AT&T and Sirius XM Working to Convert Nissan Cars Into Smartphones On Wheels

Rajesh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The future of a driver-less car remains uncertain. However, automakers are working in alliance with other companies to give their buyers a driver-less experience. The second largest US wireless operator AT&T (NYSE: T) joined forces with Sirius XM (NASDAQ: SIRI) and entered into a deal to work on an Onstar-like telematics system for Nissan (NASDAQOTH: NSANY.PK) cars. The telecom provider would give mobile connectivity to Sirius XM telematics system and incorporate in Nissan’s North American cars to provide better security services in the car. Several features are expected to come along with Nissan’s vehicles lineup in the near future.

Let’s take a closer look as to what all can we expect in the next Leaf or Altima.

Smarter cars in the making

Sirius XM has an agreement with Nissan to provide robust features for its cars with a range of services that include weather forecast, navigation, traffic assessment and other similar features. In fact, telematic services have advanced much more and all this is routed through data connection. This is exactly where Sirius needs AT&T’s network. Pricing of the telematic suite has not been announced yet.

The telematic solutions in cars would add safety, provide emergency assistance in accidents and other mishaps, track vehicles in case they are stolen, other roadside support, offer voice enabled technology and several infotainment services not announced yet. Glenn Lurie, President at AT&T defined future vehicles as ‘smartphones with four wheels’ that would provide owners with a safer journey and brilliant customer experience. Nissan cars powered by Sirius XM’s integrated telematics solutions using the Dallas carrier’s built-in internet services, would offer drivers and passengers the experience of a connected car.

Connected vehicles would be able to communicate with one another, which will help in avoiding mishaps. Such cars would be able to assess traffic conditions on the road, spot if there is any maintenance needed, and even connect to Wifi hotspots. Sirius is working to merge cellular network connectivity with satellite to widen the variety of in-vehicle telematic services and innovative features to the drivers. Sirius and AT&T are not the only ones to partner for incorporating such services in Nissan cars.

Another connected carmaker

General Motors (NYSE: GM) partnered with Verizon to work on the Onstar service. However, early this year, the lead US automaker replaced Verizon with AT&T for its high speed wireless service. The Detroit carmaker expects car sales to increase on account of Onstar service as the automaker plans to expand services by providing advanced application.

Phil Abram, Chief Executive of General Motors declined to comment on why the company switched from Verizon to AT&T for wireless services. The Onstar deal is one of the biggest agreements for AT&T. The telecom provider has lately been particularly aggressive to strike such deals in order to diversify as the wireless market is getting saturated and competition from smaller rivals is getting tougher.

While AT&T looks pretty focused in working out ways to drive its revenue growth to keep investors happy, how important is the partnership for Sirius XM?

How serious is Sirius?

Sirius XM’s tie up with AT&T adds value to both the companies. Sirius XM’s primary purpose is to go beyond providing just a premium audio experience in cars. The company can set any price for the customers to provide its connectivity solution claiming that it gives emergency assistance, self detection technology identifying maintenance need, roadside support and other such services.

Investors are concerned to know if connected cars will actually drive automotive sales and help Sirius XM make money in the long term. Here lies the answer - the company is experiencing a good number of buyers who are interested in purchasing a connected car.

As per a recent research report by Telefonica, almost 90% of cars will be connected by 2020. This means huge business for Sirius XM and AT&T as well, who are jointly working on developing the in vehicle telematics solution. This also suggests that automakers that are preparing to offer connected cars to their buyers, stand to gain as connected vehicles is the future of the automobile industry.

My takeaway

Future Nissan cars will be much more than what they are today. They will possess amazing features keeping customers' safety as the priority. Nissan buyers are being assured of experiencing a connected journey while safety is assured. Sirius XM has always tried to offer services that are unique and different, and this time with Nissan, the company is working to develop the universe of its functionality.

All eyes will be set on Nissan cars as it rolls out its models. Which versions or models of Nissan would have these built-in features? What would the price be? For AT&T the risk is the least as this is not core to the carrier’s business. However, if this happens to be successful, the telecom provider would gain another line of solid business. On the other hand, for Sirius the success of this telematic solution and its commitment to Nissan is of much higher importance. How soon will drivers witness the bliss of connected cars is still not announced. However, what remains to be seen is how well this new concept will be received by the masses.

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Rajesh Marwah has no position in any stocks mentioned. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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