Entrepreneurs shouldn't shy away from hardware if they are looking to succeed. That contrarian view---many startups would naturally gravitate to the Web and software---was argued well by Gadi Amit, founder and principal designer of NewDealDesign.
Writing over at Venture Beat, Amit makes the following case:
- The software and Web markets are saturated by giants;
- Hardware products are more wide open where as many as 12 to 15 companies can compete (think cell phones);
- Upstarts can get shelf space because consumer electronics has always had multiple players;
- And hardware remains ripe for innovation.
Those points are on target, but the commodity pricing curve, which is always an issue in hardware, remains scary.
Nevertheless, Amit says you can be one of many in a category yet still be profitable. Why? You can outsource manufacturing, focus on design and can snare shelf space. Amit's argument is that the hardware business is a lot like professional golf---you don't have to win to have a nice payday.
It's a fine argument that I don't quite buy completely. Thoughts?