Deere & CoDE, after conquering the farm industry hardware, aims to extend its dominance to software to boost the productivity of those machines and agriculture, the Wall Street Journal reports.
Deere is rolling out self-driving tractors capable of plowing fields and sprayers that distinguish weeds from crops.
Deere, which helped make satellite-guided tractors universal in the U.S. Farm Belt over the past two decades, invested billions of dollars in developing more innovative machines to boost farming productivity.
“It’s all about doing more with less,” the report quoted CEO John May.
By the decade’s end, May projects that 10% of Deere’s annual revenue will come from fees for using the software.
The report specified that Deere’s equipment rivals, CNH Industrial N.V.CNHI and AGCO CorpAGCO, agribusinesses like Bayer AGBAYRY and Corteva, IncCTVA and venture-capital investors have collectively invested for predicting crop performance and lowering farmers’ costs with more precise operations.
By 2026, Deere wants to connect 1.5 million machines in service and a half billion acres in use to its cloud-based John Deere Operations Center.
In 2021, Deere snapped up California startup Bear Flag Robotics for $250 million to provide software for turning older tractors into autonomous-capable vehicles.
Selling farmers’ subscriptions to the software will likely yield higher profit margins than sales of Deere’s signature green and yellow machinery, which will continue to make up the bulk of Deere sales.
The report added Deere is betting that it can lower farmers’ anxiety by offering software as a service on an ad-hoc basis for specific jobs, like tilling fields or applying fertilizer. Farmers would need to buy the newest crop sprayers to use the software.
Deere sold the smart sprayers on a limited basis, along with self-driving tractors for tillage work, using camera-guided technology.
By 2030, Deere said, it will offer autonomous models for its entire equipment line.
The estimated global agricultural sprayers worth $2.5 billion in 2022 will likely reach $3.5 billion by 2027, at a CAGR of 6.8% during the forecast period.
The global agricultural robots market size will likely grow from $4.9 billion in 2021 to $11.9 billion by 2026, at a CAGR of 19.3%.
Price Action: DE shares traded higher by 1.02% at $372.25 in the premarket on the last check Monday.
