Technologies, Places, Business Models for Open Design @ Pixelversity, Helsinki (23/09/2011)

Technologies, places, business models for Open Design

Massimo Menichinelli

---------------------------------------------------------------------------
September 23rd 2011
Pixelversity – Pixelache, Helsinki
http://www.pixelache.ac/helsinki/pixelversity/programme-2011/open-p2p-
design/

Presentation available at:
http://www.slideshare.net/openp2pdesign

01.
Technologies: how to “compile”
the digital blueprint?

Digital Fabrication or Fabbing

Not only for Open Design! Even for Generative Design, Mass-customisation, ...
Source: http://www.platform-net.com/

Laser engraving

(Video on next slide)

Source: http://www.youtube.com/watch?v=1SSavlU06go

Laser cutting


Source: http://www.youtube.com/watch?v=3rvSdDTgUww

3D Printing in full colors


Source: http://www.youtube.com/watch?v=hHxp9Ail6MY

3D Printing in metal: stainless steel


Source: http://www.youtube.com/watch?v=B9VOwqtOglg

3D Printing in glass


Source: http://www.youtube.com/watch?v=BtK-Hqd6Q2I

3D Printing in ceramics


Source: http://www.youtube.com/watch?v=zZU7O1BHfyo

CNC Milling


Source: http://www.youtube.com/watch?v=j4akxGjTbOs

Fabbing service + marketplace: Ponoko

Source: http://www.ponoko.com

Fabbing service + marketplace: Shapeways

Source: http://www.shapeways.com

Fabbing service + marketplace: i.materialise (Belgium)

Source: http://i.materialise.com/

Fabbing service + marketplace: Sculpteo (France)

Source: http://www.sculpteo.com/en/

Open Source: RepRap
RepRap: the first open source 3D printer you can buy or
build at home and that replicates itself.

Source: http://en.wikipedia.org/wiki/RepRap_Project http://www.reprap.org

Open Source: Makerbot (building on the RepRap)
Makerbot: easier to build than the RepRap, not an
experiment but for everyday use.

Source: http://www.flickr.com/photos/retrocactus/5875140581/in/pool-1024769@N20/
http://www.flickr.com/photos/micahdowty/5288805084/in/pool-1024769@N20/ http://www.makerbot.com/

MakerBot: 3D printing


Source: http://www.youtube.com/watch?v=h8XJUqHXgls

Open Source: Ultimaker (building on RepRap / Makerbot)
Ultimaker: faster, bigger and with higher details.

Source: http://reprap.org/wiki/Ultimaker http://blog.ultimaker.com/

Open Source alternative: laser cutting + engraving

Source: http://labs.nortd.com/lasersaur/

Open Source: 3D scanning

Source: http://hci.rwth-aachen.de/fabscan

02.
… and where can we make Open
Design projects?

Hackerspaces

Source: http://hackerspaces.org/wiki/List_of_Hacker_Spaces

Sewing Café

Source: http://www.thesewingcafe.co.uk/

Maker Faire

Source: http://makerfaire.com/

Techshop

Source: http://techshop.ws/

Open Design City, a different format

Interview:
http://www.openp2pdesign.org/2011/fabbing/an-interview-with-open-design-city/

Source: http://opendesigncity.de/

Fabbing in a common place: FabLab
FabLabs: a place for studying how information and matter
interact and doing it in an open source and collaborative
way.

Source: http://www.flickr.com/photos/protospace/5199454304/

FabLab: from MIT and Neil Gershenfeld

Source:
http://cba.mit.edu/
http://en.wikipedia.org/wiki/Neil_Gershenfeld

FabLab: information and matter interacts

Source: http://fablab.waag.org/node/3847

Fabn : a yearly meeting of all the FabLabs

Source: http://fab7.pe/

An interesting example: FabLab Barcelona

Source: http://fablabbcn.org/

An interesting example: a FabLab for Architecture

Source: http://www.iaac.net/

An interesting example: a FabLab for Architecture

Source: http://www.fablabhouse.com/

And the place defines the FabLab!

Source: http://en.wikipedia.org/wiki/Casa_Batll%C3%B3

An interesting example: Green FabLab Barcelona

Source: http://greenfablab.org/

An interesting example: Barcelona FabCity

“Toni Vives [...], Head of the Department the Urban Habitat in the Ofce of the Mayor of
Barcelona and member of the IAAC Board of Directors, presented the city’s plan to
become a “Fab City” with multiple Fab Labs in neighborhoods around Barcelona.”

Source: http://www.iaacblog.com/blog/2011/iaac-at-fab-7-in-lima-peru/

03.
… and what about Helsinki?

Hub Helsinki: a space for coworking (and collaboration)

Source: http://helsinki.the-hub.net/

Aalto Design Factory: almost a FabLab

Source: http://designfactory.aalto.fi/

ADDlab: Aalto Digital Design Laboratory (Architecture)

Source: http://addlab.aalto.fi/

Aalto Media Factory: FabLab Helsinki

Source: http://mediafactory.aalto.fi/?p=1076

04.
Why should a designer be
concerned about business?

I'm a designer, after all!

(Open) Design + Business ?

A designer / researcher studying how to co-design Open Processes with
communities, trying to make his design / research activity sustainable.

Source: Scott Beale / Laughing Squid http://laughingsquid.com/
http://www.flickr.com/photos/laughingsquid/1019493074/

(Open) Design + Business ?

Commissioned a report on business models of:

* Open Hardware
http://www.openp2pdesign.org/2011/open-design/business-models-for-open-hardware/

* Fab Labs
http://www.openp2pdesign.org/2011/fabbing/business-models-for-fab-labs/

* DIY Craft
http://www.openp2pdesign.org/2011/open-design/business-models-for-diy-craft/

Goteo.org: crowdfunding for Open Projects

Source: http://www.goteo.org

From a paper project to a real project

Designers start thinking
about the business
Source: http://www.kickstarter.com/projects/danprovost/glif-iphone-4-tripod-mount-and-stand

From a paper project to a real project

Now on Apple Store!

Source: http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-multi-touch-watch-kits

Just being “Open” is not enough: is it needed?

.. but what about the
market?
Source: http://www.kickstarter.com/projects/1833785894/100k-stray-toasthed-pull-toys

05.
Open and DIY Business
(as they are now)

Business models of Open Source (software)

Non-monetary incentives:
* problem solving
* ethical questions
* education + learning
* reputation --> social interactions + jobs

--> it's not just about money! Also a gift economy


Monetary incentives:
* selling software (as open or even with dual licensing)
* offering services (customisation, support, ...)
* paid developer work
* donation
* software as service (freemium, ...)
* embedding software into hardware

--> … it's not just only volunteer work!
Also a market economy


Red Hat
first open source company expected to break through the
$1bn mark in 2011.
Source: http://www.channelregister.co.uk/2011/03/24/redhat_q4_f2011_numbers/

Cost of developing Linux
The Linux Foundation (LF) (2008): $10.8 billion to build the
Linux community distribution Fedora 9 in today’s dollars
with today’s software development costs.
$1.4 billion to develop the Linux kernel alone.
Source: http://www.linuxfoundation.org/sites/main/files/publications/estimatinglinux.html

Please note: Open Business is not completely open

* identity (brand) is fixed and is a warranty certificate
* existing business ecosystems may not be open
* knowledge, expertise, tools, resources are not always “open”

Source: http://www.blender.org/blenderorg/blender-foundation/logo/ Source: http://www.arduino.cc

The levels of openness in Open Hardware
Patrick McNamara defined 4 possible levels of Openness in Open Hardware
projects:

1. Closed: any hardware for which the creator of the hardware
will not release any information.
2. Open Interface: all the documentation on how to make a
piece of hardware perform the function for which it is designed
is available (minimum level of openness).
3. Open Design: in which enough detailed documentation is
provided that a functionally compatible device could be
created by a third party.
4. Open Implementation: the complete bill of materials
necessary to construct the device is available.

Source: http://www.osbr.ca/ojs/index.php/osbr/article/view/379/340

The business models of Open Hardware

* Services and expertise (customization, consulting)
* Manufacturing of owned or third party Open Hardware
* Manufacturing of proprietary hardware based on Open
Hardware
* Dual-licensing
* Proprietary hardware designs based on Open Hardware
* Proprietary software tools for developing Open Hardware
* ... and:

Source: http://www.openp2pdesign.org/2011/open-design/business-models-for-open-hardware/


* Proprietary hardware tools for Open Hardware (Sparklelabs)

Source: http://kits.sparklelabs.com/


* Free services for building a greater user base (Adafruit Jobs Board)

Source: http://www.adafruit.com/jobs/


+ =

* Partnership between Open and Fabbing companies (Ponoko + Sparkfun)

Source: http://www.ponoko.com/make-and-sell/electronics


* Funding Open Hardware projects in exchange for documentation

Source: http://bildr.org/


* Piracy as a learning and market building strategy (Shanzai)

Source: http://www.flickr.com/photos/ttstam/4177935719/


* Brick and mortar store (Makerbot - Botcave)

Source: http://www.makerbot.com/blog/2010/11/26/makerbot-botcave-store-opens-today/


* Renting spaces for co-working (Hackerspaces)

Source: http://hackerspaces.org/wiki/NYC_Resistor


* Microcredit / peer-to-peer lending / crowdfunding (Open Hardware Bank)

Source: http://www.oshwbank.org/

2009:
The market of Open Hardware * 13 companies over $ 1 m.
$11.000.000
* total: $ 50 m.
$10.000.000 * $ 1 billion by 2015
$9.000.000

$8.000.000

$7.000.000

$6.000.000
Revenues

$5.000.000

$4.000.000

$3.000.000

$2.000.000

$1.000.000

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Source: http://blog.makezine.com/archive/2010/05/million-dollar-baby-businesses-de.html

The market of Open Hardware: SparkFun

Nathan Seidle (founder):

“In 2010, SparkFun had revenues of about $18.4MM. As of April of 2011, we have
around 120 employees, up from 87 a year ago.”

“We hope to grow by 50% this year (2011) to around $28MM in sales. We expect
to be in the 30-50MM range in the next 3-5.”

Source: http://www.sparkfun.com/news/599

Similar models for DIY Craft... Etsy

Source: http://www.etsy.com/

Similar models for DIY Craft... Etsy Total Members: +8 million
Total Active Shops: +800,000
Items Listed: 8.5 million
$350.000.000

$300.000.000

$250.000.000
Total $ sold (Gross Merchandise Sales)

$200.000.000

$150.000.000

$100.000.000

$50.000.000

$0
2005 2006 2007 2008 2009 2010 2011 (March)

Source: http://www.etsy.com/press/kit/

Similar models for DIY Craft... Sewing Cafes

* Renting spaces for co-working (Sewing Cafes)

Source: http://sweatshopparis.blogspot.com/

Sewing Café

Source: http://www.sweatshopparis.com/index.php?/project/concept/

...and 1 more: Crowdsourcing (Threadless)

Founded in 2000 with just $ 1,000, now it has a revenue of $ 17,000,000 in
annual sales with a 35% profit margin.
Source:
http://www.threadless.com/submit

A place for Open / DIY projects: Fab Labs
How to start it:
* $50,000-$55,000 (or open source low-cost version for $12,500 - $5000)
* value proposal: facilities or innovation support

* The Enabler business model: launch new Labs or support them
* The Education business model: a global distributed model of education
through Fab Labs (Fab Academy + P2P learning among users)
* The Incubator business model: provide infrastructure for entrepreneurs to
turn their Fab Lab creations into sustainable businesses.
* The Replicated / Network business model: product / service that utilizes
the infrastructure, staff and expertise of a many Fab Labs.

* not so interested in becoming profitables
+ Hackerspaces, Sewing
(though they could) Cafes, Techshops, ...

Source: http://www.openp2pdesign.org/2011/fabbing/business-models-for-fab-labs/

A place for Open / DIY projects: Fab Labs
* attached to institutions... or to brands (Absolut Lab, Madrid)
http://www.absolut-lab.com/

-->

Source:
http://www.advertolog.com/absolut/print-outdoor/berlin-7686855/

06.
The future of Open and DIY
Business: where will be value
created?

Look for what is becoming a commodity

A commodity is a good for which there is demand, but which is
supplied without qualitative differentiation across a market. [...] the
market treats it as equivalent or nearly so no matter who produces
it.

Source: http://en.wikipedia.org/wiki/Commodity

Commoditization (also called commodification) occurs as a goods
or services market loses differentiation across its supply base, often
by the diffusion of the intellectual capital necessary to acquire or
produce it efficiently. […] a unique, branded product into a market
based on undifferentiated products.
Source: http://en.wikipedia.org/wiki/Commoditization

Hardware and Software, becoming commodities

* ('50s-'70s) Hardware is the product, software is for free:
mainframes
--> Hacker ethic of sharing information

* ('80s-'90s) Hardware is commodity, software is the product
and it's proprietary: personal computers
--> Microsoft emerges

* ('00s-...) Even software is a commodity, so let's sell services
and get data from users: open source, web 2.0, services
around software, software as service, the cloud
--> web 2.0 emerges

Manufacturing and Design, becoming commodities

* ('90s-'00s) Manufacturing becomes a commodity and
slowly disappears in the West (thanks to China)

* ('10s-...) Now it's even more a commodity
(thanks to Fabbing)

* ('00s-...) Professional design is slowly becoming a
commodity (thanks to Fast Fashion, Ikea, design schools
bubble, Shanzai)

--> Where is value now, in Design and Manufacturing?

… so is still value in offering creativity?

Source: http://www.freedomofcreation.com/home/3d-systems-acquires-freedom-of-creation

… or in enabling creativity?

Source: http://blog.3dsystems.com/2011/05/3d-systems-partners-with-alibre.html
http://www.alibre.com/

… in attention, collaboration, creativity from “users”?

“ We fnd this previously unmeasured type of household sector
innovation to be quite large: 6.2% of UK consumers - 2.9 million
individuals - have engaged in consumer product innovation during
the prior 3 years. In aggregate, consumers’ annual product
development expenditures are 2.3 times larger than the annual
consumer product R&D expenditures of all frms in the UK
combined. “

Eric A. Von Hippel, Jeroen De Jong, Steven Flowers
Comparing Business and Household Sector Innovation in Consumer
Products: Findings from a Representative Study in the UK
Source: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1683503

07.
Open Design and money, work,
innovation, sustainability

Does the long tail of Etsy help small DIY business?

* very few users can make a living on it
* competition, but impossibility to increase volumes
--> downward pressure on prices
* rather an incubator for the most promising DIYers
(a low-cost entry point into the market)
Source:

Does the long tail help small DIY business?

None of the business examined tries to help its user to make a living on their
project. At least Shapeways uses revenues to lower prices down. But
Shapeways:
* generated 244,000 € in revenue over 2009, but at the same time it lost
1,400,000 €
* received a $ 5,000,000 fund from VC in order to open offices in the USA

Source:

… and a lesson from the past

In 1914 Ford offered a $5 per day wage ($110 in current dollar terms), which
more than doubled the wages. Ford's policy proved that paying people more
would enable Ford workers to afford the cars they were producing and be good
for the economy. Ford explained the policy as profit-sharing rather than
wages.

Source: http://en.wikipedia.org/wiki/Henry_Ford

Crowdsourcing, mass-collaboration and work

“If crowdsourcing runs on people’s “spare cycles”—their downtime not
claimed by work or family obligations—that quantity is now in surplus. […]
Crowdsourcing is proving to be highly efcient at identifying and exploiting
those “spare cycles”.”

Source: Howe, J., 2008. Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business 1st
ed., Crown Business.

“First the 'human resource' is not just inside the boundaries of your
company. The world is your resource. This is more than outsourcing.
Companies can now tap into vast pools of labour."

Source: Tapscott, D. & Williams, A.D., 2006. Wikinomics: How Mass Collaboration Changes Everything,
Portfolio Hardcover.

Yes, but where is the work that permits spare cycles?

In UK:

“Data from the Higher Education Statistics Agency shows that
just 65.5 per cent of those who graduated from creative art
and design undergraduate and postgraduate courses in 2007
are in full-time employment.
This is below the average fgure of 72.3 per cent of 2007
graduates from all courses, who are in full-time work.”

Source: http://t.co/Wgl2GGI

Yes, but where is the work that permits spare cycles?

Source: http://www.businessweek.com/magazine/11_39.html

Open Innovation vs. Closed Innovation

Open innovation is a paradigm that assumes that firms can and should use
external ideas as well as internal ideas, and internal and external paths to
market, as the firms look to advance their technology.

Source: http://en.wikipedia.org/wiki/Open_innovation http://shar.es/HN3Ua

Open Innovation vs. Open Source

“Open innovation is sometimes confated with open source
methodologies for software development. There are some
concepts that are shared between the two, such as the idea of
greater external sources of information to create value. However,
open innovation explicitly incorporates the business model as the
source of both value creation and value capture. This latter role of
the business model enables the organization to sustain its
position in the industry value chain over time. While open source
shares the focus on value creation throughout an industry value
chain, its proponents usually deny or downplay the importance of
value capture.”
Source: Chesbrough, H., 2011. Open Services Innovation: Rethinking Your Business to Grow and Compete in a
New Era 1st ed., Jossey-Bass.
http://www.amazon.com/Open-Services-Innovation-Rethinking-Business/dp/0470905743

..so is it a gift vs. monetary economy?

Source:
http://en.wikipedia.org/wiki/Money
http://en.wikipedia.org/wiki/Gift_economy

Open and P2P Money, are they a solution?

Does it address the current problems of money, or is just a way of making
it “open” reinventing the wheel without proposing business models?

Source: http://www.bitcoin.org/

When everything is peaking...

Even renewable resources like wood are peaking.. What and how are we
going to manufacture when everybody will be able to do it?

Source: http://ecoalfabeta.blogosfere.it/2011/03/il-picco-del-legno.html

… reinventing an open wheel is not enough

Will just making open an unstainable past be sustainable?

Source: http://www.theoscarproject.org/

New language, business for the new media: collaboration

Every new technology takes time to develop its own uses, languages and
business models.

Source: http://en.wikipedia.org/wiki/Car

New language, business for the new media: collaboration

Every new technology takes time to develop its own uses, languages and
business models.

Source: http://en.wikipedia.org/wiki/Horse-drawn_vehicle

… blocks of an Open, DIY and P2P Economy

* open business for design, energy, materials, tools

* open business that consider information as abundant but
materials and energy as scarce resources

* open money (but well designed and linked to energy and
materials)

* API and Open Data between open businesses

* Open processes + distributed testing of business models

Thank you!
Massimo Menichinelli

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