Software Fees To Make Up 10% of John Deere’s Revenues By 2030

US farm machinery giant John Deere has estimated software fees will make up 10 percent of the company’s revenues by the end of the decade. Chief executive John May offered the projection in a Wall Street Journal report on how Deere has plowed billions into developing self-driving tractors and crop sprayers that can tell the difference between weeds and produce. Though farmers are already struggling with operating costs — including fertilizer and fuel — Deere wants to sell software subscriptions for operating its ever smarter vehicles.

Bernstein analysts estimate that the average gross margin for farming software is 85 percent, compared with 25 percent for equipment sales. All Deere’s tractors and harvesters have an autopilot feature included as standard following decades of ushering farmers into more technology-driven agriculture. However, the company now plans to have 1.5 million machines and half a billion acres of land connected to the John Deere Operations Center within a matter of years. This cloud service “will collect and store crop data, including millions of images of weeds that can be targeted by herbicide.” Deere also acquired California startup Bear Flag Robotics for $250 million last year to turn old tractors into autonomous vehicles through software. For a company that has the heavy machinery market cornered, the shift is unlikely to be popular with farmers. The report goes on to note that a number of farm and repair advocacy groups have filed a complaint with the FTC, “claiming that Deere has unlawfully refused to provide the software and technical data necessary to repair its machinery in violation of the Sherman Act and statutes covering unfair and deceptive trade practices.”