Five Reasons to Make Hardware Instead of Software

feature-toyota3LG.jpgWe were told it was passé. The stuff they used to do in Detroit in the 1970s was not fit for the new Millennium. They'd say: You will never be the next billionaire, and George Soros will not invest because it's absolutely… the right idea for the mess we're in! Let's make hardware. And here are 5 reasons why:

1. Hardware spreads the love. Unlike software, hardware's value chain involves many people across many companies and a few different countries. The risks and rewards are usually shared by many—an ideal structure for tough economic times. While it will be near-impossible for you to become the next Facebook or Google, you've got a decent chance of being the next Nokia because investments in hardware reach the break-even point more reliably than software. Just look at any vertical market for Software: The dominant winner usually owns 60% to 70% of the market. The runner-up is somewhere near 20% and the rest is distributed among many small competitors. Global hardware markets, on the other hand, rarely behave that way. A few leaders dominate with 10% to 20% of the market. Dozens of other competitors share the wealth and find their niche even in the most crowded fields. Food for thought: Just walk the isles of your local Super-store and see how many types of blenders cover the shelf… somebody is making money selling just… blenders!

2. You value good software, but you lust for good hardware. It connects with you in a visceral way, making you want something you may need, or not. You can touch the keys and switches and feel the quality (or lack thereof). You can imagine it in your house. You can smell it. This experience is random and hard to avoid. Most people like shopping, and they do so with less money and much more care today than ever before. Everyone is looking for new things at the right price. If your product is right it will sell.

3. The hardware world is flatter. Unlike Thomas Freidman, I am skeptical that the real world is going "flat"—yet no world is flatter than the world of hardware development. Over the last 15 years the world has become one great factory with R&D centers spread globally and a supply chain that stretches from China to India, to Romania, Thailand and many more countries. Today, CAD files are shared flawlessly, people across many cultures collaborate and goods are routinely developed, assembled and shipped across continents. All these people are waiting for your new idea.

4. You can just Redesign. Often, the right solution is simply to redesign. It may sound remedial, yet it's effective! You know the product you have already. You understand it and understand what's wrong with it. With that knowledge you could re-create the product with better focus and you have a very good chance of reducing cost while enhancing appeal. It's also easier to sell the re-designed product because you have a known market. After all, you'll be your own competitor—that's a game you can win, right?

5. Think Clarity, Simplicity and Style. That's my mantra for any product creation, and it is essential today. With clarity you achieve a well-aimed product that doesn't confuse the end-user or the retail-channel buyer. With that clarity, your idea gets simpler, has fewer features, and it costs less. With clarity and simplicity at hand, it will be easy to find the magic dust—style!

Gadi Amit is the president of NewDealDesign LLC, a strategic design studio in San Francisco. Founded in 2000, NDD has worked with such clients as Better Place, Sling Media, Palm, Dell, Microsoft, and Fujitsu, among others, and has won more than 70 design awards. Amit is passionate about creating design that is both socially responsible and generates real world success.

Read more of Gadi Amit's blog: The New Deal

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3 Comments

  • Alice Roher

    I love this article! I can only take so much virtual worldliness, and beautiful, touchable, well-designed products (of all sorts, new and old) feed my tactile nature. Very interesting points about the market share in both areas.

  • Melissa Sachs

    I like this article. I do truly lust over a beautiful piece of hardware. A new toy. The problem is, with extreme feelings like that, if something happens to that toy - it breaks, it gets lost, stolen - extreme rage fills up inside of me.

    After Microsoft Office crashed on me quite a number of times back in my freshman year of college, I've come to expect software to let me down and I don't let myself get so vulnerable.

  • michael poindexter

    Gadi,
    thanks for a great article! Yes manufacturing wont be as sexy and as "Get rich quick" but it will keep many people working and hopefully innovating. Dyson wrote a very interesting speech in 2004 demanding that England rely on engineering as an economic base! needless to say he was right on! http://news.bbc.co.uk/1/hi/bus...