2012 – the year of hardware

2012 was the year of many spectacular things for the tech world. Famous IPOs (among them, the one of Facebook), the exponential development of web accelerators, the reset of investment funds (small funds & super funds), the accelerated development of big data and many more.

But for me, the year 2012 was very interesting from another point of view: the birth of hardware startups.

A few years ago, hardware development belonged solely to the big companies and R&D centers. Prototyping was expensive, the go-to-market cost was very high, iterations were hard to deliver. The investment funds were extremely cautious in financing hardware companies (mostly because of the high inventory costs), and the development of independent hardware seemed like fantasy.

But suddenly, throughout a year and a half, a series of innovations completely changed this industry. What happened:

1. the cost of hardware in respect to the performance had reached a very low level, which allowed the use of standard circuits, of high processing capacity, in independent projects. The most obvious examples for this are Raspberry Pi and Arduino, both (very interestingly!) European producers.

2. the dropping of prototyping cost, mainly because of 3D printers, allowed entrepreneurs to produce limited series of devices in order to test their technical viability and the market’s interest. Between the most interesting producers I’d mention Makerbot, the last version of the 3D printer costing only 2000EUR.

3. many of these hardware devices have found a financing channel in platforms like IndieGoGo or Kickstarter, which allow the pre-ordering of devices in their prototype stage. It’s interesting that none of these platforms had been created especially for hardware produces, but they found a perfect spot in the ecosystem that was emerging. I’m sure that more such platforms will be created in the near future, maybe targeting more specific verticals. A great example for this case would be Pebble, a smartwatch running apps and having the ability to connect to third party devices, which is currently the project to achieve the highest financing round on Kickstarter: although its target was only 100.000USD to reach production, it gathered pre-orders of 10.000.000USD.

4. retail stores created for hardware equipment such as smartphones, tablets and the rest of their accessories have begun to sell independent hardware. Just have a look at the Apple Store, where you’ll find the Nest smart thermostat or the Nike+ FuelBand.

Many of the previous things had existed for quite a while, but I think 2012 was the breaking point for this industry. I think the acceleration programs, now so many across the world, have become representative for the future trends in tech, and here are other two noticeable things:

1. in 2012, Y Combinator, probably the most important tech accelerator, for the first time in history has accepted hardware startups – 7 of them. In a personal blog post entitled The Hardware Renaissance, Paul Graham, Y Combinator founder, stated that on average the hardware startups had done better than the non-hardware ones.

2. in October 2012 Springboard, one of the most important European accelerators has launched a program dedicated to hardware startups, called Springboard IoT (Internet of Things) – disclaimer: I am a mentor for Springboard. During the months that followed, Springboard managed to gather support from the whole industry, including hardware producers, investors, experts and, recently, Kickstarter.

Bonus: The 2012 edition of LeWeb, the biggest and most important European conference, had the Internet of Things as its theme; and the winner of the startup competition of Dublin Web Summit, the second biggest in Europe, was SmartThings, a startup offering “automation” kits for homes.

As I look over the previous facts with amazement, I have a ton of questions going through my mind: what would our world look like if all the things that surround us suddenly caught life? Which are the things we’d want to recreate? And, mostly, when was the last time that technology impacted people’s lives so directly and profoundly?

Main foto – Arduino Synth.

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