We’re often asked why Repair is monopolized – and the answer is always “Follow The Money”. There are three reasons that money is at the heart of the issue. Stock value, Services Revenue, Aftermarket Control. We call this the Circular Monopoly.
Step One: Keep Selling More New Products
Stock values are key to executive compensation. Analysts look for revenue growth of new product offerings. The more new products sold, rather than repaired, the better the picture for stocks. Executives are therefore highly motivated to make new sales as attractive as possible, and repair limitations feed that cycle. Apple does a great job of keeping their customers on a steady diet of upgraded products instead of simply repairing what they've already got.
Step Two: Feed Services Revenue
Services revenue is also a driver for monopolized repair. John Deere's repair monopoly has greater benefits to the Dealership network than to Deere itself. Farmers don’t buy new tractors frequently, but the equipment itself needs constant repair. Car dealers faced exactly the same problem with Automotive Right to Repair. Following passage, the auto industry adjusted, the dealership service experience has become notably more consumer-friendly, and despite strident warnings from the Alliance of Automobile Manufacturers, the sun still rises in the morning.
Step Three - Eliminate the Used Market
Control of the aftermarket is also a powerful driver for many OEMs. Used equipment, like used cars, is always an option for a purchase, just as with used cars. Equipment that cannot be repaired, for reasons of policy or practicality – is very hard to resell on the used market. Repair must be widely and competitively available for used markets to function.
Closing the loop on repair drives drives used equipment buyers to the showroom for a new product – feeding the stock value of the OEM, feeding the exclusive dealership model, and destroying the secondary market for older equipment.
Its a circular monopoly.