VOL. XCIV, NO. 247

MOAT TYPE BREAKDOWN

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Tuesday, December 30, 2025

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Demand moat

Installed Base Consumables Moat

42 companies · 57 segments

A demand-side moat where a large installed base of equipment or core products drives recurring revenue from consumables, spare parts, service, maintenance, and upgrades. Customers stick because replacing the base asset is expensive and downtime is costly.

Domain

Demand moat

Advantages

5 strengths

Disadvantages

5 tradeoffs

Coverage

42 companies · 57 segments

Advantages

  • Recurring, high-margin revenue: consumables and service often carry better margins than the base unit.
  • Customer lock-in via economics: replacing the installed base is costly, so customers prefer to maintain.
  • Predictable demand: usage-driven replenishment creates steady cash flows.
  • Pricing power: approved consumables/parts can sustain premiums due to risk and compatibility.
  • Lower CAC for repeats: once installed, ongoing revenue requires less selling effort.

Disadvantages

  • Backlash and substitution: customers may seek third-party consumables or aftermarket parts if pricing is abusive.
  • Regulatory and legal risk: right-to-repair and interoperability rules can force openness.
  • Base asset cycle dependence: if new installs slow, future consumables growth decelerates.
  • Quality failures scale: defects in the installed base can create large recall/service liabilities.
  • Technology shifts: new platforms can obsolete the installed base and reset the annuity.

Why it exists

  • Durable base asset: the core product stays in place for years (machines, devices, systems).
  • Ongoing need: the asset requires consumables, parts, calibration, maintenance, or service to function.
  • Compatibility and certification: consumables and parts must meet specs; approved supplies reduce risk.
  • Downtime risk: customers prefer proven service/support to keep operations running.
  • Lifecycle economics: initial hardware may be priced to drive long-term high-margin attach revenue.

Where it shows up

  • Printers and imaging (ink/toner, drums, service)
  • Medical devices and diagnostics (test reagents, disposables, service contracts)
  • Industrial equipment (spare parts, maintenance, field service, software upgrades)
  • Aerospace and defense (MRO, spares, upgrades over multi-decade lifecycles)
  • Construction and heavy machinery (parts and dealer service networks)
  • Consumer devices with accessories (blades, filters, pods) and authorized service

Durability drivers

  • Large and growing installed base with long asset lifetimes
  • Strong service network and uptime performance (fast response, high first-time fix rate)
  • Proprietary compatibility, calibration, and quality controls that matter to customers
  • Smart lifecycle management (upgrades, retrofits, software add-ons) to extend base life
  • Balanced pricing: capture value without triggering aggressive aftermarket adoption

Common red flags

  • Consumables pricing is so aggressive that customers actively switch to third-party substitutes
  • Right-to-repair or interoperability mandates threaten proprietary parts and service economics
  • Installed base is shrinking or aging with weak refresh wins, reducing future annuity value
  • High warranty/recall exposure from quality issues in the base asset
  • Technology transition that makes the current platform obsolete within a short cycle

How to evaluate

Key questions

  • How long does the installed base last, and how expensive is replacement?
  • What share of customers buy OEM consumables/parts vs third-party alternatives?
  • Are consumables truly differentiated (quality/safety) or mostly a tax on compatibility?
  • Is the service network a real advantage (uptime), or just a revenue extractor?
  • What technology or regulation could break the attach model (right-to-repair, standards, new platforms)?

Metrics & signals

  • Installed base size and growth (units in the field, active systems)
  • Attach rates and mix (consumables per unit, service contract penetration, upgrade adoption)
  • Recurring revenue share and gross margin of aftermarket vs original equipment
  • Churn/renewal rates for service contracts and maintenance subscriptions
  • Aftermarket penetration indicators (third-party supplies share, refill/refurb rates)
  • Reliability and support metrics (MTBF, uptime, response time, warranty claims)
  • New unit placements and replacement cycle trends (pipeline for future installed base)

Examples & patterns

Patterns

  • Razor-and-blades models where hardware placements drive recurring consumables
  • Diagnostics platforms where instruments drive reagent pull-through
  • Industrial platforms where parts + service dominate lifetime value
  • Service networks that win renewals because uptime is mission-critical

Notes

  • The moat is strongest when the OEM’s consumables and service genuinely reduce risk and downtime, not just because of closed compatibility.
  • Always separate growth from new placements vs pull-through on the existing base. A shrinking placement engine eventually slows the annuity.

Examples in the moat database

Curation & Accuracy

This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).

Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.