In Deere's business model, the dealer, not the farmer, is the customer. Dealer's primarily make their money off repairs, not sales. However, Deere's business model is coming head to head with technology and that's a major risk for them. It's not good enough to be a better metal Bender anymore. The real power will be in software and a walled garden will have challenges. Case in point, Android is the largest mobile OS today.
I think Deere have picked up on that, and they're trying to get ahead of the pack with the range of software, particularly apps, they've released over the past few years. Also a half-hearted venture into field sensors. But they're holding onto all their data so tightly - they're trying to build that Apple-esque walled garden ecosystem.
Thing is, for a walled garden to work you have to execute on all facets incredibly well. As soon as there's a product somewhere doing one thing good enough to pull your customers away, the ecosystem starts to crumble. And Deere simply aren't a software company.
I think they're going to work this out in the next 3-4 years, find themselves behind the eight ball and starting acquiring young startups left right and centre.
Agreed. If a company wants to have such a highly controlled ecosystem they need to provide value through relatively seamless operation in 99% of applications. Apple’s “it just works” value proposition is an incredibly difficult approach to pull of in an agricultural setting.
The above being said, I think this is an approach that will be needed going forward—it just feels as if Deere is jumping the gun and applying lessons learned from a relatively mature sectors (e.g. consumer electronics) to agriculture before they’re at the point of being able to offer a high quality product designed with the user in mind. To keep the Apple analogy going, in the mid-2000s their computers were still fairly user serviceable—but as hardware became more reliable and the market shifted away from the ’power user’ ease-of-use and other features took precedence. Perhaps most analogous to the Deere case, in the late 2000s jailbreaking iOS devices was much more popular—as a direct to response to the same kind of issue we see discussed in this article. If you’re going to have a walled garden, you better be certain that you provide enough value so that most of your users never want to leave.
If they can work out the kinks, reducing the requisite IT/CS-type knowledge required to operate digitally augmented agtech could be a great approach. But they need to take a long hard look at what they’re actually providing customers right now—the have a product already, and the digital components seem hastily integrated for the purpose of alleviating Deere’s FOMO on digital agtech.
Might be the best recent example of why this industry is so ripe for innovation.
Reminds me of a different industry but similar story: Dollar Shave Club's 4-year ascension to a $1B company. Industry giants get complacent in their product offerings, stop seeking feedback from customers, newcomer enters with innovative offering, messaging that sticks, and cut out the middlemen. More here: https://www.bloomberg.com/news/articles/2016-07-20/why-unilever-really-bought-dollar-shave-club
Large companies are generally more concerned about holding onto their position. Board members and senior executives know that if they don't mess up then they'll coast through to a comfortable retirement. contrast that with the execs and boardmembers at a startup who have a growth at all costs mantra. Maybe these large corporations need to start getting a lot younger blood on their board.