John Deere has gone as far as to claim that farmers don’t
own the tractors they pay hundreds of thousands of dollars
for, but instead receive a "license to operate the vehicle".
Don't most farmers finance their equipment? If the resale value is low because John Deere's policies make it difficult to use older equipment, then they won't be able to sell tractors with high profit margins because banks won't give them security. They're literally trading higher margins for more volume sales, and begging their competitors to join them to a race to the bottom.I don't have an MBA, but that seems really short-sighted. Configuring your entire value-add chain, from R&D to sales to marketing, to focus on low-margin volume sales sounds preposterous. I mean, volume will always be meat & potatoes, but the darwinian struggle for high-margin sales is how you nurture growth. Once the small farmer is gone John Deere will only be able to sell to huge conglomerates. Eventually those conglomerates will dabble with vertical integration and cut John Deere out of the equation all together. Seems to me if John Deere wants to stay relevant they'd do everything they can to inflate the resale value of their tractors, and that necessarily includes sustaining a high resale value in the used equipment market. In a world of cheap financing it's easier than ever to keep farmers buying new equipment, and more important than ever to maximize returns based on loose financing. You shouldn't need a lawyer to hold a gun to your customer's head. This obsession with maintaining control of their product after it leaves the factory seems just so epically ridiculous. And that's before we get into any of the minutiae of copyright and the uphill battle they'll face. Anything but the strictest of controls over their software will net them absolutely nothing at the end of the day except alot of pissed-off customers. It certainly won't be an impediment to Chinese knock-offs, who have very capable software engineers. Whoever is telling them that is so misinformed that I'd wonder if they were taking payments on the side from the Chinese. I guess this is why American manufacturing is slowly dying. I mean, we're still the number one manufacturing country in the world, but despite strategies like these, not because of them. |