Boston (Reuters) - The car is the next great proving ground for communications technology, General Motors Co (GM.N) Chief Executive Dan Akerson said on Thursday.
The automobile will become a major platform for tech “and one with far better battery life than an iPhone,” he said in prepared remarks to the Chief Executives’ Club of Boston.
Developing better in-car technology is critical for automakers like GM to attract younger, tech-savvy buyers. If they can pull it off, the companies will generate new sources of revenue and boost profit margins. One approach may be for GM to sell advertising within the car itself, Akerson said last month.
In mid-2014, the No. 1 U.S. automaker, teaming up with AT&T Inc (T.N), will start selling vehicles embedded with 4G LTE mobile broadband, a wireless connection that allows for faster flow of data that GM says would allow passengers in the backseat to watch streaming video.
Akerson, a former top executive with telecommunications companies MCI, Nextel and XO Communications, said automakers have no choice as the average U.S. consumer is spending more than 2-1/2 hours a day on their smartphones and tablets. That tops the 16 hours each week spent in cars as drivers or passengers.
“Marry the two and you have a megatrend that we intend to harness for competitive advantage,” he said.
Akerson cited a J.D. Power study that found more than two-thirds of new car buyers own a smartphone, and for 80 percent of them connectivity strongly influences which car they buy.
Moreover, it’s not just American consumers who want that, he said, citing similar studies in China, the world’s largest auto market.
He said drivers want hands-free calling, navigation and automatic crash warning, in that order. He called those “the bread and butter” of the company’s in-vehicle OnStar service that connects drivers to live operators for directions or emergency help. OnStar has more than 6 million subscribers.
As for why consumers with smartphones would want such services, Akerson said GM’s features will be integrated to prevent distracted driving.
However, the AAA Foundation for Traffic Safety released a report on Wednesday saying that hands-free technology in cars actually increases driver distraction. AAA urged the auto industry to consider disabling certain functions of voice-to-text technologies, such as using social media or interacting with email, so they are inoperable while the vehicle is in motion.
Citi analyst Itay Michaeli has estimated that OnStar generates about $1.5 billion (956.1 million pounds) in annual revenue for GM and the unit is worth between $5 billion and $7 billion as a whole.
Akerson said installing 3G Wi-Fi in vehicles only scratches the surface of what’s possible.
“Imagine that your vehicle can predict that it needs a new battery and then automatically schedules a visit to your dealer before it dies on the (Massachusetts) Pike in rush hour,” he said.
“How cool would it be to have your car automatically call Dunkin’ Donuts when you’re a mile away, so your coffee and cruller are ready and paid for when you pull up?” Akerson added.
Some services will need far more bandwidth and much higher download speeds, which 4G LTE will allow, he said. “We’re going to turn millions of our cars and trucks into nodes on the Internet through the industry’s largest global deployment of 4G LTE.”
The tech features will just be the beginning as GM needs to entice thousands of code writers to come up with apps for its cars, he said. That approach made Apple (AAPL.O) and Android (GOOG.O) dominant in their field, and Akerson said he hopes a GM App Shop someday will be just as popular.
Reporting by Tim McLaughlin in Boston, writing and additional reporting by Ben Klayman in Detroit; Editing by Kenneth Barry