If we look at the current business model from the ubiquity and also the new commer Alta Labs. But let’s focus on Ubiquiti for now, Ubiquiti sales generate revenue primarily from selling hardware, routers, switches, access points, etc. Without tying customers into ongoing licensing or subscription fees, which sets them apart from competitors like Cisco or Juniper, which often combine hardware sales with software licenses. Here comes a point where most potential customers have already purchased the necessary hardware. For a company like Ubiquiti, this means that once their products are out there and functioning well, the need for replacements or new purchases diminishes. Ubiquiti is known for producing durable and reliable equipment, which, while great for customer satisfaction, could limit the frequency of repeat purchases. If they maintain high-quality standards, customers might not need to buy new equipment for several years.
Should it reduce the quality to keep in business?
One strategy could be to reduce the quality of the hardware slightly, ensuring it has a shorter lifespan (e.g., breaking down after 3-5 years), which could drive repeat purchases. However, this comes with significant risks. Like brand damage, Ubiquiti’s reputation is built on providing reliable, long-lasting equipment. Deliberately lowering quality could damage their brand and lose customer trust, leading to long-term sales decline. And second In the age of social media and consumer advocacy, any suspicion of planned obsolescence could lead to a negative reaction from both customers and the market. So it looks like they luckily don’t want to be torn with this
Premium Features
Alternative revenue models could be premium features or services
offtopic:
Such as their competing vendor Alta Lab is doing with Alta Pass , even that is patented, all major brands like Mist, Cisco, and Cambium have already done this for years,( I need to admit in a less friendly way) But if you are in IT its no problem.
back on topic:
Offering premium features or services that require a one-time purchase or a subscription. For example, advanced software capabilities, enhanced support packages, or cloud-based management services could be a way. Ubiquiti added paid support, which is good generally because it means they choose this way instead of degrading the quality of the product to still make a profit.
Expanding product line
Also, Ubiquiti can continue innovating by expanding its product line into adjacent markets (e.g., smart home devices, IoT, etc.), thereby creating new demand without compromising on the quality of its core products. It looks like this is the road they walk currently.
Upgrade Cycles
Encouraging upgrades through the introduction of new technologies (e.g., Wi-Fi 7, 5G, etc.) can also drive sales. Customers may be willing to replace older devices to take advantage of these new capabilities, even if their existing hardware still works. Not all regions have the same level of market saturation, Ubiquiti can focus on expanding into emerging markets where network infrastructure is still developing. In these regions, the demand for new hardware is higher. Ubiquiti could implement trade-in or recycling programs where customers can return older devices for a discount on new purchases. This encourages repeat sales while maintaining a positive brand image through sustainable practices.
Conclusion
Ubiquiti is faced with the classic challenge of balancing quality with the need to sustain revenue from hardware sales. While intentionally reducing quality might seem like a short-term solution, it risks long-term brand damage. So it looks like they focusing on expanding product lines, exploring premium services (paid support), and targeting new markets (Security & home automation) for a more sustainable strategy. This approach may always Ubiquiti to maintain its reputation continuing to grow and evolve in a competitive market.
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