Is Hardware the “New Software”?
Hardware development is becoming less expensive and more agile. The speed at which products can now be made is astounding, with the technologies available to produce them becoming more accessible than ever before. According to experts, this is also fuelling innovation and investments in the sector.
In 2013, legendary investor Marc Andreseen expressed a certain bullishness over the resurgence of hardware startups during a Pandomonthly event. His optimism was reserved, as he disagreed with statements being made about hardware becoming like software.
“The problem is that hardware companies are much harder to build and scale than software companies,” Andreseen said, according to Pando. “It’s called hardware for a reason,” he concluded.
Flash forward eight years and hardware, although still “hard,” is becoming “softer,” as a result of new technologies. Hardware products can now be built faster and more affordably. With demand for hardware continually increasing and the ongoing need for digital interfaces in a post-COVID world, we can expect this space to continue to grow.
“What is going to happen to hardware is what happened to software-based business models earlier on. If you dont take control now, you will be controlled,” Christoph Bornschein, CEO of TLGG, said at KREATIZE’s Launchpad event on June 10th. “That is always the worst thing that can happen.”
Bornschein further added that hardware companies should take part in discussions around cloud manufacturing and supply chain transparency, and be aware of the changes taking place in traditional asset ownership, as this new way of operating businesses is going to have an effect.
Hardware startups are among the first in the business to benefit from the increasing agility and speed of their product development processes. Because they lack the hardwired structure of many established companies, they are able to more easily leverage new technologies and solutions to dramatically improve their time to market.
“Software is different from hardware,” explained Philipp Sonnleitner, CIO & Founder of Mikme, the Vienna-based company behind a series of powerful and sleekly designed compact audio recorders. “Even with new technologies, for hardware, fast means months of development. Fast in software is just days.”
Mikme was able to bring one of their products to market in 9-months, which is “lightning fast” for hardware, where years are standard.
“The bad part about hardware is you have to physically move things from A to B,” said Sonnleitner. “With software the logistics are easy, you just have to download things. ”
With the advent of new technologies, such as cloud manufacturing, businesses can now access global manufacturing capacities to help them scale faster, while minimizing global non-market risks and reducing distances for shipping.
“Cloud manufacturing provides access to global machining capacities and helps you reduce the time and cost to build a very high quality supply network in local markets,” said Simon Tuechelmann, CEO of KREATIZE. “You will still need to build your assembly production and set up your logistics, but cloud manufacturing offers a plug and play solution to accessing a top notch supply network.”
Cloud manufacturing is also lowering the financial barriers of entry for hardware product companies, as they no longer need to invest in machinery or developing their own supply chain. This cuts the time to market and allows businesses to start building faster.
“Cloud manufacturing is one of the most revolutionary components of the 4th industrial revolution. It provides easy access and control of industrial machines without having to make large upfront investments,” said Gisbert Ruhl, former CEO of Klockner in an exchange with KREATIZE, where he encouraged people to download our recent playbook to learn more about cloud manufacturing. “Hardware businesses need to learn more about cloud manufacturing if they want to remain competitive,” he affirmed.
The added speed, flexibility, and improved technology now available to hardware product developers is helping hardware startups remain buoyant despite the challenges of hardware.
Christian Dahlen, VP at SAP and a seasoned angel investor, told KREATIZE at Launchpad that raising money for a hardware startup is still challenging because of the substantial investment required. Especially when compared to the requirements for software. However, he also expressed optimism, and believes that the market for hardware investments is in a healthier state today than it was 10 years ago, citing the influence of very visible players in this space, such as Elon Musk, who has made big investments in hardware (e.g. Tesla, SpaceX, etc.)
“Everyone likes to touch physical objects, there is something about the tactile experience,” said Dahlen. “Right now there are a plethora of hardware startups,” he affirmed.
Bottom line: Hardware might not be like software yet, but it is undergoing a transformation. This transformation is allowing businesses to make products faster and cheaper—a type of change which led to the golden age of software.
Take a step towards a faster and cheaper hardware development experience by creating your account with KREATIZE Manufacturing Services or by making an appointment with one of our cloud manufacturing specialists today.
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