Connected car revenues are not yet a significant driver of revenue for either AT&T or Verizon, but are very important strategically.
Verizon’s vehicle telematics business, providing vehicle communications, might amount to a bit over $800 million in current revenue, but could be the foundation for revenues in the billions, over the medium term. Based on its recent acquisition of GPS tracking firm Fleetmatics, Verizon should report a $1 billion or so connected vehicle revenue number for 2016, some would guess.
AT&T likely earned about that level of revenue from connected car services in 2015, from services to about five million vehicles, likely mostly driven by wholesale communications deals with auto manufacturers.
Given that AT&T has added as many as a million new connected car accounts in a single quarter in 2015, it is possible the number of vehicles supported by AT&T could grow significantly in 2016.
That is not the point. At some time in the past, revenues from mobile voice services, entertainment video and mobile data likewise were fairly small contributors to overall revenue for the two firms.
But those sources eventually wound up being major drivers of revenue growth for both firms, with entertainment video especially recently emerging as highly significant for AT&T, which now is the largest U.S. supplier of linear video services.
Of course, long term revenue gains will depend as much as the ability to create platforms used by partners, as much as direct connectivity revenue.
Software will be the biggest autonomous vehicle value chain winner, with $25 billion in revenues in 2030, a 28 percent compound annual growth rate, according to Lux Research. By that point it is possible autonomous vehicle ecosystem revenues could reach $87 billion.
Optical cameras and radar sensors will amount to $8.7 billion and $5.9 billion opportunities in 2020, respectively. By perhaps 2030 computers will be biggest hardware opportunity on-board autonomous cars, amounting to a $13 billion opportunity.
Ironically, some industries will be severely disrupted. Uber drivers, for example, will be replaced by autonomous vehicles. Auto sales should decline, as more people forego car ownership.
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