Software fees to make up 10% of John Deere's revenues by 2030
- Reference: 1662995826
- News link: https://www.theregister.co.uk/2022/09/12/deere_software_revenues/
- Source link:
Chief executive John May offered the projection in a [1]Wall Street Journal report on how Deere has plowed billions into developing self-driving tractors and crop sprayers that can tell the difference between weeds and produce.
Though farmers are already struggling with operating costs – including fertilizer and fuel – Deere wants to sell software subscriptions for operating its ever smarter vehicles.
[2]
Bernstein analysts estimate that the average gross margin for farming software is 85 percent, compared with 25 percent for equipment sales.
[3]
[4]
All Deere's tractors and harvesters have an autopilot feature included as standard following decades of ushering farmers into more technology-driven agriculture.
However, the company now plans to have 1.5 million machines and half a billion acres of land connected to the John Deere Operations Center within a matter of years. This cloud service "will collect and store crop data, including millions of images of weeds that can be targeted by herbicide."
[5]
Deere also acquired California startup Bear Flag Robotics for $250 million last year to turn old tractors into autonomous vehicles through software.
For a company that has the heavy machinery market cornered, the shift is unlikely to be popular with farmers.
A number of farm and repair advocacy groups [6]filed a complaint with the Federal Trade Commission (FTC) in March claiming that Deere has unlawfully refused to provide the software and technical data necessary to repair its machinery in violation of the Sherman Act and statutes covering unfair and deceptive trade practices.
[7]
"Deere is the dominant force in the $68 billion US agricultural equipment market, controlling over 50 percent of the market for large tractors and combines," said Jamie Crooks, attorney from Fairmark Partners, which represents the farm and repair groups, in a preface to the complaint
[8]PDF
.[9]Oh Deere: Farm hardware jailbroken to run Doom
[10]John Deere tractors 'bricked' after Russia steals machinery from Ukraine
[11]Deere & Co won't give out software and data needed for repairs, watchdog told
[12]Farm machinery giant John Deere plows into two right-to-repair lawsuits
"For many farmers and ranchers, they effectively have no choice but to purchase their equipment from Deere. Not satisfied with dominating just the market for equipment, Deere has sought to leverage its power in that market to monopolize the market for repairs of that equipment, to the detriment of farmers, ranchers, and independent repair providers."
The FTC complaint alleged that Deere's repair business is three to six times more profitable than its agricultural machinery sales business because farmers and ranchers have to pay thousands of dollars up front for access to the Customer Service Advisor, which provides repair information but still does not enable them to perform common repairs on their own.
It also accused the agriculture giant of gathering data from farmers and using that information to provide optimization techniques to others, eroding potential points of competitive differentiation among its customers.
At the time, the company told The Register : "John Deere supports a customer's right to safely maintain, diagnose, and repair their own equipment. To facilitate this, Deere provides the tools, parts, information guides, training videos and manuals needed for farmers to work on their machines, including remote access for technicians to provide long-distance support.
"John Deere does not support the right to modify embedded software due to the risks associated with the safe operation of equipment, emissions compliance, and engine performance. We remain committed to providing innovative solutions that support our customers' needs."
As the company moves deeper into software, concerns around servicing will only get worse. But there is an upside.
In May, millions of dollars worth of John Deere agricultural machinery stolen from a dealership in Ukraine by Russian Federation forces was traced to the Chechen Republic and bricked, [13]according to CNN , thanks to Deere's proprietary digital access controls.
On the other hand, a hacker going by Sick Codes was able to jailbreak Deere equipment to run a farmer-themed Doom mod for the DEF CON 30 event this summer. "The main bug is that nothing's encrypted or checksummed properly or anything like that," Sick Codes said.
Kyle Wiens, CEO of repair website iFixit, [14]commented : "Turns out our entire food system is built on outdated, unpatched Linux and Windows CE hardware with LTE modems."
Food for thought. ®
Get our [15]Tech Resources
[1] https://www.wsj.com/articles/deere-invests-billions-in-self-driving-tractors-smart-crop-sprayers-11662904802?mod=djemalertNEWS
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Yx9XlFzD-6dkP@N84DfGdwAAAEE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yx9XlFzD-6dkP@N84DfGdwAAAEE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yx9XlFzD-6dkP@N84DfGdwAAAEE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yx9XlFzD-6dkP@N84DfGdwAAAEE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2022/03/07/deere_repair_ftc/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yx9XlFzD-6dkP@N84DfGdwAAAEE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[8] https://regmedia.co.uk/2022/03/07/fairmark_complaint.pdf
[9] https://www.theregister.com/2022/08/16/john_deere_doom/
[10] https://www.theregister.com/2022/05/02/ukrainian_tractors_deere/
[11] https://www.theregister.com/2022/03/07/deere_repair_ftc/
[12] https://www.theregister.com/2022/01/25/john_deere_right_to_repair_lawsuits/
[13] https://www.theregister.com/2022/05/02/ukrainian_tractors_deere/
[14] https://twitter.com/kwiens/status/1558688970799648769
[15] https://whitepapers.theregister.com/
John Deere
The new Sonos?
Your family farms are belong to us.
Re: John Deere
When some speakers stop working, the impact is only to those that own those speakers. If you brick a large numbers of farm machinery and farmers cannot grow or collect their crops, this starts to become a much wider risk that just to the farmer. What percentage of US farms use John Deere and what would be the impact of a large volume of its machinery stopped working overnight.
We only need to look at what is happening with food in Ukraine to see that this is the next battleground. Hacking a company and bricking tractors is probably a lot easier and cheaper than traditional warfare. So at what stage does a government start to realize that sticking everything on the internet is not such a great idea.
Are thjere no other tractors available
in the US?
Customers might complain, but....
they will plough on regardless.
The JD devs were probably hoping for a greenfield project.
Embrace, Extend, Extract
John Deere has had many competitors, e.g. Massey Ferguson, who drove themselves into the dust with managerial incompetence. Deere just happens to be the last man standing.
The tech revolution in agriculture is just beginning. The combines and harvesters record gigabytes of data per hour. All is fed back to the manufacturer by WiFi and 5g. They then help the farmer "optimize" -- for a price -- their productivity and reliability.
Food is as essential as air, obviously, and if you can monetize the essential, and extract the "maximum" value from the value chain, you win. So say the MBAs.
It's worked for fertilizer producers, seed vendors, grain intermediaries, shipping companies. And it looks like it's going to work for John Deere.
it's not the software fees
The 10% of revenue is immaterial. While it's odd to say that 10% of any company's revenue is immaterial, the software is a symptom: The vendor lock-in is what's driving that business. Through software (and hardware?) locks their farm equipment can't be maintained and repaired by third parties.
I think farmers would be happy to pay for the software, as that provides features they want and need. What they also want and need is the ability to keep their farm machinery operational without having to schedule and pay heavily for supplier engineers and parts.
Give John Deere a choice between the lock-in and software sales, they're going to go only one way. They'd give the software away for free to retain that tied revenue stream.
Avoid.
Best way to go about them is to simply not buy their products.
End of life what you got and change supplier's the way to go.
Only tractors?
'Cause I've got a brand new combine harvester and I'll give you the encryption key
Nothing Pulls Like a Deere
And nothing stinks like a John.
(Hat tip to the commentard who posted that very phrase on here months ago)