---
title: "Installed base"
description: "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."
canonical: https://moa.giglabo.com/moats/26/
locale: en
---

# Installed base

> Markdown twin of https://moa.giglabo.com/moats/26/ — the same content as the HTML page, a fraction of the bytes.
> Every page of this site has one: append `.md` to any URL, or `index.md` to a directory URL.
> Site structure and the full page list for agents: https://moa.giglabo.com/llms.txt

- Sheet 26 / 35

## 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.

## Related

- HTML version of this page: https://moa.giglabo.com/moats/26/
- Русский: https://moa.giglabo.com/ru/moats/26/
- Previous: https://moa.giglabo.com/moats/25/
- Next: https://moa.giglabo.com/moats/27/
- Atlas: https://moa.giglabo.com/
- Catalogue: https://moa.giglabo.com/moats/
- Calculator: https://moa.giglabo.com/calculator/
- Site map for agents: https://moa.giglabo.com/llms.txt