Intuitive Surgical Business Model: Da Vinci Code

Intuitive Surgical Business Model: How Robotic Manufacturer become Services Oriented Company.
Figure 1: Intuitive Surgical Business Model

Leonardo da Vinci is the first who performs an autopsy on the human body. That brave – and maybe a blasphemous decision by religion was taken in 1490. Hundreds of years later, the Da Vinci robot, under the Intuitive Surgical company, becomes the first robot that delivers surgery (with the man behind of course). We invite you to get closer to the Intuitive Surgical Business Model through this article. Spoiler alert: we love its recurring income.

In This Issue

Non-Invasive Operation

Da Vinci is a platform that mainly consists of three or four multipurpose arms and some monitors. The surgeon delivers surgery through those arms and by looking at the monitor. Imagine Dr. octopus in Spider-Man performing surgery. Nah, that is how Da Vinci works – with the monitor.

The monitor gives the medical team more viewing angle and better resolution, and the four arms are the extension of the hand of the surgeon. Those four arms give more flexibility, speed, accuracy, and precision. As consequence, surgery could deliver much quicker with much better results – and most importantly, less inconvenient impact.

Invasive Surgical vs Intuitive Surgical

In 2018, Kaley Cuoco, The Big Bang Theory Star admit that she experienced boobs surgery to improve her appearance. The best thing ever in her life said Penny of The Cheesecake factory. Boob surgery, usually enlargement that makes women sexier, is one of the invasive surgical procedures. If not executed properly (we mean perfectly) it gives pain to the patient.

Intuitive Surgical with its Da Vinci platform helps the medical team to cope with this problem. Da Vinci helps them to deliver near-perfect procedures.

Financial Review of Intuitive Surgical Business Model.


Dive into its financial performance, the Sunnyvale-based company has no dent. Revenue climbed from 1.4 Billion in 2010 to more than 4 Billion in 2020.


Revenue grows
from 2010 to 2020


Revenue grows
from 2010 to 2020

The Da Vinci

The Business Model is not sophisticated or revolutionary. Simply, Intuitive Surgical sells Da Vinci machines to the hospital. In its official reports, Intuitive calls it System. This segment, in 2020, contributes about 23% of total revenue.

As you have expected, the Da Vinci system is expensive and needs to be optimally operated. Thus, maintenance and repairment to ensure optimum productivity are mandatory. Officially, this is recorded as recurring income in the financial report, and, it delivers more than 70% of company revenue. This is why we love Intuitive. This number means that even the sale of the Da Vinci machine tumble or drop, revenue is still at an acceptable level. This business model is quite similar to GE Healthcare and Aviation with its Jet Machine and Scanner mimics Da Vinci Machine while the services become recurring. See Figure 1 at the beginning of this article to get a better perspective.

Scoring Economic Moat Based on Intuitive Surgical Business Model

After get understanding the business, we are ready to map Intuitive Competitive Advantage.



Dealing with medical means dealing with the highly regulated industry. Before coming to the market, certain products need to meet FDA approval. In fact, the players for robotic surgery are a few shows us how difficult and complicated to get that regulatory permission.

Switching Cost


Till November 2002, Da Vinci Surgical Platform was the only FDA-approved robotic assistance to perform surgery. Being the first mover give Intuitive Surgical a large installment based in several hospitals while competitors just get started. As time flies, that large installment base become large inertia that creates high switching cost. Moving away from Da Vinci to another vendor means more training. More adaptation, more learning curves. Not to mention the risk that has to be taken switch from one proven device to another challenger.

This kind of competitive advantage is our favorite for Medical device companies since it will give another economic advantage like services and spare part replacement as recurring income.

Economies of Scale


With its benefit for surgeons and demand for more minimal impact surgery, the Intuitive scale will help them to fill the gap quickly. With the current installment at 55,000 around the globe and reinforced with high switching costs, it is difficult to see competitors eat the Intuitive cake.

To get an understanding of how big the Da Vinci scale is, imagine that 90% of prostatectomies use the Da Vinci platform to perform procedures.

Intuitive Surgical Business Model: How Intuitive Surgical Play Its Cards, Robotic Ecosystem

With a $2 million price tag, the Da Vinci robot is surely not cheap – and not all hospitals can afford it. The more sophisticated robot even comes with a more expensive tag. Intuitive know these circumstances and make a perfect strategy. It starts a lease program that can help hospitals to get Da Vinci with little capital upfront. These operating leases give Intuitive bucks of money that boost its revenue.

Operating Lease Revenue add a recurring element

Intuitive also switches its priority from selling Da Vinci to a services company. With costs maximum of $3,500 per procedure. Another juicy recurring number is Da Vinci need $180,000 annual maintenance cost. Da Vinci is a decent cash machine.

This strategy convinces us that Intuitive Surgical is more like a surgical platform company than merely a robotic manufacturer. It looks a little like Razor Blade Business Model.


In 2013, for the first time, revenue from spare parts and instruments exceed revenue from sales of Da Vinci

Several Key Points of Intuitive Surgical Business Model

Here are the reminders:

  1. Intuitive Surgical has a durable competitive advantage. Still, it doesn’t mean that the Calif-based company has no competition in upcoming years. Juicy recurring income will attract new entrants, we need to see how this will last.
  2. The investor needs to check whether its cash flow reflects our hypothetical analysis of the company’s condition.
  3. The business model is fascinating, it more likes subscription-based instead of a one-time purchase.
  4. Another overlooked element is the company’s relationship with the hospital and government. It will create some magic barrier for new players to come.
  5. We like to see how Da Vinci someday gets closer to university or college, The familiarity will enhance more its competitive advantage.