Tech Companies Are Jumping to Ride Shotgun in the 'Connected' Car

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Demonstration Of The New Pandora Operation In A Honda Vehicle
Bloomberg via Getty Images
Hitting the open road has never been this entertaining -- or distracting.

A big theme in this week's Consumer Electronics Show is the connected car and how drivers can now use their Bluetooth-enabled smartphones to do everything from streaming music to making online dining reservations without taking their hands off the wheel.

The revolution has been a quiet one: Automakers are hesitant to brag about new technology that could be quickly trumped by somebody else. However, this hasn't stopped companies including leading music streaming service Pandora (P) and foodie fave OpenTable (PCLN) from brokering deals to make it easier for drivers and passengers to engage with their applications from the dashboard.

It's been a clear trend lately, and now tech giants are calling "shotgun" to make sure that they go along for the ride.

Don't Click and Drive

Reports surfaced late last month about Google (GOOG) and Apple (AAPL) jockeying for position in this battleground on wheels. Google's Android and Apple's iOS combine for most of the tablet and smartphone markets, and each wants their operating systems to power the connected car of the future, in which apps and services are a voice prompt or steering wheel button away.

It's not directly about the money. Android is open source, meaning it's freely available to any company that wants to install it. Gaining control of the dashboard experience is about making sure that Google is the company watching over the app marketplaces and digital ecosystems that will live in our cars in the future.

After all, we're now just a few years away from self-driving cars. If the person in the driver's seat doesn't have to watch the road, they can watch a screen, and suddenly, the highways don't have to be boring anymore.

Turning Up the Volume

Pandora made waves on the eve of the Consumer Electronics Show, introducing an in-car advertising platform that will spearhead deeper marketing integration to reach out to motorists. It already has signed some of the leading national brands -- Taco Bell, BP, Ford -- as initial advertisers.

Ads on streaming music services may be annoying, but drivers already get served significantly more commercials per hour on traditional AM and FM radio. It's the price of being a freeloader, since most of the leading streaming services offer ad-free options for those willing to pay.

Pandora's in a good place, with 76.2 million active listeners. It also has deals in place with most of the major car manufacturers. Drivers can seamlessly access their smartphone Pandora app through their car's audio system in nine of the 10 best-selling passenger vehicles. Millions of Pandora users have activated their registrations as a result of in-car access. And this is just the beginning.

Riding on the Information Superhighway

Pairing up smartphones with equipped vehicles for Bluetooth interaction is a breeze, but in the future, smartphones may not even be necessary. AT&T (T) has been striking deals to have its wireless unit work with automobile manufacturers to offer in-car connections, and it has announced partnerships with General Motors (GM) and Tesla (TSLA) this week.

It's not just about streaming Pandora or booking dining reservations through OpenTable. AT&T connectivity will allow Tesla and others to offer remote engine diagnostics and other telematics features including live traffic and weather updates.

It's not just Google and Apple that want to champion the operating system of choice in this inevitable revolution. AT&T Drive is the new name for the wireless giant's automotive solution and development platform, now called AT&T Drive.

These are the early days of the connected car, and everybody wants to be a road hog.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, General Motors, Google, OpenTable, Pandora Media, and Tesla Motors. The Motley Fool owns shares of Apple, Google, and Tesla Motors. Try any of our newsletter services free for 30 days.


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