AGCO Talks Tech, Trimble

AGCO Talks About Its Joint Venture With Trimble and Retrofit Market

Dan Miller
By  Dan Miller , Progressive Farmer Senior Editor
AGCO is exploring how it might provide its newest technologies to its customers through software unlocks. (DTN photo by Dan Miller)

AGCO Corp said March 7 that it looks to give customers access to its new technologies by way of software unlocks, which will allow equipment owners to purchase AGCO technologies throughout the life of their hardware, whether they are installed on new or used AGCO brands or competitive equipment brands.

AGCO has seen "some pretty strong pushback from farmers around ... recurring revenue models," said Andrew Sunderman, AGCO/Trimble Ag joint venture transition lead. Instead, he said, "We have looked to deploy software unlocks that can be purchased through the life of the hardware, that even if the customer doesn't purchase it on day one with their new machine or their new technology, we can go back to them year after year and drive a new opportunity -- new value for them and a new margin opportunity for us."

Recurring revenue is income earned by activation of a technology or feature. Some manufacturers call it "solutions as a service," others more simply "subscriptions" or "licenses." It is a fee paid by the acre or by an amount of time, for example.

Sunderman participated in the 2024 Morgan Stanley Technology, Media & Telecom Conference on March 7. He talked about AGCO's retrofit strategy, installing technologies on any brand of equipment. He also discussed the joint venture AGCO is forming with Trimble. AGCO's $2 billion purchase of Trimble Agriculture, said to be the largest ever ag tech buy, was announced last September and should be finalized by summer.

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Trimble Agriculture, once that deal is finalized, adds vast new precision resources to AGCO's technology offerings that have long been featured by its highly successful Precision Planting unit, a business purchased by AGCO in 2017. ACGO said its precision ag business was worth $750 million in 2023.

With the addition of the AGCO Trimble Joint Venture, the company foresees $2 billion in income from its precision business within five years.

AGCO's retrofit strategy -- offering precision ag and autonomy solutions to owners of any equipment brand -- will be key to that result.

Retrofit means "we bring a new capability, to an existing set of machines, regardless of the make or brand," Sunderman said. "And that's important. It allows us to serve 100% of farmers in a marketplace regardless of brand, regardless of the age of equipment they are using. We have a technology portfolio that will drive value in their operation."

The AGCO-Trimble joint venture adds a customer base operating more than 10,000 different equipment types. It's an important number brought to AGCO by the pending joint venture. Retrofit builds a key relationship -- a "stickiness" as AGCO describes it -- for continual technology upgrades with payback to the farmer, in most instances, within a year.

"There has to be a ROI for customers," Sunderman said. "Our key metric of success is net farm improvement for farmers. If we can drive that positive profitability to them, we will in turn share in that profitability. And that has proven accurate for us so far."

The pending AGCO-Trimble joint venture is 85% owned by AGCO and 15% by Trimble and will be operated as a standalone unit. The arrangement brings to the joint venture opportunities to tap into all of Trimble's technologies, in addition to those brought specifically to AGCO by Trimble Agriculture. For example, the joint venture will have access to Trimble's positioning, modeling, connectivity and data analytics products.

Dan Miller can be reached at dan.miller@dtn.com

Follow him on X, formerly known as Twitter, @DMillerPF

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Dan Miller