LAS VEGAS — The biggest beneficiary of all the “smart” devices appearing at this week’s Consumer Electronics Show will probably be the wireless industry.
Cars, watches, fitness trackers and other emerging gadgets are considered smarter because they’re getting better brains, in the form of tiny, powerful processors. But to graduate into the upper class of smartness, they have to able to connect and share information over wireless networks.
Then there are questions about whether these new devices should connect directly to a cell network or work as extensions of a smartphone, and how much people will end up paying wireless companies to surround themselves with more and smarter gizmos.
For perspective on this situation, I interviewed Chris Penrose, head of the emerging devices group at AT&T, which handles non-phone devices that connect to its network. At CES, his group announced a new connected car platform that will be showcased at a new development studio in Atlanta. It’s also going to provide LTE capability to GM cars, starting with 2015 models of the Corvette, Impala, Malibu and Volt.
Atlanta-based Penrose started in a Bell call center supporting plain old telephone service more than 20 years ago and rose to senior vice president in charge of the emerging devices business in 2012.
Here are edited excerpts of our conversation:
Q: What are some of the big things you expect to see at CES this year?
A: I think this is really the year you’re going to see us moving beyond some of the basic safety security services in the car to a whole bunch of advanced services. From where I sit, it’s been this interesting, perfect convergence where the automobile manufacturers have begun to see the value of connectivity for their businesses.
Whether you’re doing over-the-air updates of the cars, or extracting real-time information out of the vehicle, they’ve seen that, wow, this car can actually get better over the course of time by continuing to push updates to it.
Then you have the consumer side – everyone has smartphones and they are saying ‘how can I get my car to do a lot of the things that my smartphone does for me as well?’
Q: Not just in the U.S. …
A: We provide not only 4G connectivity domestically but we’re also offering global solutions. We’ve got a global SIM chip that you can put in the vehicle. That car can be shipped anywhere around the planet and we can light that up on the local network.
Q: Last year there were several international roaming phone-service announcements. Were you simultaneously developing roaming deals for cars?
A: Absolutely. We are able to leverage all that work we’ve done on one side of the business and apply it to new technologies.
Q: The situation is confusing for people now – they may have a car locked to one carrier and phone service with another.
A: We’ve got a wide variety of solutions we’re offering. If you’re an AT&T customer, you’re going to have a couple options. You’re going to have the opportunity to take that car and put it on a mobile share platform. Just like your tablet or smartphone … you’ll be able to take your car and just use it like another device.
Q: For an extra $10, $20 or $30 per month?
A: We haven’t announced our pricing but that will be coming this year. We’ll also offer up standalone plans – on a monthly basis, session-based opportunities and multi-year engagements. It comes down to what each automobile manufacturer wants to do.
Some are going to include data in the price of the vehicle. Others are going to want to have the consumer pay for some of that data.
Q: There’s been a lot of talk about U.S. carriers doing overseas acquisitions. Would that be driven by your enterprise business — so you could go to a carmaker and say “we’ve got you covered in all regions”?
A: I won’t be able to comment on any acquisition opportunities. What I can comment on is we’re definitely seeing the requests coming not only from car companies, but a lot of companies, asking how can you help me out on a global basis with these products.
Q: Do you need a global footprint to help work with device makers such as Nokia?
A: Everything is continuing to move more and more global as we go forward. We’re beginning to see a lot of different technologies [such as], ’We’ve been working on this car. We’d like to do connected luggage or watches or whatever. Can I use the global SIM as well?”
The answer is yes. That’s exciting. Now that we’ve built this capability set, we see there’s a huge opportunity to bring this to market in a wide variety of ways across a number of different devices.
Q: Wearables are a big topic at CES this year, but they’re mostly Bluetooth extensions of your phone and don’t directly connect to wireless networks. Will carriers push for more direct connectivity?
A: Most of the early on wearables are Bluetooth-enabled. They’re going to be leveraging phone or tablet or even hotspot in a car. The question for a lot of the wearables will be, are they accomplishing what you want them to accomplish by connecting to your phone? If you’re going to work out, do you want to have to bring your phone along with you with the [fitness watch] device, or do you want a watch that can stand alone, so you can go work out and be able to be reached if you needed to?
Everybody’s going to be figuring out a lot of things about what makes sense to be tethered off a smartphone, what needs to be standalone, in order to gain maximum value for the customer. I think that’s what you’re going to see shake out here over the next couple of years.
Q: Do you think consumer demand is there for wearables? There is lots of innovation happening, but do people want these things? Are you hearing customers ask for this stuff?
A: I think this idea of the “quantified self” is beginning to resonate. Being able to track your fitness and steps and aggregate that up and make lifestyle choices, that is definitely continuing to resonate. Between the applications you’ve got to be able to track those things on your smartphone, together with the devices, there’s definitely a need a need and ‘want. This is all on the cutting edge of what is going to make a meaningful difference.
I think smartwatches have a ton of opportunity but they’ve got to solve what the customer wants out of that. We’re going to see these things continue to emerge and morph to make them really relevant to each of these different audiences. There’s so much that can done, particularly as you start getting into different types of wearables that can track things.
Let’s say you’ve got blood sugar issues. If there’s something that could detect that type of stuff, where you know you need to be medicated on a regular basis — that’s where I think things get really fascinating. You really are helping make someone’s life better. That’s really what it comes down to. At the end of the day are these things actually helping make your life better and if they are I think you’re going to see great needs for them.