Connected-product data can generate recurring revenue, but downstream sharing, regulatory exposure and consumer backlash can turn a lucrative asset into a costly liability.
Ford’s privacy pledge signals a potential shift from selling customer behavior to selling services powered by it, preserving commercial value without surrendering control of the underlying data.
The real measure of connected-data profitability is how much risk-adjusted revenue survives after privacy, compliance and third-party liabilities are priced in.
Somewhere around the turn of the century, and the decades following, the smokestack economy become the connected economy.
Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.
Connected vehicles, industrial equipment and warehouse devices today generate continuous streams of behavioral, operational and location data. That information can support subscription services, predictive maintenance, product development and new commercial partnerships.
The Thursday (Oct. 29) announcement that General Motors has agreed to pay $220 million to settle allegations from 36 state-level jurisdictions that it improperly shared drivers’ behavioral and location information with data brokers, however, shows how that same connectivity can also create liabilities that outlast the revenue those arrangements generate.
Following the news of the settlement, on Monday (Nov. 2), Ford Motor Company introduced a new company Privacy Promise, pledging not to sell customers’ driving-behavior data to brokers and providing clearer information about how vehicle data is collected, used and controlled.
Together, the developments raise a question for manufacturing CFOs well beyond the automotive sector: What happens to the economics of connected products when the information they generate becomes more expensive to monetize than to collect?
Source link
