Had Vizzini of "The Princess Bride" lived to relate a third "classic blunder" beyond land wars in Asia and competing with Sicilians, he might have urged start-ups to avoid hardware-dependent strategies. Hardware, after all, can be expensive to build and can't match software for ease (and cost) of distribution.
So, is hardware a bad idea for start-ups? Or are we just thinking about hardware in the wrong way?
Gadi Amit of NewDealDesign suggests that the hardware business, long shunned by Silicon Valley VCs for its costs and complexities, may be getting easier due to ready-made manufacturing capacity in China, which is driving down the cost of building hardware.
Open-source hardware could drop the price of development even further, as Om Malik recently wrote. Give away the designs for your hardware and let would-be customers build it themselves.
This is a particularly appealing strategy for companies that depend upon hardware to drive what are essentially software businesses. Apple builds its own hardware because it wants to control the complete consumer experience, but it could also enable third parties to build hardware that is optimized to run iTunes, OS X, and other Apple software.
Yet hardware could prove the undoing of Apple in smartphones, just as it did in the personal computer industry, when the pioneer Mac gave way to the relentless, ubiquitous Windows.
Sure, Apple's iPhone is currently blowing the competition out of the water. Google Android, however, poses a serious threat, given its ability to embrace multiple hardware vendors with a common platform. Were Google to extend this strategy with open-source hardware, too, the strategy could prove even more disruptive to Apple's current dominance.
Android's momentum isthat community can trump control.
This same strategy applies to others, too. What about TiVo? Or Sling Media? These are all companies that have built and distribute their own hardware, but really what they're providing is software or services. The hardware is simply there to enable consumer access to software-driven data or entertainment businesses.
So why not open source the hardware and, hopefully, accelerate adoption by lowering the cost of manufacture and distribution?
This is, as companies race to open source complements to their core businesses. Intel with Linux, Google with Android, IBM with Linux/Apache/more, etc.
Can it work for hardware, too? I think so. But we're still waiting on someone to prove it.
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