American agricultural machinery giant John Deere believes that software fees for its tractors will account for 10% of the company’s revenue by 2030. 1.5 million machines on 500 million acres of land will be connected to the John Deere operations center.
At a time when farmers are struggling with high operating costs, including fertilizer and fuel costs, John Deere wants to sell subscriptions to software to control its increasingly intelligent farm machines. At the same time, according to Bernstein analysts, the average gross margin on software for agriculture is 85%, compared to 25% of the margin from the sale of equipment.
This news is unlikely to please farmers who are already unhappy with John Deere’s actions. In March 2022, several farm advocacy groups had already filed a complaint with the Federal Trade Commission (FTC) alleging that John Deere unlawfully refused to provide software and technical data needed to repair its machinery in violation of the Sherman Act and statuses covering unfair and deceptive trade practices.
“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. 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,” Jamie Crooks, an attorney at Fairmark Partners, which represents farmers and repair groups, said in a preface to the complaint.
On the other hand, John Deere is really investing a lot of money in creating autonomous tractors and reducing the costs of agriculture thanks to the increasing automation of labor. Again, John Deere software prevents, for example, equipment theft, as was the case with agricultural machinery stolen by the Russians in the temporarily occupied Melitopol.
Well, besides, Doom working on a John Deere tractor is really fun.
And seriously, in our cyberpunk future, which is actually already here, software updates for almost all appliances, clothes, shoes, etc. will become as common as brushing your teeth every day, so… just get used to the new.