3.2. Business Models in OSH

Companies’ drivers summarized in table 4 show the main differences between the cases. Although every project has its original story, there are some elements which are shared by more than one company. Therefore, looking at the detailed information on companies’ websites and the information gathered by the interviews, by using the criteria shown in section 2.4 (user’s starting point, the innovativeness of the products, the impact they made on the OSH ecosystem, the popularity among online communities, and the intensity to which the user became an entrepreneur) emerges three different profiles of users entrepreneurs who manage differently each project.

  1. OSH specialists

These companies were not necessary started thanks to Arduino, but currently it is part of the business and a relevant source of revenues. However, the hardware is not their “core” business given that they also sell components, kits, devices and complementary assets. In addition, some of these companies are moving toward more integrated and business solutions, selling expertise about design implementation and technical support.

Within this group there are Adafruit, Bug Labs, Dangerous Prototypes, Libelium, Maker Shed and SparkFun (the biggest OSH player).

These businesses are started by pure user entrepreneurs who devoted themselves to the company and rely on an additional team of people working for the company. Those companies have a clear organizational structure and a website where they sell their products. Within this group, it is important to notice that Dangerous Prototypes is currently focusing more on Arduino than it was in the past (although it was born in the OSH environment) and Bug Labs allow users only to partially employ Arduino in prototyping. Their modules are more powerful and more applicable in several industries, although the business is not focusing on Arduino, neither is the plan declared for the future.

  1. 2.   Arduino-based companies

These companies derive their success mainly from Arduino, which is employed by users in their hobby and/or in a problem solving situation. They do not always rely on distributors; occasionally they sell their products themselves. They have a limited market but still large enough to organize a company and make some profits. On average they have $1 Million of revenues.

These users never plan to establish a company but thanks to the community they recognize a potential business opportunity and they decide to become entrepreneurs, which is in most of the cases is an additional working activity. To this group belong the following companies run by Arduino Entrepreneurs: Botanicalls, Chumby, DIY Drones and MakerBot.

  1. 3.   Commercialized Arduino-projects

These users make products through Arduino which gets wide attention from their peers. Therefore, they start to sell kits and/or ready-to-use products through their own websites. These are pretty new projects (less than one year) so figures are not meaningful. Those projects are mainly focused on the end of the “Long Tail”, thus a single vertical market might not be large enough to support a mass production.

These are the users who make some profits from this activity and some of them are reluctant to fully exploit the entrepreneurial opportunity as there are some “barriers” in switching their status from users to full-time entrepreneurs. Among them, there are some users who started to consider a possibility to exploit the business opportunity despite the fact that they would rather prefer to assign business activities to others and keep working on their “core competence” (such as prototyping and design rather than commercialization). Moreover, the current inaccessibility of a network of distributors does not guarantee them a success.

Within this group there are: Ardustat, GardenBot, Garduino, Laser Harp, Word Clock and The Blind Theatre, run by lazy user entrepreneurs.

This division leads also to a different perspective of the business models that these companies acquired, which are a bit far from the ones proposed by the authors reported in section 1.4. In fact, these models are a result of an empirical evidences and interpretations of the results from user entrepreneurs who is the main source of the information.

Moreover, it should be considered that apart from few exceptions (e.g SparkFun and Maker Shed), the majority of the sample started their activity quite recently; therefore the models proposed are just a pictures at the time of the research (February 2011).

In overall, another interesting finding from the sample is that Arduino increases entrepreneurial opportunities which require low investments. Arduino itself is a good example, given that the team started with 3.000 euro as the initial investment; now it is the leading platform in OSH with 220.000 boards sold. Another example is given by Sparkfun, which has about 19 million dollars revenues in 2010 and it did not require any funding from venture capitals or other financial investors. Therefore, users are encouraged to become entrepreneurs also by the low initial investment required.

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