How To Run An Open Source Hardware Company

[saturation]

Its not a Dave presentation, but it has a lot of enthusiasm.

Its important for anyone thinking of going into a small business by themselves to see what you'll get into.

However, from the description of their website e-commerce cart, its clear open source has a benefit if you can program, many of the customizations they did would not be possible in a closed system.

The speakers claim they were able to do what major companies charge 10-100x more for, in terms of software and hardware.  However, this is true, if you can program so you can use cheap stuff.  If you factor in the costs of customization that they did for free for themselves, chances are $ for $, it would come out even.  Its not so much the time it takes to program, but the knowledge they bring to bear in knowing the systems, the software, more than the product they sell.

Also as expected, once in your own business, your time is consumed by the non-electronic portions of it, the business of sales, supply, inventory etc., a lot of standard stuff that all big business do routinely, so in the end what seems innovative is not, its just done cheaper for the size of the business.  Scaled that way, it will be almost likely be as costly as Amazon has become.

[Zad]

Over the past few weeks I have run the full cycle of opinions about open source hardware. Normally I design products for other people, but right now I have a couple of products I am working on (with 2 totally different motivations) and so marketing is something I am looking at quite seriously. In the past, I have been relatively fortunate that I was able to sell the designs outright to a particular company, but that has rarely done much more than cover my costs, and has never really done the product much justice.

I am rapidly coming to the conclusion that there is no point whatsoever putting any formal protection on a product whatsoever, beyond stating your copyright and giving it a name. From what I heard in the AmpHour podcast, the open source agreement seems like a mess.

Maybe I got the wrong impression from the LadyAda and Phillip Torrone presentation, but running an open source company seems to consist of 5% developing the product, 20% financing production, and 75% running an online store, managing a web site and supply chain, marketing, and coping with fraud and legal matters. That would make me bored with my product no matter how in love with it I was. I have no doubt there are many $1M companies, and the occasional $10M one, but they are almost all online shops, managing other peoples content. I can understand how going open source can give you a huge market awareness, but only if your product is in the right market sector. A good product is not enough, you have to fall lucky and get it picket up by the media.

[Simon]

A good product is not enough, you have to fall lucky and get it picket up by the media.

or tap into some sort of underground network of enthusiats about something your product relates to

[JohnS_AZ]

One aspect of the open hardware debate I've never seen discussed is that the entire premise depends on a suitable large market who can appreciate and use the open source aspect of a product. You could design and market an open hardware microwave oven, give it a USB and an Ethernet jack, and ship it with a schematic and a software listing. The problem is that the VAST majority of microwave buyers just want to make popcorn and heat up cold soup. The open hardware is of no value to that market, and may actually scare off buyers (like my Dad).

It seems to me that the array of "successful" open hardware products presented in the press have a market pretty exclusively made up of hackers, tinkerers, and other techie type folks (in short; us). Can that market support dozens of companies doing $1mil gross sales? I'm inclined to doubt it. Can an individual make a really good living selling into that market on a modest scale? I'm certain of it.

It always strikes me as amusing that I come across companies with a product that could probably see HUGE additional sales if they went open source/hardware with their product, but they almost all have that paranoid, gotta protect myself six ways to Sunday attitude.

Consider the Nook e-reader ( sorry Dave, I like it way better than the Kindle ). They will surely sell boat loads of them, and there are already hacker communities out there figuring out how to flash/mod the thing. If they had included some sort of deeply connected expansion port, and published a "geeks eye view" of the thing, they wouldn't lose any sales to people who just want an e-reader, and they would have added thousands of sales to people like me would would view it as an imbedded controller with a really REALLY cool display and who have no interest of actually reading books on the thing. I'd have one ... or more.

[deadbuglabs]

It is indeed true that trying to sell ones electronics takes a lot of time doing other things than developing electronics.

I don't know how it is outside of Europe, but here we have a rule called "Waste Electrical and Electronic Equipment" (WEEE). That means that you don't sell electronics, you sell electronic waste . The idea behind this concept is a good one, but the implementation was done by some crazy ... heads.
The problem with this rule is that you have to provide means of waste disposal if you sell electronics. You can either do it on you own. That means joining the "WEEE lottery". If you win (winner is chosen once a year), you get a container with around 3 tons of electronical waste delivered to your home. It is now your job to dispose this waste properly. Costs around 1500 Euro (USD 1920,-).
Or you can join some kind of club which manages disposal for you. You pay an annual fee and don't have to care.

The next thing in line is that you have to register every device you try to sell to another kind of club . This costs, depending on the device, a minimum of 400 Euro (USD 512,-).
You can, maybe, avoid this whole procedure by selling solder-it-yourself-kits instead of assembled devices.
Only a lawyer (who costs another heap of money) can answer this question .

So the situation in Europe is everything else but hobbyist salesman friendly when it comes to selling electronics.
I don't remember the exact numbers, but if I recall correctly, conforming to the law, I would have to pay something around 2000,- Euro (USD 2560,-) to sell just one small kit . Company fees and taxes not included. Crazy.

You can, of course, find a bigger partner who registers your device and manages sales etc.

Or you can keep doing it as a hobby and don't care about any of these crazy laws .

How is it in Australia?

[saturation]

This is quite terrible.  It makes a very large barrier to enter the electronics industry unless you are a very large company.  But recycling has not been very successful to date:

http://en.wikipedia.org/wiki/Electronic_waste

Open source hardware has success, to name a few Tomtom GPS runs under Linux as embedded Linux, among many notable products:

http://en.wikipedia.org/wiki/Embedded_Linux

[allanw]

The Nook is only $150, which seems pretty cheap. It seems like they would subsidize the cost of the hardware by expecting you to actually buy books. Thus it doesn't make business sense to allow the hardware to be modified easily, because even if they can sell a thousand extra units to some geeks, they'd end up losing money if they don't buy books.

Of course I know nothing about the Nook. I'm just comparing it to the console market.

[EEVblog]

The Kindle is now only $139.
My review is rendering now!

Dave.

[JohnS_AZ]

I was swayed to the Nook because it has a web browser (such as it is). Maybe the Kindle does now as well. I don't know.

[saturation]

The all-chinese design Dr. Yi reader, sold in the USA as the jetbook, is quite good too.



A key differentiator is an LCD screen, not e-paper.  It looks fairly close, and if you've used an e-paper based e-reader you know at each page turn the page 'flashes', it can be very annoying.

The LCD is old technology, but very hi-res.  So its interestingly as clear, but cheaper and works well.  The lite version runs off AA batteries.