LOS ANGELES (WWJ) — Covisint Corp. (Nasdaq: COVS), the secure collaboration technology provider spun out of Compuware Corp., announced at the Los Angeles Auto Show announced the results of a new study that highlights how the car-buying public perceives automotive value related to cloud-based, connected services.
The Covisint-sponsored study, conducted by CGS Advisors, reveals that, unlike traditional product and feature sets that are at highest value when new, the value of connected services starts at essentially zero — and grows over the lifetime of the vehicle.
This concept turns automakers’ past subscription pricing models and defined contract periods on their collective head. A new pricing model needs to reflect that the perceived original value is minimal and grows only as original equipment manufacturers expand the number of services and connections available to the consumer.
“Perceptions are changing dramatically; the new objective is all about influencing the next purchase by keeping owners satisfied with their current purchase — all of which translates into debuting services for free and realizing revenue down the digital road,” said Tim Evavold, director of automotive solution delivery for Covisint. “Customers believe in the future of connected services to increasingly improve their lives, and
automakers need to adjust to this new reality.”
The findings also revealed that other industries are likely to step in to absorb some of the costs and take on some of the risks — as well as the profits — if automakers are reluctant to commit fully to the new world of connected services. The study noted that telecoms are the prime candidate for this as they “see different future potential revenues” than some risk-averse OEMs.
“Vehicle owners expect OEMs to significantly enhance and accelerate connected vehicle offerings,” said Gregg Garrett, founder and CEO of CGS Advisors. “The entire auto industry is undergoing evolutionary change in the value proposition of the car to its owners — all driven by connected vehicle services.”
Covisint also announced at the show its new demo on the future of the connected car buying experience. The Covisint demo immerses show attendees on this experience for “Adele” as she trades in her company’s leased vehicle. It will show how critical all of her devices, data and connected services are in this process — including her phone, computer, new car and old car, etc.
The Covisint-sponsored study is available at: http://bit.ly/IcRbOj.