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13 Open Source Hardware Companies Make $1+ Million
kkleiner writes "Selling products whose design anyone can access, edit, or use on their own is pretty crazy. It's also good business. At the annual hacker conference Foo Camp East this year, Phillip Torrone and Limor Fried from Adafruit Industries gave a rapid fire five-minute presentation on thirteen companies with million+ dollar revenues from open source hardware. The thirteen add up to $50 million this year. While this business model is counter-intuitive for those accustomed to our current patent- and copyright-encrusted system, Torrone and Fried estimate that the industry will reach a billion dollars by 2015."
In the world of hardware there is an enormous difference between the two. You can easily have $1M in revenue and lose your shirt (make a huge loss).
http://lkml.org/lkml/2005/8/20/95
You know, Dr. Evil, a million dollars isn't exactly a lot of money these days. Virtucon alone makes over nine billion dollars a year!
$50 million today => $1 billion in 5 years! You'd have to be crazy not to invest EVERY PENNY YOU OWN in these companies!
Negative moral value of force outweighs the positive value of good intentions.
I don't really see the growth factor for open source hardware. Yeah, its great if you are a geek, but if you aren't... why bother? Most open source hardware projects are designed for people to program. I see things like Android becoming popular, open enough to do most things you want, but still polished. Yeah, I like being able to program obscure assembly commands to a CPU to make it do odd things, but I like things to work without having to spend hours setting them up. So while I don't think things are going to shrink, I think that the number of geeks really aren't increasing enough to expand the market.
Taxation is legalized theft, no more, no less.
That's great and all but how much profit are they making on that $50 million in revenue?
By making your hardware more accessible, you are increasing your product's value for your users.
Sure you do (especially for Bill_the_Engineer, not so much for Bill_the_Average_person_clueless_about_technology) but the question is will you bring more return in for your investors than with closed hardware. More to the point, can you convince your investors to pony up for R&D up front, while knowing that as soon as your product is out, $LARGE_CORP can copy it and sell it for less because it doesn't have to recoup the R&D costs like you do?
Negative moral value of force outweighs the positive value of good intentions.
Doing a million dollars in REVENUE is simple. Just about any company can bring in a million dollars in revenue.
The question is, can they pay their people, their suppliers, their advertisers, etc and then MAKE A PROFIT from that revenue? That's the hard part for ANY business.
Mike @ The Geek Pub. Let's Make Stuff!
RAM, blu-ray, LTO backup tapes, WiFi and others
in all cases many companies come together, pool their patents to create a standard and share the profits since every product sold puts money into the industry pool to be doled out to its members. The model even predates Linux, since that's how VCR's were sold. the profits go back into research that is pooled into another patent pool for the next generation product.
Their products are amazing. In case you are not familiar, Mark Spencer and crew are the guys behind Asterisk, the best PBX ever. Their hardware business is actually pretty big, and they also provide asterisk-related services, including training and support.
Considering that 20% of all PBXs in use are Asterisk-based, I thought it was worth mentioning it.
WTF am I doing replying to an AC at 5 A.M on a Friday night?
AMD made $5.4 billion last year and Intel made around $35 billion. Each of these companies make more revenue in an hour than the yearly revenue of any of these companies.
They also make more than most proprietary software/hardware companies.
Even ARM, which is significantly smaller than either of those, makes $305 million in revenue. There's nothing impressive about making $1 million in revenue.
To be perfectly clear, that model predates electricity, since that's how sewing machines were first sold (1856). Honestly, these aren't new issues. Patent thickets have been around almost as long as patents, as have the solutions.
Not counterintutive for anybody who is, well... a little bit older. There. Said it. Now that that's out of the way, let us hearken to the days when TV sets had SCHEMATIC DIAGRAMS printed on the inside of the box. This was so that guys called "repair men" could actually fix these "valuable devices". Furthermore, while most consumers couldn't tell heads or tails from the schematics, they could at least unplug the tubes and take them to the drugstore and test them, to see if it was as simple as a worn-out tube.
No, I'm not that old. I was a little kid when all this was still going on, and even then it was fading fast. Still though, I have vivid memories of it all. It made quite an early impression on my budding geek mind.
If computer hardware gets back to that, it would be a welcome regression to the mean. Throughout most of history, you could generally understand most of the components in a device, or at least understand the relationships between the black boxes well enough to make repairs.
Anyway, the companies that made these "open source" devices throughout history did just fine. They prospered because most people don't have time to understand a schematic or source and integrate all the parts themselves. They'd rather pay somebody else to do that.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
This is Open Source Hardware not Open Source Software. A completely different industry, with completely different numbers to make up.
And hundreds of companies make much more off the fruits of OSS 'labor'.
'We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.' RPF
Start by being a billionaire.
Science advances one funeral at a time- Max Planck
Their hardware isn't open source.
...what in the HELL is with these comments? A lot of these people either seem to have their heads up their asses, or are just jerks.
Sure, a million bucks isn't a lot of money in the grand scheme of things, and may not be huge by small business standards... But for fuck's sake people, we're talking about companies consisting of-- on average --just a couple of people. People JUST LIKE US. In fact, they ARE some of us! If YOU made a million dollars in a year, wouldn't it be a pretty big deal?
With the world economy in the toilet and still goin' round an' round, tiny companies like these making decent money selling open source gadgets and whatnot IS a big deal.
Yes, revenue isn't profit, as many have pointed out. But I'll bet you anything, these people are doing fine, which isn't exactly something we can all say, now is it? Sparkfun? Sure, they're not really tiny like the rest, they have facilities and staff and all that, but still... Wanna know how they're doing? They gave away $100,000 worth of free stuff a while back, and I'll bet everyone's still got their jobs and can afford to eat.
These are people just like us, and they're pioneering the new way to design, manufacture, and sell electronics. Opensource hardware is even going to change the consumer side of the equation. Making people smarter about the things they buy, and making the consumer take up a more participatory role. It's another step in the democratization of technology.
Here's hoping we bring up the next generation wanting to build and create more things than they buy off the shelf. And here's hoping my name will show up in a similar presentation in the not-too-distant future!
Friend: "The NIC is misconfigured..." Me: "No prob, I'll just telnet in and fix it." *Silence*
My parents do about $750,000, maybe more, in sales per year in their small business. However they still aren't making a profit. Their expenses are eating it all up. They aren't millionaires and will never become ones this way, despite having sales near a million a year. Business isn't cheap to do. Whatever you think a business should be getting in profits, you have to figure their revenues have to be at least double that, usually much more. For example GE has $154 BILLION in revenues, yet makes only $10 Billion in terms of income available to common.
Doing a million in sales isn't hard. As I said, my parents near that and they have a small business that more or less sells just to a small tourist city in Canada. Making a million in profit, that's much harder.
Back in the day companies gave away reference designs for their new components, and companies often simply added software to these reference designs to specialize their products. The Tandy Color Computer was a chip-for-chip reference design created by Motorola. The Colecovision was a chip-for-chip reference design from Texas Instruments. These reference designs were zero-cost, modifiable and distributable.
How much different is a freely-distributable reference design schematic with open source DL? It isn't if you think of the chip as a circuit board in miniature and the OSS HDL as a code for a schematic. Of course, that users of the unprogrammed chips have to do the reference design themselves, rather than receiving it gratis from the manufacturers is beyond me...
Oh yeah, I forgot: monetize what was once free or stockholders get angry.
Why is everyone comparing these OSH companies to huge international tech companies? These small upstarts aren't providing schematics for the next desktop CPU. They are simply selling kits and schematics for electronics/hacker/maker gadgets. This is the next evolution of Heathkits and Radio Shack's better days. These companies aren't really trying to compete with the giants of the tech industry. The purpose is to act as an enabler for tinkerers, hobbyists, and crafters.
After years of ignoring hobbyist electronics, I purchased an Arduino, an AVR programmer, and a breadboard with a 5v power supply (all from Adafruit). When I discovered the arduino community, i was hooked. The money I paid to Adafruit was, to me, a small amount to pay for a ticket to ride. While I was relearning the electronics basics, I tweaked the design of the 5v power supply with some different parts from Digikey. This led me into etching my own circuit boards, and building my own kit. When that first gadget fired up, it was like the feeling I got when I completed Linux From Scratch for the first time. I felt like a kid again. Please refrain from pointing and yelling, "NOOB!" I'm just an architect (not the software kind) who has reconnected with my nerdy past. I'm already working on designs for DIY versions of a CNC mill and CNC laser cutter. I'm going to do this because I've been inspired by the DIY community and the companies that cater to that community.
Seriously, do a bit of research of what these companies are offering. If you're not inspired by what people like Limor Fried from Adafruit are doing, then you need to turn in your geek card. I'm just a beginner in the DIY world, but this stuff is seriously fun. That these companies are making money (even if only enough to stay alive) is a win for the geek community.