TL;DR Can 2018 be finally the year where hardware bounce back? Yes!
Year after year we have seen the massively funded hardware plays go bankrupt. 2017 particularly has been a harsh year on hardware startups. Jawbone the infamous fitness tracker that racked over 900M in venture funding has announced its plans to close shop last year; Juicero has shut its front doors after failing to release a more pocket-friendly version of its $400 juicing machines (like duh!) after securing over 100M dollars of investments. Snapchat Spectacles (foul who bought one here!) is yet another example where despite the artificial hype created through its brilliant marketing tactic, the company is sitting on hundreds of thousands of unsold inventory causing its market cap to dive faster than Micheal Phelps in the 2016 Rio Olympics. One could continue to go on and on about hardware companies that never saw the light at the end of the tunnel!
What makes the hardware business so tough is also the same reason that makes it so lucrative and yet investors are still pouring billions of dollars into this space(the smart ones at least). Remember Sono’s? The smart speaker before smart speakers was a thing! Well, this week they have just announced their S-1 filing (a.k.a they are about to go public! like on the stock market n stuff). While the company is showing an occasional trend on profitability, their filing shows that over 27% percent of their 6.9M households own FOUR or MORE Sonos speakers! That is in a time when you have your occasional Google, Amazon, and Apple going all in on your core business; in any other space, you would usually be dead in weeks, months tops! But that’s the beauty of hardware, it’s so hard to get it right that when you do people will try to move heaven and hell to get in on it! Kudos to John MacFarlane, Craig Shelburne, Tom Cullen and Trung Mai for building such an amazing product! It took them 16 years to get to this point but boy was it worth it!
Also, Remember the part when I mentioned Amazon earlier? Good! As am really bad at transitions…uhmm hmmm so speaking of Amazon they just spend mad money (like a billion dollars) on a doorbell… a smart doorbell. Put a GoPro on your doorbell hook it up to raspberry pi and bang you got yourself a billion dollars! Ring was another massive win in the hardware space this year, after being rejected on Shark Tank by all sharks. At the time it was seeking just 700K on a 7M dollar valuation! Those 700K would turn out to be worth 20–30M dollars at least just a few years down the line..not bad huh?
Sonos and Ring are just the tip of the iceberg! According to CB insights consumer hardware saw a 3.3 Billion dollars of investments in 2017 alone. That is not taking into account drones or autonomous cars which are another story on their own! Hardware has been coming for a long time, a few occasional zombies had to pave the way for hardware and software to completely merge into the utopian future we all dreamed about! Google glasses, Snapchat spectacles, and a few others had to die for likes of magic leap to rise (hopefully)! But now seems closer than ever and every piece of hardware out there seems to be on the verge of disruption! Unlike software, for hardware, its winner takes all and I am more optimistic than ever! 2018 is the year hardware is going to eat the world: one industry at a time. Goodluck to all the “we invest in everything (but hardware)” peeps!