Installed base
Passport
- Rock
- Assets
- Depth
- 3 · Drill rig
- Time to dig
- 3–10 years
- Capital
- ● · high
- Solo
- ✗ no
- AI
- ↑ AI-resistant
- Rent
- ✗ not for sale
Essence
The anchor product is sold cheap or at cost, and the profit is taken for decades from consumables, service and add-ons attached to the installed base. A relative of switching costs with its own mechanics: the moat is the economics of an annuity tied to a fleet of hardware, not accumulated data.
How it is built
Otis and KONE — the lift almost free, the service forever
A lift is sold at minimal margin because the real product is a service contract lasting decades: mandatory maintenance, spare parts, modernisation. An installed base of millions of lifts is an annuity a competitor cannot take without replacing the lift itself. Rolls-Royce runs the same model in aero engines with power-by-the-hour, paid per flight hour, and engine telemetry closes the maintenance loop back on the manufacturer.
HP — the printer at a loss, the cartridge at a profit
The consumer classic of razor and blades: hardware at the edge of cost, margin in ink marked up by hundreds of per cent, chips and DRM against refills. The fleet of printers is a distribution network for cartridges, and every printer sold at a loss is a future cash flow bought.
PlayStation and Xbox — the console as a ticket into the store
Consoles sell at or below cost; the profit is royalties on every game and subscriptions. The installed base decides everything: developers go where the fleet of consoles is larger — a bridge to the ecosystem moat — and a player with a library of purchased games is locked in, a bridge to switching costs. Nespresso repeated the scheme in coffee: machines cheap, capsules expensive.
How it is bypassed
Third parties crack open the consumables and the service
Compatible cartridges, independent lift servicing, non-original capsules: as soon as the blades become somebody else's product, the annuity leaks. Incumbents answer with DRM and lose publicly — Keurig 2.0, which locked out third-party pods, triggered a consumer revolt and a retreat, and right-to-repair laws, from Massachusetts automotive rules to EU regulation, pry the bases open legally. The attacker here is often not a competitor but an ecosystem of refillers — though a competitor can lead it.
Break the model with an honest price
Under pressure from the refill market, Epson released EcoTank — printers with proper ink tanks: more expensive up front, pennies per page. An attacker, or a cornered incumbent, sells the anchor at an honest price with no blade dependency and takes everyone tired of being treated as a cash cow. Subscriptions do the same from the other side: Game Pass turns games from blades into a flat fee, and the economics of someone else's base stop working.
Kill the need for blades with technology
An electric car needs almost no servicing — the dealer service annuity that fed the combustion industry for decades collapses along with the number of moving parts. The harshest bypass is not cheaper servicing of the base but a base that does not need servicing.
Verdict
A moat of annuity on a fleet: built by selling the anchor at zero and closing consumables and service on yourself. Bypassed by third parties and right-to-repair, by an honest price without blades, and by technologies that remove the need for blades altogether.