Aftermarket, Services, Servitisation and the Installed Base

Many manufacturers make most of their profit after the sale rather than on it. A jet engine is often sold at or below cost so that its maker can earn decades of spare parts, overhauls and service contracts. A bulldozer, a combine or a truck earns its dealer and its maker parts and service revenue for twenty years. An elevator company's real business is the maintenance contract. The installed base, every machine still running in the field, is the asset; new equipment is how it grows. The numbers show the scale. GE Aerospace reported a backlog above $210bn in mid-2026, of which ~$170bn was commercial services (Q2 2026 call, Shared facts). Caterpillar set a goal in 2019 to double its 2016 services revenue of ~$14bn to $28bn by 2026; it reached ~$24bn in 2025 and has moved the goal to $30bn by 2030 (Caterpillar proxy and secondary summaries, reported). Rolls-Royce built its civil-aerospace model on "power by the hour" (TotalCare) and nearly broke it when Trent 1000 durability problems and the 2020 grounding of flying hours cut the cash it was paid per hour. And Deere's effort to turn equipment into a data and software platform collided with the right-to-repair movement: the FTC sued on 15 Jan 2025 and settled with five states on 8 Jul 2026 on repair-resource parity (reported). This section explains why the aftermarket is the profit pool; the razor-and-blades economics of engines and equipment; dealers and distributors; connected equipment and subscriptions; outcome-based contracts; right to repair; recurring-revenue models such as Danaher's consumables; the risks (durability, independent repairers, parts pricing scrutiny); and how an experienced operator reads an installed base.