Earlier this month, John Deere announced a new model to replace the 7 year old standalone 2630 display, the new Gen 4 4640 display. The new 4640 operates very much the same as the Gen 4 Command center displays, which have been on the armrest of large, final tier 4 emissions tractors for almost four years now. However, there is a huge change in the strategy of software activations such as AutoTrac and Section Control.
Instead of one-time fees for activations, the 4640 requires a recurring annual or five year subscription. This is a major shift in strategy for the second time in the last four years. For 2630 displays and other previous generations, activations were both transferable and up-gradable to the newer generation of display (ex: 2600 -> 2630).
That was a whole lot sooner than I expected to see subscription based activations.. pic.twitter.com/WTerLbFlXI
— Aaron Bobeck (@AaronBobeck) May 26, 2017
When the Gen 4 Command Center armrest mounted displays came out for certain late model year 2014 tractors, new activations needed to be purchased and they were required to stay with the tractor. Despite the downside of having to buy new activations for the Gen 4 Command Center armrest displays, the prices were about a third of what the 2630 activations were. I thought this to be a very reasonable strategy as most other manufactures don’t allow upgrading or even transferring of activations.
Now fast forward from 2013 to 2017 and in comes a new level of confusion with the standalone 4640 display and subscription activations. Oh and add renaming the activation packaging that already existed for the Gen 4 Command Center. While I’m not at all against leasing or renting iron or precision hardware, the pricing does need to be reasonable and reflect the lack of lifetime usage. In my opinion, leasing a set of activations for five years shouldn’t be even close to same price as set of activations that stay with the display or tractor for its usable lifetime.
GS3 2630 Activations (activations are transferable to other GS3 displays)
Display Price $5,895
Lifetime AutoTrac $3,500
Lifetime Documentation (included in the price of the display)
Lifetime Section Control $3,000
Gen 4 Command Center Activations (activations are NOT transferable at all)
Display Price (built into the price of the tractor/vehicle)
Lifetime AutoTrac only $1,500
Lifetime “Premium Activation” bundle (AutoTrac, Documentation and Section Control) $3,000
*If an AutoTrac only activation is already on the machine, it can upgraded to the “Premium Activation” bundle for $2,000
Gen 4 4640 Standalone Display Activations (subscription activations are transferable to other 4640 displays, possibly any future model?)
Display Price $3,995
1 Year AutoTrac only Subscription $ 850
5 Year AutoTrac only Subscription $4,000
1 Year Precision Ag Core (AutoTrac, Documentation, Section Control) Subscription $1,700
5 Year Precision Ag Core (AutoTrac, Documentation, Section Control) Subscription $8,000
Now with all the criticism that subscription activations bring, there is of course another side. Subscription activations or any kind of annual renewal fees, should bring with it recurring revenue for the manufacturer and the dealer or sales professional who sells it. This recurring revenue should result in better support and software updates that bring with them new features and compatibility. Compatibility being a big issue, as technology on implements is evolving faster than ever. The other argument for a subscription is this brings in is lower initial cost and a tax write-off every year. Which is interesting because with owning iron we’re taught to think the other way, large upfront $$ is offset by strong residual value. So basically you’re being asked to think differently about pricing of Precision Ag versus traditional iron. The two are not the same, but the pricing has been in the past, however that clearly won’t be the future.
Just some thoughts here.. It will be interesting to see how other manufacturers respond, but I think subscriptions are the future, even if we don’t like the pricing as it stands now. And hopefully the inconsistency in pricing and terminology settles down a bit.