Can the elevator OEMs become tech-enabled?

After publishing a series of articles five months ago outlining our contrarian vision of the elevator market, we received a great deal of attention from top executives, industry experts, and equity investors. They asked us similar strings of follow-up questions, which can be summed up as follows:

  • Isn’t it simply a matter of time before the Big 4 are able to replicate uptime’s innovation?
  • How does uptime scale?
  • Are you the only company on the market doing this?

Because we believe the industry is on the brink of a revolution, we decided to make our answers public.

Predictive maintenance will shift the value from labor operators to tech operators.

As we detailed in our previous articles, the entire industry will pivot on its service business model disruption. The disruption equation has three parts:

  • the technology platform, which enables predictive maintenance
  • the operational model, which shifts from a labor-first, visits-based technician routine to tech-enabled, task-oriented interventions
  • the value proposition, which shifts from selling useless visits, compliance, and last-minute repairs to selling performance and access to information
The three parts of the elevator-maintenance-disruption equation

Simply adding “digital features” to the OEMs ’ existing service contracts is far from enough to deliver the required level of change.

For an incumbent, this change requires a complete turnaround.

We believe that once the OEMs have access to the right technology, they will gain the ability to perform a turnaround and emerge as winners in this industry transformation. However, even with lavish investments, they cannot build the tech by themselves, and definitely not within a reasonable timeframe.

As detailed below, the barriers to entering such a technology platform are high, such that the value will shift from those who control the operational framework (service contracts, labor) to those who control the technology and the data.

Time-out. It’s good that we have our own opinion, but we understand why some of you might think we are biased. So we decided to tune in to the Q3 Earnings Calls of Kone, Schindler, and Otis in order to listen to what analysts and top execs were saying. Luckily, digital maintenance, although initially not part of the CEO presentations (apart from a brief mention by Otis’ Judy Marks), was the main focus of the Q&As. Kone, for example, was asked nine questions — representing a third of all the questions posed — regarding their 24/7 Connected Services product, by no fewer than five different analysts.

Smokescreen. Unveiled?

To begin, let’s look at the basic questions: What is the deployment pace of digital offerings? What value are they creating?

First of all, the Q3 earnings Q&As confirmed that the deployment pace of the OEMs’ digital maintenance products is slower than expected. Let’s look at Kone’s Q&A (source of the transcript: SeekingAlpha).

Kone

Q: Guillermo Peigneux, UBS

« I am actually wondering whether you could share some numbers on 24/7 installation for us in unit terms or number of installations? »

A: Henrik Ehrnrooth, Kone CEO

« […] So we are currently in the range of between 5% and 10% of our service base where we have the 24/7 Connected Services. »

Q: Guillermo Peigneux, UBS

« And maybe a follow-up on that, every — do I understand that every new unit, elevator unit that you are installing will be with 24/7 Connected? »

A: Henrik Ehrnrooth, Kone CEO

« […] Not every unit comes automatically connected yet, but when we have DX across the world, then every unit will automatically have connectivity built in. »

Q: Andrew Wilson, JPMorgan

« And I guess, just an additional question on 24/7, I think historically, you have sort of set I think it was that there could be 1 million connected elevators […]. I guess, just of the development that you have seen at 24/7 so far, have you changed your of ambitions? »

A: Henrik Ehrnrooth, Kone CEO

« […] Perhaps in the beginning, we thought it would be faster to roll it out. Perhaps what’s been a little bit slower as we have a commercial model to sell to install and all of that has been somewhat slower than I would have predicted a few years back. […] We think that the majority of our service base in the future will be connected. That view hasn’t gone anywhere, but we also haven’t given a time frame where we think that’s going to happen. »

Q: Daniel Gleim, MainFirst

« Yes, good afternoon. Thank you very much for taking my questions. Actually got three on ten on 24/7 Connected Service and apologies for belaboring the point. The first is on the short-term impact; you gave us some guidance for the incremental service growth tailwind. […] »

A: Ilkka Hara, Kone CFO

« Well, geographically, actually, for 24/7, we have a good coverage already. […] So geographically, it’s not so much of an expansion story from my perspective. Then second, I think the key for us really is to ramp up our capability to sell. […] »

What did we learn, from this Q&A?

1. Deployments are below expectations. Henrik says it stands between 5% and 10% and that it is slower than expected. He further mentions that their total ambition is still here — but without any mention of a time frame.

2. Not every new elevator has built-in connectivity yet, although this will be the case shortly, with the DX rollout.

3. The main reason given for Kone’s slow pace of deployment is the go-to-market, mentioned by both Henrik and Ikka. The geographical footprint is already there — but the product seems hard to sell.

Let’s now look at Schindler’s Q&A on this subject (source of the transcript: SeekingAlpha).

Schindler

Q: Andre Kukhnin, Crédit Suisse

« Schindler Ahead, could you give us an update on where you are, to whatever degree of detail you can in terms of number of connected and paid for units, and maybe any indication on how much revenue that has added in last 12 months, so that we can run some benchmarking versus some of your peers and think about forecasting that going forward for that business?

A: Thomas Oetterli, Schindler CEO

« […] We are strongly convinced that connectivity is a key driver of future success. It is still a net investment for Schindler. […] So every new equipment is equipped with the Schindler Ahead. »

Q: Lucie Carrier, Morgan Stanley

« […] I just actually had a follow-up on the — on Andre’s question on connectivity. Are you maybe able to tell us how much of your install base is actually functioning in terms of connected services. »

A: Thomas Oetterli, Schindler CEO

« So we do not disclose the absolute number of connectivity, because we don’t want to enter into this race. »

Here, it becomes clear that the deployment rate is too low for them to want to disclose it (Thomas doesn’t “want to enter into this race”), and their hints are in line with our previous assumption of < 10% of the installed base.

It seems evident that if the products would bring definite value, they would be deployed. Let’s look at the value-creation questions.

Kone

Q: James Moore, Redburn

« Firstly, could we get back to 24/7, please? Could you talk a little bit about what is the magnitude of the price uplift that we’re seeing in the latest quarter or so? […] And then we are talking about a 10% price hike against the standard contract, or more than that? »

A: Henrik Ehrnrooth, Kone CEO

« Much more than that. »

Schindler

Thomas Oetterli, Schindler CEO responding to Andre Kukhnin, Crédit Suisse

« […] And yes, on the first analysis and we see that the overall connected units are performing better in portfolio retention than non-connected units. But it is a long — it’s a long term game.

[…] Of course, this will — the financial impact will depend on how much we are going ahead with connectivity. And this will take a couple of years.

[…] And last but not least, for those units where we can sell an Ahead package, we also see that our service price, including the Ahead module is increased — depends a little bit on the market — between 10% to 15%. »

Otis

(Source of the transcript: SeekingAlpha.)

Q: Carter Copeland, Melius Research

« And then just as a follow-up on Otis ONE and pricing differentials you’ve seen on those connected units or what your expectation is for those in the future, just high level thoughts on that would be appreciated? Thanks. »

A: Judy Marks, Otis CEO

« […] In terms of Otis ONE, we are ramping up and accelerating our deployment. We’ve seen productivity gains but in terms of additional subscriptions or revenue, it’s still early in terms of where we’re able to gain traction on that. […] It’s giving them [the technicians] the ability to show up quicker, to have less running on arrivals when they get there because they know it’s already running on arrival and they don’t have to actually make that service call. So we’re pleased with the early results, but it’s not anything that’s really added to the top line in terms of subscription revenue yet

Here, it’s important to note in passing that they focus on “showing up quicker” rather than on avoiding breakdowns. This takes us back to the product vision of technology for elevator maintenance, which we discussed in our second article.

A: Rahul Ghai, Otis CFO

« So just to add to that Carter, Otis ONE joins the suite of other connected applications that we have like destination dispatch system, elevator management system, and those applications combined add about 30% to 40% of the subscription revenue. […] Where we do have remote service capability that we provide through even the phone lines, we are able to get incremental price in those units. […] »

“Even the phone lines” — it seems that Rahul is referring to the Otis REM (a 1980s product that has evolved since), a great innovation at the time, which, however, could not help to build predictive maintenance.

Q: Denise Molina, Morningstar

« Hi, thanks. Thanks for the question. Denise Molina from Morningstar. I am just trying to go back to the comment you made about the 30% to 40% left on service revenue from the connected services. […] Just wondering if you’re expecting that to be widely adopted for everyone to kind of have another 30% to 40% in their budgets for these services […]?

A: Rahul Ghai, Otis CFO

« Yeah Denise, so my comment on kind of 30% to 40% was more around the fact. So we have several connected solutions, in addition to Otis ONE. So we have a little bit of a management system. We provide the destination dispatch. We have eView systems that involves — that are connected. So when you put all that together, that can add about 30% to 40% off the revenue that we get on that unit. And there is not a lot of incremental cost to support that. So you would expect margins to be higher.

[…] to get higher uptime because as Judy responded earlier, we can dispatch a technician as soon as the unit breaks down. […] We are investing in this, we are installing these units at our own cost because we think the productivity benefits outweigh the cost. »

A: Judy Marks, Otis CEO

« And Denise, our conversion rates and our retention rates on connected elevators beats our industry leading retention rates across the globe. So we have the ability to actually retain in our service portfolio those connected units at several hundred basis points above what we do with our normal retention rate globally. […] »

What did we learn?

1. Kone’s value from 24/7 focuses on additional topline, reaching more than 10% gains. We do not have details on productivity and retention, because questions concerning these factors were not asked. Taking into account the challenge in ramping up sales that Kone mentioned, is the value created for customers high enough to justify this price increase over the long term?

2. Schindler doesn’t value the topline first, and doesn’t see the financial results of the Ahead program yet. However, Thomas quotes increased retention, additional productivity, and a 10% — 15% price increase in some cases, that is, “for those units where we can sell an Ahead package.” The sale does seem hard as well.

3. Otis’ response is surprisingly contradictory: The CEO says it’s about productivity first, not additional revenues — but the CFO mentions that up to 40% of additional revenues are expected. However, the CFO combines quite different things, such as the destination dispatch system, in-cabin screens, and even old emergency phones — which do not seem linked to Otis ONE’s advertised focus on digital maintenance. Regarding Otis ONE specifically, both the CEO and CFO underline the productivity gains, though only curative ones (enhanced unscheduled callbacks — as opposed to the actual avoidance of a breakdown). The product does not seem to be currently commercialized per se.

Now,

  • If the productivity and retention gains are so high (Schindler and Otis), why not deploy massively?
  • If the product is working and generating much more than +10 points in additional revenues, and if there is already a global footprint (Kone), why is it hard to sell?

Are their products fully functional?

Our assumption, which we detailed in our previous articles, is that the OEMs’ products are not living up to the expectations. They do not enable the operational and go-to-market shifts that we detailed above.

Some of our key views have been confirmed in the CEOs’ answers:

  1. Is the product vision even appropriate? Shouldn’t it be about avoiding breakdowns, instead of fixing them faster?
    « We can dispatch a technician as soon as the unit breaks down » says Rahul Ghai, Otis CFO. « It’s giving them [the technicians] the ability to show up quicker » points out Judy Marks, Otis CEO, before adding « to roll the trucks and to get our field professionals out there as quick as possible to drive uptime. »
  2. Is their go-to-market strategy based on the right approach? Do the customers really wish to purchase another “gadget” for their connected building? Maybe the sale is hard because their products focus only on nice-to-have features instead of must-have features? Data generated by an IoT device in itself has no compelling value proposition for customers. What customers want is an actual improvement in performance and transparent access to information.
  3. Have they developed the first layers of predictive maintenance, that is, brand-agnostic controller IoT and powerful field software?

Why is it so hard for industrial companies to adopt a software-first approach?

Predictive maintenance is deep-tech, not merely digital.

The biggest market actors have been boasting about their digital initiatives for years. Those projects are simply prerequisites to operating a service company in the 21st century: deploying an ERP or CRM, giving technicians smartphones with reporting applications, tracking spare parts, etc.

« We continue to deploy iPhones to our field professionals, adding four more countries during this quarter, and the adoption of our suite of apps continues to expand driving service productivity within the organization. » — Judy Marks, Otis CEO

Of course, when an industry was “paper & pen” only a few years ago, it looks like tremendous progress. But it is the ground layer.

Much deeper changes are required to unlock the future.

Isn’t it only a matter of time before the Big 4 are able to replicate uptime’s innovation?

This opinion is rooted in two misconceptions:

  • Data. The OEMs have access to a tremendous amount of data, each of them maintaining 1m+ elevators. This was also Henrik Ehrnrooth’s answer during Kone Capital Market Days in September.

Q: Klas Bergelind, Citi

« I want to dig deeper into the maintenance and digital offerings, and threats out there. We’re hearing now of tech operators that are looking to join forces with ISPs, and quite big independents, and thinking they have an edge in understanding not only your equipment but also the equipment of third-parties from a tech perspective ? »

A: Henrik Ehrnrooth, Kone CEO

« […] Here I actually think the big players will have a clear benefit, because they have a broader base. And you require that data from a broader base to create the service needs, if you only have a small base, only some hundreds or thousands or couple of thousands, you will be very restricted in learning what are the service needs that come out of certain signals out of the data, and analyze and make sense out of it. […] We have to put it in perspective, the big players have 1m+ units in service, then we talk about smaller players that have some thousands it is quite a different game to scale it from one level to the other. »

  • Money. The OEMs have tons of cash to invest into developing the right technology.

Sheer volume is meaningless when you collect the wrong data.

“Another common misconception is that IoT offerings generate so much data that companies should be able to discover a silver bullet somewhere in it. Misled by this belief, one multinational industrial company tied up dozens of highly qualified data scientists for a decade on data projects that failed to find a viable route to market or indeed demonstrate any real commercial potential.”

— McKinsey article, Tech-enabled disruption of products and services

To build a powerful AI and generate real ROI for customers, the sheer volume of data itself is not the most relevant factor. The dataset has to be relevant in the first place. Otherwise, it’s virtually useless.

  • Brand-specific versus brand-agnostic data. How can data be useful if the dataset is appropriate only on one brand or model — provided that those units are connected? The operational routine of a technician is built around an area, not a brand or model. No field technician manages only elevators of a specific brand. The shift to tech-enabled services can happen only in a brand-agnostic model.
  • Relevance. What if the data points gathered are irrelevant? This applies as much to the IoT data stream (e.g., in the elevator context, vibrations are far less insightful than firmware status codes) as to the field data stream (e.g., the actual normalization and quality of reporting by field technicians). How can a technician focused on productivity targets and doing countless compliance-only visits report useful data?

At uptime, we built our tech based on what was needed, not what was there and merely available. And the threshold that must be met to have a significant impact is clearly not millions of elevators. Henrik Ehrnrooth confirmed this view:

Q: Lucie Carrier, Morgan Stanley

« My last question was maybe on the Connected Services, I remember at the Capital Markets Day, you made the argument that the scale of your installed base was giving you an advantage, especially versus a smaller provider of services. […] »

A: Henrik Ehrnrooth, Kone CEO

« […] My point in the Capital Markets Day is that before you have several thousand units connected, you’re not going to have enough information to create good service needs and good algorithms to create that predictability and the understanding going forward. And that’s why I think big players have a significant advantage here.”

Several thousands of units is a threshold that third-party technology providers fueling independent SMBs can achieve… fast.

We estimate that the OEMs do not have the right data streams, neither for IoT nor for field data. Yet again, the Q3 Earnings Calls Q&As seem to validate our assumptions.

First, the OEMs do not seem to have brand-agnostic controller IoT (as a side note, we were impressed by the accuracy of the analysts’ questions):

Kone

Q: Lucie Carrier, Morgan Stanley

« Can you explain maybe which type of data you collect specifically? I mean which kind of KPIs are really important from your standpoint? […]

And how also should we think about the scale argument, considering that half of the elevators you maintain are not of your own manufacture, if I understood well from the Capital Markets Day material? »

A: Henrik Ehrnrooth, Kone CEO

« I think your question is more related to the Connected Equipment and what data we collect and utilize. That’s a proprietary information that we utilize. But of course, what are the most important things they have to do with movement of doors. It has to do with electronics, it has to do with the accuracy, with ride comfort and a lot of things like that. And we look at all those parameters, we learn from them, you create service needs.[…]

Then you talked about that many of our equipment are non-Kone. That’s okay. We connect them as well. So that doesn’t really, again, change the picture here at all. They are connected in a slightly different way, but we get almost as good data from them as we get from Kone and we’re learning there as well, more and more, the broader base we have.”

Henrik Ehrnrooth, Kone CEO answering Andrew Wilson, JPMorgan

“[…] also the data that we collect from sensors and through the connectivity that we have into these elevators.”

The word “sensors” could be a hint about the absence of a brand-agnostic controller-IoT product. Elevator expertise shows that connecting digitally to the controller yields massive results instead of adding additional sensors. To date, it seems that OEMs are able, at best, to connect to their own brand controllers only.

Hence, regarding Kone versus non-Kone, what is the difference? Are we talking about additional sensors for non-Kone, or a connection to the controller? It changes everything.

Schindler

Thomas Oetterli, Schindler CEO answering Lucie Carrier, Morgan Stanley

« So the older an installation is, the less information you get out of the controller. And you have to make a business case where it really makes sense to add a sensor kit. So you have enough data to get a meaningful data for your Ahead platform. »

Again, additional sensors or controller-IoT? Especially for non-Schindler equipment?

Moreover, is the age of the elevator the most relevant factor? Almost all controllers since the 1990s have digital diagnostic ports, and the average modernization pace is 20 years.

Otis

As we saw earlier, is Otis repackaging the REM as IoT products? Are they focused on gathering the right data?

Q: Denise Molina, Morningstar

« Can I just ask one follow-up on that, because we’ve heard a lot from Kone and Schindler respond on their connected services and I think we’re trying to figure out what the difference is amongst the players. But it sounds like the ISPs are the ones that or maybe not as much as they don’t have many elevators kind of feeding information to get those good kind of uptimes. Do you think that’s right? Do you think that if you were going up against and it’s difficult to say that you are going up against another OEM that had the same number of elevators feeding those algorithms, do you think your services would be differentiated still? »

A: Judy Marks, Otis CEO

« 55% of the service market right now is controlled by ISPs. That’s who we are going to get share from to grow our service portfolio above our leading service portfolio of over 2 million units already. And we do believe that with scale and with differentiation comes incredible data and clarity in terms of being able to make decisions, having a data lake, being able to do predictive and transparent maintenance, and as Rahul said to get the — to roll the trucks and to get our field professionals out there as quick as possible to drive uptime. It’s the value of that data and the analytics, that’s going to make a difference and we are — that’s where we’re going after. The ISPs have more than half of the share globally, and that’s what we intend, especially to get our Otis units back. »

And as side note, if the target is the Otis units, why focus on ISPs? Isn’t Otis planning to be competitive and regain Otis units from Kone’s, Schindler’s, ThyssenKrupp’s portfolios as well?

Kone

Q: Andrew Wilson, JPMorgan

« Just a couple of questions on 24/7, actually following-up on questions earlier, I think we were talking around the engineers and the way that they work in the field. Am I right in understanding from your comments that the engineers when they’re out on a site, they are documenting in all of the repairs, the mix is being logged and that data that you use in terms of helping to provide that connected service down the road? I am just trying to literally understand the practicalities of how the way the engineer is working has changed over time? »

A: Henrik Ehrnrooth, Kone CEO

« Clearly, they document what they do and through their devices they have in the field. So the data we have for any given elevator is what they have used, but of course, also the data that we collect from sensors and through the connectivity that we have into these elevators. […] And of course, if there’s a fault about to happen, you get a direct — it goes directly to the field device of the technician to inform them that they need to do an intervention. »

Q: Lucie Carrier, Morgan Stanley

« […] How are your maintenance employees incentivized to make sure they perform a good collection in monitoring of the data because obviously, for a lot of them, this is quite a new thing? »

A: Henrik Ehrnrooth, Kone CEO

« Okay. There were many questions in one and you wanted to understand what data employees collect, of course, the input data. We have — I think we have the leading field systems in the market. So we can, of course, gather data what they’ve done and what interactions. So that’s something that automatically happens. »

Henrik is not providing much detail, unfortunately. Are the field technicians providing the right normalized data about elevator components, observations and actions, all in a harmonized way? Is the dataset usable by AI? Has this field data proven to be useful for building the “Service Needs”? Is this increased reporting requirement a cultural change for the field workforce? We would need to ask follow-up questions.

Schindler

Q: Lucie Carrier, Morgan Stanley

« Yes, so if it wasn’t clear, I guess my question is, you know, we can have a lot of elevators being connected. But, you know, which type of metrics are you focusing on? And how much are they incentivized on collecting also the data? I mean, I’m just curious to understand how it worked really in practice for them, because historically, engineers were not necessarily serving a fixed base of elevator, they were kind of you know, serving an area rather than a portfolio of elevator. So in terms of their knowledge, and them being proactive in managing this install base of elevator, I’m just trying to understand how their training is changing or how their incentivization is changing, so they kind of adjust to the connectivity of elevator, in terms of their job? »

A: Thomas Oetterli, Schindler CEO

« […] Schindler Ahead is just an additional support for our engineers in the field. So we do not intend to reduce, for example, training, training efforts of our service engineers, but we add them additional data. So when a service engineer goes to the installation, he will have on his iPhone or on his smartphone, all the data of this and all the history of this elevator; if it is a breakdown of the elevator, he gets a guide and on how to resolve that, how to resolve that breakdown.

For that purpose we have installed in all the countries, a so-called TOC, T-O-C, this is a technical operation center. All the data which comes from the connected unit goes into a central technical operation center of that company, where we analyze all the symptoms, all the data received by the elevator. And if there is a breakdown, or a normal visit, this technical operation center gives guidance to the technician. »

Like Henrik, Thomas does not provide all the necessary details, and the same line of questioning arises.

The answer mentioning the technical operation centers is insightful. Before, or instead of, developing AI algorithms that make sense of the IoT data automatically and send the insights to the field technicians directly, Schindler seems to analyze the data with people reading live streams.

When we wrote our first article, we thought the OEMs lacked a suitable predictive maintenance product vision. Now, it also seems that they do not have the first layers done right. In our mind, their execution seems to suffer from the following problems:

  • Unclear IoT strategy for their competitors’ brand equipment
  • Unclear data strategy from the field
  • Industrial product vision versus a software-first approach: technical centers instead of algorithms; roll the trucks faster instead of avoiding breakdowns.

Cash alone never generated any innovative outcome

Considering that the OEMs have been trying to build such innovation for the last two to five years — and have invested significant money (to date, c.€200m-300m each for Schindler and Kone, according to Credit Suisse research), it is clear that they know they have to do it. But there is a big difference between trying and succeeding.

IoT initiatives by the OEMs

Source: Company data, Credit Suisse estimates

Why then is it so hard for large industrial actors to develop the right IoT products, software, and AI?

  • First, there are substantial cultural barriers. In our previous article, we offered a relevant quote: “It definitely needs a cultural change, because a company like ThyssenKrupp is more a classic engineering company,” said Reinhold Achatz, ThyssenKrupp’s own chief technology officer, to the Wall Street Journal in October 2019.
  • Second, software and AI innovation is extremely hard and requires more focus and agility than money. The same McKinsey article advised that, in order to become tech-enabled, industrial companies should:

First, listen to your customers — not something the elevator industry is known for.

Second, place big bets. “Some tech-enabled industrial companies use a VC-like governance structure with a digital unit reporting directly to a “digital board” comprising the CEO, CTO, and CFO.” Focus is key. The elevator OEMs have been trying to innovate in a wild range from in-cabin screens to smartphone elevator calls by users ; not necessarily focusing on what matters.

Third, adopt agile product development. This is much easier said than done — even for startups around the globe — let alone for huge manufacturing organizations.

Fourth, build out your ecosystem. “Commercial as well as technological partnerships are essential to moving fast and scaling effectively. Building and maintaining a robust ecosystem of partners demands dedicated resources.”

Fifth, establish the right go-to-market capabilities. « Expecting your traditional sales channels to convert customers quickly or bolting a digital sales group onto a traditional organization could spell disaster. » (same article). Those who are the most advanced on the market know that without the right go-to-market (value proposition and sales system), no innovation is valuable. Again, what is needed by the market is far removed from the elevator industry’s usual standards.

With a high enough level of investment, agility and focus matter much more than extra dollars.

uptime is only getting started

We have upended the industry’s value proposition by offering a guarantee of performance to our clients.

We have entirely rebuilt our technicians’ routine by adapting various workforces to various tasks, and soon, this allocation will be dynamic and condition-based.

Most importantly, we have reached the key milestone of brand-agnostic digital IoT for elevators, as well as brand-agnostic data-driven field reporting. We have built the first predictive features (see our previous articles on the predictive maintenance steps), such as breakdown detection and remote callback discrimination, and we are now deploying our first CBM features. Our technology platform, the map®, is only getting started, and its full realization still lies far ahead, once the compounded effects of additional data, successful CBM, and further operations & sales model evolutions start kicking in.

The OEMs are stuck in their legacy brand-specific product focus, legacy field data models, and legacy field and sales organizations. They might get somewhere with time, but we’re talking in years. Where will uptime be in two or in five years, when the OEMs could perhaps be approaching the first milestone of where uptime currently is ?

Are incumbents automakers solving self-driving by themselves? Definitely not.

  • Jaguar teamed up with Waymo,
  • General Motors bought Cruise in 2016, before investing $1.1bn and attracting $2.75bn from Honda in 2018
  • Ford and Volkswagen teamed up with Argo ($3.6bn, 2019)
  • Hyundai and Fiat Chrysler teamed up with Aurora
  • GM launched GM Ventures early on
  • Renault-Nissan-Mitsubishi created Alliance Ventures with $1bn to be deployed.

The bottom line is that deep-tech innovation depends entirely on pace and timing, and knowing that, industrial incumbents of any sector are ill-advised to walk this path entirely on their own.

Is uptime the only company disrupting elevator maintenance?

The short answer is yes. There are elevator service companies out there, and there are elevator equipment providers (which provide a certain kind of IoT tools). But there is no company that is expert in software innovation, as well as on the service delivery and go-to-market.

Andreessen Horowitz, one of the top VC funds, described this as “full-stack startups” in 2014. As Sep Kamvar puts it in a recent podcast:

If you’re starting a full-stack construction company, you have to start a construction company and a software company at the same time. And it’s hard enough just to start either. […] But once you’re able to do that, if you’re able to do that, then it allows something really powerful, which is it allows you to write software not just for existing processes, but it allows you to innovate on process at the same time as you innovate on software. And very specifically, it allows you to innovate on process in the way that software enables.

Growing our elevator portfolio from scratch in Paris allowed to us to innovate simultaneously on the operational processes, the value proposition, and the go-to-market — and to do so in a way that our IoT and software enabled. Without an elevator portfolio as development field, it is impossible to create the adequate predictive technology product, and it is impossible to change the operational model and go-to-market model without the right technology input.

The only other start-up disruptor in this market also happens to be a French company, WeMaintain. WeMaintain founders noticed the poor quality of service in the market and decided to solve it by adopting a labor supply approach instead of a technological one. To our mind, there is indeed a friction on the supply of technicians, but it is a far distant matter compared to the maintenance model — and it is solved by developing predictive maintenance.

Based on this idea, they started out as a marketplace in Paris in late 2017, and they communicated heavily about why predictive maintenance is the wrong answer for the elevator market as well as about their goal of motivating the current OEMs’ field employees to leave their jobs and start as independent contractors on their platform.

However, we understand from the French technician labor market that WeMaintain now hires field operators, abandoning the pure marketplace route, which is hardly a good fit for the elevator maintenance market.

Beginning 2020, WeMaintain acknowledged the technology shift and launched an IoT device, on the additional sensors and vibration analysis model that we depicted in our previous article. This limited solution looks mostly like another marketing push, similar to what some OEMs seem to be relying on so far. We can also notice that some elements of this IoT device development would have been outsourced to a generalist small firm, Piwio.

As they launched in the UK recently, and their value proposition remains centered on customer communication and a direct connection to the field technician, we do not consider them a deep-tech company, and definitely not a complete full-stack company.

How does uptime scale?

uptime has everything required to continue building its technology platform, thanks to its full-stack development field. It is now in a position to scale globally by selling pickaxes to multiple actors during the imminent predictive maintenance global gold rush.

Four years ago, when we started the company, elevator predictive maintenance was a dream for us, and a distant illusion for others. Now, we are ready, and the whole industry is progressively understanding that they have to shift ASAP. OEM companies went for the gold rush alone, and have failed so far.

Let’s bear in mind that:

  • elevators are the same worldwide, most of them being supplied by the same OEMs — IoT scales,
  • field routines are similar as well worldwide — software scales easily with localization.

Our platform is ready to be deployed globally.

The OEMs and regional ISPs that will use our technology platform will be able to build on top of it:

  • a massive dataset of relevant IoT and field data
  • a custom CBM engine adapted to their own operational framework

And therefore, they would finally differentiate by developing the right operational and sales shifts.

They should emerge as the best at maintaining any elevator of any brand.

There is an opportunity to cancel churn on mature markets, to generate strong installed base organic growth, and to solve the maintenance equation in China by jumping directly to predictive maintenance.

Not all OEMs nor ISPs will be able to perform this turnaround and emerge as the dominant players. Who, in the context of the COVID-19 pandemic and crisis management pressure, will have what it takes to bet on the future? Who will build market leaders that operate the technology and serve any elevator better than their competitors?

To enable that technological shift, uptime has the best product and the best team on earth.

This is how we scale.

www.uptime.ac/en

uptime

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