“You get a one-time payment for selling the device and then you get the recurring revenue by selling the stuff you need to operate the device. Yahoo Finance Columnist Rich Newman has said Keurig has been using what is known as the “walled garden” business model.

Basically by cutting the top off of an official K-Cup and securing it to the top of another pod, you can trick the machine into accepting it. But consumers who are determined to use any pod they chose can try a popular “hack” that works around the DRM system. Older K-Cups and third party pods will also continue to be unusable. However, consumers will still have to buy the new My K-Cup to work in their machine. In an effort to bring sales back, the company plans to reintroduce My K-Cup for Keurig 2.0 later this year. We underestimated the passion the consumer had for. We underestimated, is the easiest way to say it.

President and CEO, Brian Kelly said in an earnings call: The consumer backlash to this decision was more than the company anticipated.

DRM makes it so Keurig 2.0 machines only accept official, and more expensive, Keurig K-Cups that are one-time use only. The problem with Keurig 2.0 is with the machine’s DRM (Digital Rights Management) system. It seems this sharp fall off was a startling realization for Keurig. According to the report, 22 percent of this loss was due to a decline in brewer sales volume. Keurig is finally making an effort to fix at least one of these problems by bringing back the refillable My K-Cup.Ī recent report of Keurig’s fiscal second quarter this year shows the company took a 23 percent hit in brewer and accessory net sales compared to last year. The Keurig 2.0 frustrated customers with it’s inability to accept third-party coffee, older K-cups, or reusable pods.

How to identify keurig model