Big companies, especially the ones operating in the manufacturing industry, should watch out about switching of technology as at the moment even physical objects can be printed at home. The diffusion of 3D printers, which were developed thanks to Arduino, is changing the manufacturing sector. Moreover, there are companies like Ponoko (appendix 1) that allow everyone and everywhere to design an object and to have it printed. “Soon we can print from home a MP3 player, or a mobile phone”, therefore from the analysis it clearly emerges that the future of manufacturing could be affected by further development of OSH, putting in trouble also companies based in China that exploit cheap labour. That is why companies such as Bug Labs that employ an open approach are switching from hardware to a business solution. Spreading the hardware through an open approach allows companies to sell services and software that works on this hardware, thus profit from them like companies pursuing the “Razor Blade Strategy”. This is similar to the strategy prosecuted by IBM which was able to adapt its business in response to the change of technology in OSS.
Lack of skills, enthusiasm and motivation to become an entrepreneur can be exploited by others, while the innovators can keep focusing on their “core competences” such as prototyping and design. These are also the main activities in which users are interested compared to the product development and commercialization process. Another point that emerges is the potential difficulty that a single user encounters when trying to enter the mass market. There is no doubt that OSH enables users to escalate the “Long Tail”, to cover plenty of new markets in which there are some potential customers. Therefore, building an organization entirely on these products may create some problems. A product like Good Night Lamp (presented in the paragraph 2.1.3) might need to be sold at a higher price, despite the low cost of production. In fact, to build a company and organize all essential resources there is something that needs to be carefully orchestrated: owning factories, commercial and technical supports are some examples of costs that need to be carefully evaluated before starting the commercialization of the product, otherwise the main advantages of selling an Arduino based product is lost. That is why the best strategy could be to sell kits that users can preassemble and make by themselves. As a result it seems practical to dispose of a common organization to share costs.
On the one hand, users with entrepreneurial attitudes have all the tools to develop products and the support of communities, where users give feedback about technical features on how to improve existing products. In this context the community serves also as a first market test, to check if a market opportunity exists. Business opportunities are also enhanced by the low initial investment required, so there is no need for users to seek microcredit opportunities, venture capital or business angels as in case of normal start-ups. These elements represents a crucial limitation especially for new ventures in developing countries where the financial needs represent a market failure.
Therefore, even a single user may finance its project: the Arduino board is very affordable, given that the main cost is represented by the time that needs to be dedicated to prototyping and developing activities. Websites such as SparkFun sometimes organise promotions offering good discounts to new customers, with the aim of educate people about the basics of OSH, which can eventually help them to become entrepreneurs.
On the other hand, products and services of new ventures are more accessible to small communities in certain regions. In fact, evidence have shown that the prices of certain commercialized products dramatically decrease when OSH is applied. 3D printers, for example, are already available on the market for about 30.000 dollars, but thanks to OSH it is even possible to produce one for as little as 500 dollars. In consequence, it is more accessible even to individuals and institutions in communities in developing countries that can use it to make products.
Furthermore, some of the projects deliver unconventional gadgets which are used only by a limited number of people. Others, however, solve concrete problems and get the attention of a considerable audience. Botanicalls, for example, allows to solve a problem that is experienced by people who want to monitor a plant they have at home while they are away. No company would be able to satisfy this need due to the small consumer segment and the high investment required. However, “even if there are 10-15 people in the world that are interested in a certain application, thanks to the increasing of web accessibility we can find them” said Nathan Seidle, the SparkFun founder. This aspect is extremely relevant in case the product meet a solution related to a healthy problem. Bug Labs, for example, largely employs its modules in order to develop solutions to elderly people who suffer from some particular diseases that need to be monitored by expensive medical instruments.
On the whole, from the analysis it emerges that a business opportunity can be exploited by a company which is able to take commercial benefits without losing the advantage of being open.
As discussed in the previous section, the Arduino board is easy to use, but the feedback from the online community reveals that it is still too difficult for many users. Others, however, show interest just in electronics and the OS ecosystem, but they are “lazy entrepreneurs”. From the Arduino’s point of view, future strategies of some companies interviewed reveal that they aim to reduce the impact of Arduino products on total sales. In fact, they are growing by more than 50% yearly, so costs become more important, and Arduino’s substitutes are not only better in terms of performance, but also cheaper. Even more, some Arduino users are getting bigger, offering also different variety of microcontroller boards, so they could soon become an Arduino competitor.
Arduino seems to be aware on these threats, which is why the strategies the team is implementing should take into account these issues.
In conclusion, along managers also policy makers could benefit from the insight of this research. They should support OSH environments as it increases entrepreneurial opportunities requiring low investments and support technology projects. Then, products and services of new ventures are more accessible to small communities in certain regions than traditional products, which increase social equality.
Source: MakerBot founder.