The Connected Automobile Nears Critical Mass

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The Connected Automobile Nears Critical Mass

The car is about to become the ultimate mobile device, thanks to telematics. Telematics is the integration of telecommunications with informatics, enabling drivers and their vehicles to connect to a network, access apps, stream music, monitor traffic and weather conditions, download software updates, and send and receive data in real time.

The result is the connected car, and what was once a niche market is now accelerating toward the tipping point.

According to a research report by BI Intelligence, the market for connected cars is growing at a five-year compound annual growth rate of 45 percent, compared to just 4.5 percent for the overall automobile industry.1

That means that, by 2020, 75 percent of the 92 million cars expected to be sold around the world will have installed internet connections. As a result, according to Gartner Inc. research, by the end of this decade there will be 250 million connected cars on the road.2

That figure is a staggering number considering that, as recently as 2014, BI estimates that only 7 million connected cars were sold. The obstacles until now have been:

  1. High prices, as connectivity is currently limited to higher-end luxury models with an average sticker price of $55,000.
  2. Limited applications, because the technology was still in its infancy.
  3. Lack of consumer awareness of the benefits of connectivity while driving.

But now, most automobile manufacturers are planning to include Internet connections in a wide range of models across price ranges. The technology is rapidly advancing, as new industry players like Apple and Google enter the market with easy-to-use connectivity solutions. And consumers, who are now used to nearly constant connectivity in their homes and on their mobile phones, are easily persuaded about the benefits of staying connected while they're in their cars.

All of this leading to a shift in consumer attitudes toward their vehicles. Historically, the top feature that drivers looked for in a new car was its driving performance. Today, according to Accenture research, 39 percent of drivers say the most important attribute in choosing a new vehicle is in-car technology, compared to just 14 percent who say that driving performance is most important.

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