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GE Letter Declares 'Non-Base' Software Options Non-Transferable

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Over the last 30 days, third-party imaging equipment and service providers around the world have received copies of a letter from GE Healthcare notifying them of an unprecedented move to restrict sellers from including "non-base" software options with the sale of a previously-owned GE imaging system.

What the Letter Says

The core premise of this move is summed up in the letter as follows:

"Please be aware, unless otherwise explicitly stated by GE Healthcare in writing, software that is not part of the equipment's base system standard operating software is non-transferable and only the original equipment purchaser has a non-exclusive, limited license to use such software."

Who It Affects

At first glance, this move seems to be aimed at restricting competition within the refurbished equipment space- certainly an understandable goal as GE looks to grow equipment and service market share.

Far beyond independent refurbishment providers and their ability to provide useful software options in an economically feasible manner, however, there are several other parties who will be deeply impacted by this seismic shift:

  1. Everyone who owns a GE system: Whether a hospital, imaging center, or ISO, the inability to sell (or trade-in) equipment with "non-base" software options decreases equipment resale values significantly and immediately.

  1. Finance institutions: For banks holding the paper on a capital or operating lease, the residual value of those agreements just dropped in noteworthy fashion.

  1. GE customers: The equipment being purchased today will include software that is non-salable or transferable.

  1. Patients: If a facility has purchased a system with ASIR, GE's radition dose reduction technology, from a refurbished service provider and was unable to afford the $100,000+ option, the option would need to be deleted from the system and patients would begin receiving significantly higher radiation doses on a system that was once fully equipped to reduce dosage.

Who Wins

While it's evident there are some less-than-desirable outcomes for quite a few stakeholders within the GE imaging space, it's important to ask, "Who wins?"

  1. GE: For customers who only buy GE equipment, the opportunity is certainly present to capitalize on the sale of new equipment. There is a strong chance as well that GE will see a big short-term gain for sale of software to customers that need to replace options that have been removed. The GE Goldseal Refurbishment program will also be able to buy back equipment at greatly-reduced values.

  1. Siemens, Philips, and Toshiba: One has to imagine that carrying such a letter into a competitive sales situation demonstrating the reduced resale value of a GE system would provide a pretty meaningful benefit.

The Takeaway

There's no question that software has proprietary elements and that the investment and creativity involved with imaging applications are to be applauded and compensated. That being said, in this time and marketplace, this move is certainly a head turner, especially given the significant price already paid for the intellectual property by the initial purchaser.

Block Imaging looks forward to attending the IAMERS European meeting to hear more from GE on the intent and immediate implications of this action. Furthermore, we look forward to hearing and providing additional information to bring more clarity on this matter to the imaging industry and customers around the world.

UPDATE: What we learned at the IAMERS European meeting