Where is KONE going next with its push into tech-led services and modernization?
KONE's shift to high-margin services merits attention as 2025 service revenue rose and modernization orders grew, signaling steady recurring cash flow and less exposure to new-build cycles. Kone SWOT Analysis
KONE can scale recurring revenue by expanding predictive maintenance and retrofit capacity, but execution risks include supply-chain strain and digital integration across legacy fleets.
Where Is Kone Trying to Go Next?
KONE is shifting growth to aftermarket Service and Modernization under its Rise 2025-2030 plan, targeting an industry-leading focus on retrofit, residential installs, and digital services to lift margins and recurring revenue.
Aftermarket Service and Modernization as Core Growth Engine
KONE aims to grow Service and Modernization, where higher margins and recurring revenue improve profitability; this leverages a global installed base of about 6.5 million units and aging fleets in key markets. Modernization demand is commercially attractive because retrofits capture short payback on energy and safety upgrades and raise lifetime service revenue.
North America and Europe: Market Expansion Potential
Over half of the 6.5 million units in North America and Europe are >20 years old, creating a large retrofit TAM; KONE will target urban retrofit programs and energy-efficiency mandates. Growth in North America and Europe offsets slower new-builds elsewhere and supports margin uplift toward the 13-14% mid-term target.
Product and Service Upside: Digital and Sustainability Platforms
KONE is scaling digital services-IoT-based predictive maintenance and data platforms-to increase attach rates and lifetime value; these services improve uptime and lower customer OPEX. Eco-efficient upgrades (motors, regenerative drives) tie into KONE sustainability goals and drive premium pricing on modernization jobs.
Most Credible Next Move: Residential and High-Growth Regions
The most realistic short-term catalyst (2025-2026) is expanding residential servicing-already the industry's largest segment-and accelerating growth in India and the Middle East to offset declines in other regions. Residential maintenance contracts and volume new installs in these markets boost recurring revenues quickly.
Where KONE Is Trying to Go Next
KONE's Rise strategy prioritizes Service and Modernization, digital service expansion, and targeted market growth (North America, Europe, India, Middle East) to reach a long-term EBIT margin goal of 16% and a mid-term 13-14% by end-2027.
- Aftermarket Service and Modernization as main growth opportunity
- Expansion focus: North America, Europe, India, Middle East
- Product upside: IoT predictive maintenance and eco-efficiency retrofits
- Near-term driver: residential service scale and modernization contracts in aged fleets
Related reading: What Kone Company Stands For
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What Is Kone Building to Get There?
KONE is building a digital-first service and partial-modernization platform to turn market demand into measurable growth, investing in connectivity, AI, and modular upgrade products to speed installs and boost recurring service revenue.
Expansion into Service-led Markets
KONE is prioritizing service growth in mature and fast-growing regions, especially Asia and North America, to capture recurring maintenance revenue and modernization orders.
Product and Service Innovation Roadmap
The company is scaling partial modernization products such as the KONE MonoSpace Upgrade and expanding digital service offers to increase attach rates and shorten sales cycles.
Technology and AI Initiatives
KONE has reached approximately 38% connectivity across its maintenance base in 2025 and deployed Generative AI tools (technician assistant, Tender Lens) to raise field productivity and speed customer responses.
Partnerships and Targeted M&A
KONE is partnering with construction and smart-building platforms to embed IoT and predictive maintenance, while selectively acquiring tech assets to accelerate digital services.
Investment and Execution Focus
R&D spending rose, with R&D at EUR 56.8 million in Q1 2025, supporting rollouts of connected maintenance, AI tools, and partial modernization product lines.
Most Important Strategic Build: Connected Service Platform
The connected service platform-linking 38% of assets in 2025 with AI-driven field tools-is the key move because it converts data into predictable, higher-margin recurring revenue.
How KONE Is Building to Capture Growth
KONE is combining partial modernization products, higher connectivity, and Generative AI to drive faster tender wins, higher service attach rates, and improved field efficiency as part of its Kone company future and Kone strategic direction.
- Main expansion priority: scale service and modernization in Asia and North America to lift recurring revenue.
- Key innovation initiative: expand partial modernization orders (KONE MonoSpace Upgrade growth ~30%) and digital services.
- Top technology move: deploy IoT-connected maintenance (≈38% connected in 2025) plus Generative AI technician assistant and Tender Lens.
- Strategic 2025 action: increase R&D and rollout of connected service platform-Q1 2025 R&D EUR 56.8 million.
Read more company context in the History of Kone Company Explained: History of Kone Company Explained
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What Could Slow Kone Down?
Sharp weakness in China's new-building market, sustained wage inflation, and slow uptake of connected services are the main risks that could blunt Kone company future growth; execution gaps in the Rise strategy and global digital transformation add execution and margin pressure.
Demand shock from China construction slump
China's New Building Solutions market collapse-housing prices still falling through December 2025 and property sales nearly 50% below the 2021 peak-cuts new equipment orders and drags on Kone growth plans in Asia.
Competition and pricing pressure in equipment and services
Intense rivalry, cheaper local suppliers in Asia, and customer shift to low-cost alternatives can compress margins and slow Kone strategic direction for premium elevator and escalator sales.
Execution or investment risk for Rise and digital rollout
Scaling digital transformation across >60,000 employees raises training, integration, and rollout costs; any failure to hit residential targets in the Rise strategy or delayed connected-services adoption undermines the targeted margin expansion.
Regulation, technology shifts, and macro exposure
Supply-chain disruption, tightening building regulations, or slower IoT/AI adoption in key markets could raise capex and compliance costs and slow Kone innovation strategy and sustainability goals execution.
Key headwinds that could slow Kone down
The clearest constraints are China's property collapse reducing new-equipment demand, inflationary wage pressure, and execution risk in scaling the Rise residential focus and connected services; together these threaten margin targets and global growth plans.
- Demand shock: China property downturn and weaker new-building orders
- Execution risk: slow Rise strategy rollout and digital transformation across 60,000+ staff
- External disruption: wage inflation, supply-chain and regulatory changes, and delayed IoT/AI uptake
- Single biggest risk: prolonged China market contraction cutting new-equipment revenue and margin expansion
For context on ownership and corporate structure that shapes Kone strategic direction, see Who Owns Kone Company.
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How Strong Does Kone's Growth Story Look?
KONE's growth story looks resilient and moderately expanding: aftermarket and services are driving margin-rich recurring revenue, offsetting weakness in new-builds. The company is positioned for steady low-to-mid-single-digit growth into 2026.
Direction: Service-Led Expansion
KONE's strategic direction shifts toward higher-margin services and modernization, stabilizing revenue as new-build demand softens in China and select markets.
Near-Term Signals: Guidance and Order Book
Management guided 2026 sales growth of 2-6% at comparable rates and an adjusted EBIT margin of 12.3-13.0%, supported by a solid order book and strong aftermarket bookings in 2025.
Strategic Supports: Recurring Revenue and Digital Services
KONE is scaling predictive maintenance, IoT-enabled digital services, and modernization offerings to raise share of recurring revenue and expand margins.
Upside: Aftermarket and Smart-Building Adoption
Faster adoption of smart-elevator solutions, urban mobility integrations, and accelerated modernization cycles could lift growth above low-to-mid-single digits.
Downside Risk: New-Build Cyclicality
Prolonged weakness in Chinese real estate or slower global construction activity would pressure sales and delay margin expansion despite strong service demand.
Overall Judgment: Convincing but Moderate
KONE's shift toward aftermarket and digital services makes the growth story convincing and resilient, though expansion is likely moderate and paced by construction cycles.
How Strong the Growth Story Looks
KONE delivered EUR 11.2 billion in 2025 sales with an adjusted EBIT margin of 12.2%; 2026 guidance targets modest top-line growth and margin expansion driven by services and modernization.
- KONE company future: positioned for moderate expansion via recurring revenue
- Most supportive near-term signal: 2026 guidance of 2-6% sales growth and higher margins
- Biggest upside: faster uptake of smart-elevator, IoT, and predictive maintenance services
- Main downside risk: extended slowdown in Chinese real estate and global new-build markets
For context on how KONE sells and scales recurring revenue, see How Kone Company Sells
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Frequently Asked Questions
Kone is focusing next on Service and Modernization under its Rise 2025-2030 plan. The company is targeting higher-margin recurring revenue from retrofit work, residential installs, and digital services, with particular attention to aging fleets and installed-base opportunities across key markets.
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