The razor/blade business model has powered many profitable companies — from Gillette to Kodak to HP — all have taken little to no profit on equipment but made healthy profits on the blades (literally or film, or printer cartridges in the cases of Kodak and HP).
Keurig’s single-cup coffee brewing system has become very popular. Keurig makes money selling machines, its own Green Mountain Coffee, and licensing fees from other coffee sellers who use its K-Cups. Patents recently expired on K-Cup technology — so many competitors are offering the coffee without paying license fees to Keurig. So the new coffee makers with DRM (digital rights management) technology was designed to keep Keurig’s profits flowing. Unfortunately, customers are not happy. In this Verge article, “Keurig’s attempt to ‘DRM’ its coffee cups totally backfired” (February 5, 2015) you can read more about Keurig’s blunder. Of course it is not clear that, as disastrous as this may be, Keurig had other choices if it was seeking to maximize profits. For now though, profits are down and customer outrage is high.
The article might be used when you talk about patent protection. It also raises interesting ethical questions. It might also develop an interesting discussion around business models and strategy. For example, will complaints about Keurig’s DRM eventually fade away? Is it profitable enough of a strategy to weather the complaints?