JOHN DEERE

Farm equipment company now wants to hybridize advanced equipment using smart software systems

Deere & Co has been selling and servicing tractors and other farm equipment for farmers for decades, but now the company is entering a new phase that requires business transformation. One of the world's largest agricultural machinery manufacturers is stepping up efforts to hybridize advanced equipment using intelligent software systems and introducing subscriptions for its use to increase profitability.

With dwindling public grain producers and the world's growing population, Deere and its competitors are developing offline hardware that runs software that not only harvests the harvest itself, but also organizes critical data. This model can generate consistent revenue through a system of value-added paid services, similar to Apple and other tech giants.

For now, Deere and competitors like AGCO and CNH Industrial are just starting to increase investment in high-power automation. In the next step, it is planned to mass equip the machines with seeding systems using satellite imagery, soil data and other information.

While Deere has yet to release its own innovation roadmap, the scale of the investment can be roughly gauged by the plans of General Motors, which aims to earn tens of millions of dollars from software services.

The race to automate farm machinery has accelerated amid a looming food crisis. For a variety of reasons, including drought in major grain-producing countries, prices for grains and related commodities have increased significantly, so, according to Reuters, farmers in the same United States are doing their best to increase yields and reduce use. of fertilizers and pesticides, as well as reducing other costs. That and the decreasing number of people willing to work on farms open up new opportunities for Deere and its competitors. The latest addition to the company's line of autonomous solutions is the 8R Tractor, which goes on sale this fall.

The new tractor will cost $500,000, but the autonomous driving option will be offered separately. While the company continues to sell in the traditional format, its representatives said the business intends to integrate the SaaS (software as a service) model into its standalone solutions. Apparently, this also applies to the new autonomous tractor.

A model that systematically generates income for farmers can be economically beneficial for manufacturers of heavy equipment. In Deere's case, subscription services will give the company greater margins while remaining attractive to farmers.

Image source: John Deere