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Watching The Business Case for Open Hardware Unfold

DaveYoung

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“What designs would you open if product sales were your primary source of income?”

 

The Open Hardware Summit was held last week, and I had the pleasure of attending.  The principles of open licensing are simple: share all design files into the public domain and place no ownership or restrictions on the technology, allowing the community to learn from and build on it without wasting time 'reinventing the wheel.'

 

The reason I was so excited to attend OHWS was the license's requirement disallowing the use of a non-commercial clause.  This clause means that the designer cannot limit others' use of the design files for commercial purposes.  Many people worry that a design can be copied as-is and produced at a lower price than the designer offers thanks to reduced R&D costs. I am not yet sure how valid the concern is, however the outcome is currently being defined which makes for a very exciting time.

 

There are many companies that embrace the open source approach with all of their designs.  By dumb luck I sat next to Nate, CEO of Sparkfun on the flight back to Denver.  When asked why he gives designs away, he said that it started in order to make customer service easier and better.  From there, they continued opening designs because they understood that they would be reversed engineered even if closed.  He and his team use the knowledge that the competition is close on their heels to drive them to innovate faster and provide value outside of the physical product and price.  Talk about motivation!

 

There are others that find deviations from the OHW license as something to consider.  Chris Anderson from DIY Drones said in his keynote address that there are many varying uses for opening designs depending on different businesses.  Marco Perry from Pensa spoke about his company's move towards opening some designs while recognizing there are many applications that will never work with any open license.  Marco was the source of my favorite quote from the event, saying People copying you is a business problem, not an open source problem.

 

As open licensing becomes used more often in business, there are some that find the completely open approach to be a risk to their bottom line and are becoming more closed.  Bre Pettis from Makerbot gave a talk on the challenges that they have seen in people using their own designs to undercut them, and why they decided to close parts of the most recent Replicator 2.

 

I must admit that I see this almost like a movie playing out since the entire conversation will be over soon.  The time it takes to reverse engineer a design is getting shorter. Low-cost manufacturers are reaching markets faster and faster with knock-offs.  In the end, closing a design will only prevent your customers from having it as the competition will have figured it out on their own.  But until then, my favorite question to ask people in the industry will still be, “What designs would you open if sales were your primary source of income?”  

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  • Hi Drew,

     

    Sounds like a very interesting discussion.

    From my perspective, if you are developing open hardware, your best course of action is to offer up kits with the product ready to use.  You can only expect about 1-2 years before your product gets over taken by events, so you should already be working on the next version when you release your current design.

     

    Regardless of how you try to stop it, competition will evolve if you have a good idea.  Its just a matter of time.  Attempting to stop people from undercutting your cost structure will also fail. 

    From my observations, your best bet is to freely provide kits along with the design release.  Make sure that you have your logo on the parts and remind people that the only safe replications are yours.  Beyond that, you must plan for eventual obsolecence. 

    Big companies deal with this issue all of the time.  If you want to get rich, you need a monster idea with hidden complexity that takes your competition a while to unraval.  Even the best idea will eventually be overtaken by your low cost competitors.  To retain market share, you need to add value every six months or so.  Get people used to incremental design updates and they will continue to look to you for the next new idea.

     

    Either way, it is a tough business.  If you plan to run open hardware devices, you need to understand that it is not the path to mounds of gold, but can certainly lead to a following of loyal supporters.  You just have to have bounded expectations.

     

    Just my opinion,

    DAB

     

    PS, thanks for the reports from the Open hardware summit and the Maker Fair.  I appreciate the information as I am sure others do.

    Thanks.

Comment

  • Hi Drew,

     

    Sounds like a very interesting discussion.

    From my perspective, if you are developing open hardware, your best course of action is to offer up kits with the product ready to use.  You can only expect about 1-2 years before your product gets over taken by events, so you should already be working on the next version when you release your current design.

     

    Regardless of how you try to stop it, competition will evolve if you have a good idea.  Its just a matter of time.  Attempting to stop people from undercutting your cost structure will also fail. 

    From my observations, your best bet is to freely provide kits along with the design release.  Make sure that you have your logo on the parts and remind people that the only safe replications are yours.  Beyond that, you must plan for eventual obsolecence. 

    Big companies deal with this issue all of the time.  If you want to get rich, you need a monster idea with hidden complexity that takes your competition a while to unraval.  Even the best idea will eventually be overtaken by your low cost competitors.  To retain market share, you need to add value every six months or so.  Get people used to incremental design updates and they will continue to look to you for the next new idea.

     

    Either way, it is a tough business.  If you plan to run open hardware devices, you need to understand that it is not the path to mounds of gold, but can certainly lead to a following of loyal supporters.  You just have to have bounded expectations.

     

    Just my opinion,

    DAB

     

    PS, thanks for the reports from the Open hardware summit and the Maker Fair.  I appreciate the information as I am sure others do.

    Thanks.

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