Construction Equipment Industry desperately needs a Steve Jobs!

Who could have imagined that 29th June, 2007 would go down in history! Steve Jobs launched the iPhone and changed the way people would use their smart phones for times to come. A year later Elon Musk did the same with electric cars. No one could have imagined that EV's would take over the world. Today,  Tesla is making 500,000 cars a year and is valued higher than the top six car manufacturers combined.

Steve Jobs & Elon Musk have caused disruption in their respective industries like no other. When will construction equipment industry get their own Steve Jobs? Just like Automobiles, Construction Equipment has not seen any new entrant in a long time. The industry is facing the challenges of digitisation, remote operationality,  alternative fuel engines like electric, LNG, CNG, Hydrogen fuel cell – creating an opportunity for new players to emerge. There is a disruption waiting to happen. Will a new Steve Jobs rise?

CE Industry is changing at a rapid pace but is still too far away from Automobiles, Telecommunication and several other industries. CE is till dependent on its extensive product, customer and application knowledge to survive. But given the technical changes coming, would that be enough to save them from a digital disruptor?

The new era of machines could be designed around the capabilities of an electrical drivetrain. LNG drive trains have also been making a serious headway but these are not expected to cause the disruption the industry is looking for. Transfer of power would be with cables instead of belts, and shafts. These machines would be software controlled just like a Tesla car, depending less on mechanical changes and more on easily upgradable software changes. 

Supply chain could remain the same, as many components and raw materials of tomorrow’s machines will be like todays. New components will be needed, particularly in the electric drivetrain and hydraulic systems. 

New digital market is expected to change the traditional role of the dealer and sales be on a digital platform just like that of Tesla’s. Construction equipments require responsive and intensive product support, which is currently a vital part of the dealers’ services. Parts and services are also a large part of operating income for OEMs and dealers. Simplified, software-driven machines will require less maintenance and this will negatively impact the traditional business model and reduce the value of existing captive parts business.  A disrupter would thus create a service-only network of dealers while moving most of the sales activity on-line. 

All a Disruptor needs to worry about is being focused on developing the new products, services and business. 

Jobs & Musk started when the industry was still bereft of all technology and got a first mover advantage. This is not the case for the construction equipment industry today as all existing OEMs are aware of the changes happening and can drive the disruption themselves if they are willing. But, if they don't, someone else will