.
“Marry the two and we have a megatrend that we intend to harvest for competitive advantage,” Akerson said. To pull off the feat in a way that distances GM from the competition, the company plans to use its deal with AT&T (NYSE:T) to advantage, as well as OnStar’s features that connect cars with security services. The increase in profits suggested for 4G upgrades in GM cars is staggering, with estimates of the profit boost in the hundreds of millions.
According to Itay Micaheli of Citi Investment research, the move to 4G LTE could make OnStar more profitable in 2016 by $400 million, and as much as $550 million two years later. Of course, most users would utilize the mobile Internet access to make the driving experience more enjoyable. Services like automatic call answering and streaming Internet radio would be automatic, and require no involvement from a driver’s smartphone.Yet wouldn’t that lead to more distractions on the road for drivers?
GM’s chief executive doesn’t believe twenty-first century connectivity will have adverse effects on driver safety. Akerson sees it as a way to enhance the safety features, in fact.
“Technology can actually be part of the solution to keep driver’s eyes on the road,” he said, adding the technology could help drivers avoid delays due to congestion and accidents.
Mainly people would be able to make their lives easier, by ordering food or movie tickets, and keeping kids occupied with streaming movies in the back seat. In other words, he sees it more like the iPhone of the road, and thinks the GM app store could be as well-traveled as Apple’s (NASDAQ:AAPL) iTunes some day. It won’t be long before the theory is tested.
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