Industry Trend Analysis - Verizon/GM Deal Reinforces Kindle Model View - SEPT 2017
BMI View: The deal between Verizon and GM reinforces our view of a Kindle Model when it comes to telematics connectivity. Car manufacturers want one single provider, which major telecoms operators are best placed to offer. Car manufacturers also need connectivity to turn vehicles from products into services.
Verizon and General Motors (GM) have announced a global connected car deal. Through Globetouch, Verizon Telematics will provide an upgraded network solution that will be used by GM with its OnStar platform. The deal mirrors the one between Toyota and KDDI in 2016, which we called the Kindle model (see ' Toyota, KDDI Implement Kindle Model ' , June 9 2016). Car manufacturers are only looking to have one single provider of connectivity worldwide, and not deal with multiple operators, which leads us to believe that the diagnostics opportunity in the connected car segment will only be limited to the major global operators.
There are two major opportunities for telecoms operators in the connected car market: diagnostics and entertainment. Diagnostics relates to the maintenance of the car, as well as transmitting data on driving patters, whereas entertainment turns the car into another device, through which a user consumes data (see ' Entertainment A Better Long-Term Strategy Than Diagnostics ' , September 11 2015). We still believe that entertainment provides the best bet, as it allows operators to add another service as part of a bundled and converged plan, improving stickiness in saturated developed markets, but diagnostics will provide some opportunities, limited to the major and global players, as they can offer car manufacturers a global solution, and a single provider.
|From Products To Services|
|GM Global Sales (Units), H1 2017|
|Source: General Motors|