SOFTWARE LICENSING

Growing Revenue With Car-as-a-Service Software

By Steve Anderson, Contributing TMCnet Writer

Ford's work with the Sync platform is making a lot of new opportunities for software developers. But new opportunity, in order to be followed up with any earnestness in business, must include at least some shot at a revenue component. Examining Ford Sync in closer detail, meanwhile, shows at least one major opportunity for revenue thanks to its inherent “platform + apps + services” model.

Taking the “platform + apps + services” approach allows Ford to offer Sync at differing levels of performance and, from there, differing levels of expense to the potential user. That one software product, Sync, can offer a different experience based on the user's needs. For some users, Ford can offer up a “full package” sort of Sync, with all the options available like Wi-Fi hotspots or various subscription services. Bringing subscription-based services into the mix not only provides more options for users, like letting them get just the package they want, but also opens up the potential for revenue to come in after the sale. Internal diagnostic reports provide peace of mind that only some are willing to pay for. HD Radio enjoys the possibilities of an iTunes-style “pay per song” model. The possibilities for revenue generation here are wide and varied.

But by like token, the opportunity to gain new revenue comes at a price, specifically here, the adjustment of thinking from the former model of “build a car and sell it” to “build a car, sell it, and provide services after the sale.” Car companies need to adjust their thinking to include the new ways of packaging their product and distributing it, adjusting prices of vehicles according to all the options it contains, including the new subscription services. This in turn requires new ways of managing entitlements, to make sure that customers are getting what they pay for, and only what they pay for. Additionally, adding in the ability to offer free, short-term demonstration access is another important step in the process.

Oddly enough, the growth of the driverless car industry is factoring into the “Car-as-a-Service” model as well, owing to several factors. The software required to operate a driverless vehicle is being seen in some sectors as a software product itself, and that's the driving part of the need to rethink pricing. What happens when someone drives onto the lot in their 2002 Ford Explorer or their 2005 Jeep Cherokee Sport and wants the auto-drive modification? Some will, and that gives a new opportunity for revenue growth. From there, a car that can drive itself opens up a lot of opportunities to offer paid app services to former drivers who are now passengers.

Opportunity waits in several portions of the Car-as-a-Service model, but taking the fullest advantage of these opportunities will require a fundamental change in the way car makers think about how they offer their products for sale. They may have a much bigger opportunity than they think on hand, but will they be ready for it? Only time will tell how this unfolds.