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Building Hardware is Hard
Kara Swisher is reporting at All Things D that student 
tablet maker Kno
is considering selling off the entire hardware part of the business and is in talks with two major consumer electronics manufacturers to do so, according to sources close to the situation.
Engadget also picked up the story, and cites competition from more established hardware manufacturers as one of the motives behind this move. Kno will reportedly focus on providing software for the iPad and Android tablets going forward.
The news only underscores the point that bringing well designed hardware to market is a difficult proposition. Some individuals think that because they have built a successful software business or popular website, they will be good at building hardware. This is a lot like assuming that if you are good at plotting data on a graph, you know exactly how a black hole works. Hardware is a complicated, complex animal. It presents many potential points of failure, and has its own unique challenges. The key to delivering great hardware is assembling an experienced team that knows how to handle everything from product concept to product launch.
Let’s imagine a web entrepreneur who starts a successful dating site (or cooking site, etc). Given the way the web works, he could easily transfer all of the lessons he learned building that site to another URL. Everything the first experience taught him about customer acquisition, internet marketing, and web design would apply to his second website (and his third and fourth, etc). If this CEO used the same transferable skills to build a number of websites he would be considered (rightly so) a savvy entrepreneur.
Now let’s look at what it takes to build a gadget, and the paradoxes that are inherent in successful hardware manufacturing. The more successful one is at building a gadget, the more money is needed to continue to be successful and the more likely the gadget business is to fail.
Wait, what? It seems counter intuitive, but with hardware, growth = problems. The moment your device becomes a success you need to accommodate more orders from the distribution channel (those are the guys that place your hardware in retail, BTW). For example, if you sold 10K units last quarter, and orders for the next quarter are 30K, you have to start building for the quarter after that. The good news is that sales are projected for 60K units. The bad news is that you need to pay for those gadgets now.
Hardware presents problems that software and websites never encounter. Bringing a hardware device to market can take 9-13 months. During that time there are significant costs and multiple points of failure that can come up (the power button won’t work, the driver is malfunctioning, the gadget loves to catch on fire, etc). As opposed to the web/software entrepreneur mentioned above, almost all of these hardware problems are unique and no amount of software success will apply in the gadget realm (you can’t pivot a defective mother board).
This post isn’t meant to pick on Kno or its leadership (by any means). And the point is not to say that startups that build hardware can’t be successful (they can). The point of this post is to point out that a great product team determines hardware’s success. They do this largely because they have done the work before and were successful. (Take us for example, we have been building award-winning devices in the CE space for years, but don’t ask Stage Two to design a main frame- that’s not our bag). Dedicated product professionals understand how complicated hardware is and have the mettle to think through every potential problem, from the quick start guide, to the distribution channel, to customer service and support. Building a new device is hard. Make sure that your product team is up to the challenge.
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