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A big part of this is the result of manufacturers trying to protect the profits of themselves and their dealer networks. Dealer network profit is increasingly
by chriselles 7y ago
A big part of this is the result of manufacturers trying to protect the profits of themselves and their dealer networks.
Dealer network profit is increasingly reliant and dependent on service income.
So attempts to lock in serviceability are to be expected.
I wonder if manufacturers will consider and experiment with a platform approach?
Perhaps along the lines of Salesforce, Xero, Apple App Store.
And take a cut of the ecosystem income.
- tehlike 7y agoLease model for farming equipment, I guess that's what you mean by platform approach?
- chriselles 7y agoI think subscription-like leasing is an option worth exploring. But I’m thinking more along the lines of aftermarket hardware/software providers certified and brought onto a manufacturer’s platform marketplace.
- zxcmx 7y agoPersonal conspiracy theory: If you're JD what you really want is to get a cut of revenue generated using the equipment. Like the copier market, all run on "clicks". Service is more or less free (and responsive), because if you're not harvesting they're not earning. I'm inclined to believe that obsession with telemetry collected is partly for service, partly for sales, but also to support future "pay per unit processed" contracts and business models. Hackable tractors undermine the nascent "farm equipment as a service" business model.
- jjeaff 7y agoMight be what they are trying to do, but I feel like few industries have managed to make that happen. With the exception of payment processing, I feel like most people avoid deals that try to take a cut of revenue like the plague. I know I do.
- jjp 7y agoThink aircraft engine is closer to the farmer/JD relationship. Airlines don't buy engines but rent thrust/hours. A little more explanation https://aviation.stackexchange.com/questions/8270/what-is-the-future-of-manufacturer-independent-jet-engine-maintenance-repair-and/8283#8283 https://aviation.stackexchange.com/questions/8270/what-is-th...
- grawprog 7y agoSeems more like it should be more like the CNC machines at the shop I was at and the manufacturer. The price point is the same for the machines(around half a million), we were heavily encouraged to use their customer service and support, but we could work on, modify and repair our own machines as we saw fit, order parts from whoever we wanted and have any technicians we wanted work on the machines. The machines were online and could be accessed by the manufacturer but were only accessed during customer support calls.
- chriselles 7y agoVery interesting, thanks for sharing. I wonder how farm equipment manufacturers will manage the necessary transition in their dealer franchise model?
- ptah 7y agomaybe not a percentage cut of revenue but some kind of SAAS-like pricing model?
- chriselles 7y agoThat makes sense. But I wonder how the manufacturers will manage the transition of their large global franchise model to supporting “farm equipment as a service”? It will be pretty disruptive to the franchise network.
- mac01021 7y ago> Dealer network profit is increasingly reliant and dependent on service income. Why increasingly?
- chriselles 7y agoProfit margins on new durable goods are dropping, often approaching dealer cost. So greater reliance on service profit is existential. This has been an ongoing shift for about 20 years.
- mac01021 7y agoBut why are profit margins on new durable goods dropping? More competition amongst dealers? Used cars lasting longer? Manufacturers price-gauging the dealers?