Hardware By the Numbers: O'Reilly Solid Keynote
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Hardware trends in 3 sentences: Hardware manufacturing was challenging due to the difficulties of prototyping, offshoring, and lack of investor interest. However, the rise of hackerspaces, 3D printing, lower China wages, and increased VC funding in hardware has made hardware development easier. The growth of connected devices, wearables, and the Internet of Things is driving more investment and opportunities in hardware.
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Hardware By the Numbers: O'Reilly Solid Keynote
- 1. HARDWARE TRENDS Renee DiResta @noUpside Hardware By The Numbers
- 4. Hardware was hard… …because it was lonely
- 5. Hackerspaces From Do It Yourself to Do It With Others
- 8. Maker Faires
- 12. Hardware was hard… …because prototyping was difficult
- 13. 3D Printers: units sold under $100,000
- 14. Enterprise-quality printers will cost less than $2000 by 2016
- 15. MakiBox $200 A6 LT kit Printrbot $349 Simple kit Buccaneer $397 on Kickstarter
- 16. End-User Spend on 3DP
- 18. Octopart Microcontroller Price Index
- 20. Hardware was hard… …because China is far
- 21. Increased Access
- 23. China PMI data
- 24. Mexico vs China Wages
- 25. Botsourcing Industrial robots per 100k employees Germany South Korea United States Japan Average China
- 26. Typical industrial robot $100k Base price $200k+ Programming cost
- 28. Hardware was hard… …because investors were scared
- 29. 2011 Kickstarter 0.46% of all projects were hardware 120 Hardware projects on Kickstarter 649 Product Design projects 26k Total projects on Kickstarter $2.5M Hardware project dollars raised 2.43% of money raised on Kickstarter
- 30. 2012 Kickstarter 0.58% of all projects were hardware 239 Hardware projects on Kickstarter 1373 Product Design projects 41.4k Total projects on Kickstarter $9.7M Hardware project dollars raised 3.02% of money raised on Kickstarter
- 31. 2013 Kickstarter 1.7% of all projects were hardware 784 Hardware projects on Kickstarter 2453 Product Design projects 46k Total projects on Kickstarter $46.6M Hardware project dollars raised 9.94% of money raised on Kickstarter
- 33. Hardware Companies Raise More
- 34. But follow-ons are tough…
- 35. Today, VCs<3 HW $442M Into hardware startups in 2012 $848M In hardware Investments in 2013
- 36. Hardware Companies Founded Designed Products Connected Devices / IoT Wearables Robotics
- 37. Hardware investment by sector
- 38. Acquisitions
- 41. Or a toaster
- 42. Or a cow
- 43. M2M vs H2H Data Transfer Patterns • Orders of magnitude more nodes • Upload-Biased Traffic • Low bandwidth • Low power • Real time
- 44. In 2008, the number of devices connected to the internet surpassed the number of people on earth
- 45. Connect All The Things 20202012 50B8.7B 2013 10B … 2008 >
- 46. People are paying attention Google Trends data for “Internet of Things”
- 47. People are paying $$ $25B 201820132012 $71B$33B …
- 48. Wearables
- 49. Projected Growth of Wearables
- 50. Hardware is still hard… …but the future is bright
- 52. Software is eating the world… Hardware gives it teeth
Editor's Notes
- Nearshoring is gaining in popularity as manufacturing wages in China continue to rise. Although no official Chinese wage data has been released since 2009, in several industries it is now cheaper to hire workers in Mexico. US companies are moving manufacturing to Mexico, across the spectrum - both large automakers, and in startups such as 3D Robotics. Besides wages, considerations include costs of shipping a 40-foot container, the exchange rate, time differences, language barriers, and the challenges of managing a far-flung supply chain.
- Reshoring is largely made possible by robots. This is a trend within a trend. Industrial robots are getting increasingly powerful, and dropping in price. They are changing the face of labor around the world. Robot density is the ratio of robots to human workers. Countries with high density have 27-40 robots per 100,000 employees. China currently has 2. That is expected to change. Chinese manufacturing is becoming automated as well. This is driving demand for more robots.
- Historically, prices are in the $100k range.
- But that’s changing. Smarter robots are changing the way things are made, and reshaping the global economy. The new robots of today are safer, play well with humans, and can be trained to perform many different tasks.
- Getting into dollars here…
- Crowdfunding gives potential founders the opportunity to raise a bit of money without having to go to angels and venture capitalists. It’s most often used to finance the first run of a product and allow entrepreneurs to field-test their ideas. It’s been an invaluable addition to the funding ecosystem for hardware. On Kickstarter, we see hardware, tech, and product design categories progressively gaining strength. Number of projects are up. Dollars are up. And both are increasing as a percentage of proects and funds on Kickstarter.
- And VCs are getting in the game. This chart shows the prevalence of early-stage venture deals, Series A and below. It does include medical devices. And what we’re seeing here is the number of early-stage funding events increasing every year
- Hardware startups raise more in the early days.
- But follow-ons are hard to come by. The mean success rate across all sectors is 19.8%. On average, only 10% of hardware startups raise a second round.
- Looking at total dollars across all stages, it’s clear that now is a great time to be a hardware startup raising money.
- These are the general sectors that entrepreneurs are starting companies in.
- Venture capital deals are being done in most of these sectors. Drones is a subset of robotics, but it’s attracting an increasing amount of interest so I broke it out here. In 2013, VC dollars flowing into drones hit $79 million.
- Investments are likely to continue, as the hardware sector has seen a number of high-profile and lucrative exits. Robotics alone: in 2013 Google purchased 7 robotics companies
- Of course, it’s not just robotics. Virtual reality, 3D printing, and connected devices all had significant exits.
- Make no mistake about it: hardware is still hard.
- But the trends we’re seeing in the startup ecosystem - protoyping, manufacturing, fundraising – they all indicate that it’s getting progressively easier to get from that idea on a napkin to a space on the shelf.
- Marc Andreessen once said, “Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.” And while it may yet be early to make the same claim about hardware, the hardware revolution is happening. Which means that we’re in for some truly exciting developments, as today’s creators leverage the power of software and the promise of hardware, and bring new and compelling connected devices into the world. Thank you.