# But

> "Everything before the word ‘but’ is horseshit”
> <br>
> — Jon Snow, *Game of Thrones*

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## But

**Hardware is hard**, especially consumer hardware

even to established companies

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### But

# most commercial Open Hardware projects 
# Fail

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### But

Some reasons 

1. High fixed costs but low, eroding margins
1. Easy cloning
1. Value-capture gap: few recurring-revenue hooks

Note:

1. High fixed costs but low, eroding margins
    * Tooling, certification and inventory tie up large capital, yet the designs can be copied the moment they ship, crushing gross margin before volume rescues unit cost.
    * Investors shun hardware because “it’s expensive, has lower margins than software, and production and iteration cycles take longer.” Inc.com  Open-hardware makers who price chiefly on “being cheaper” enter a “race to the bottom” that ignores real development costs. Aquiles Carattino Open Notes
1. Easy cloning
    * price competition and brand confusion     
    * Open CAD files let factories or rivals release near-identical boards within weeks. The original vendor must drop prices or watch sales disappear, while still paying for R&D.
    * Espruino’s creator has to mark up boards to fund software; $2 knock-offs pre-flashed with his firmware undercut him and still ask him for support. WIRED
1. Value-capture gap: few recurring-revenue hooks
    * Unlike OSS, support or cloud-service add-ons for physical devices are harder to bolt on and customers expect the files for free. Many firms never replace one-off sales with a service, subscription or consumable.
    * Tile’s CEO notes that without “razor-blade” or network-effect revenue, hardware startups struggle to interest VCs. Inc.com

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### But

more reasons 

1. Verification, compliance and liability are still your problem
1. Support load scales faster than revenue
1. Misaligned funding timelines

Note:

1. Verification, compliance and liability are still your problem
    * Open IP does not waive EMC, safety, CE/FCC, or chip-level verification; those costs recur for every design spin and each derivative you release. Underestimating them kills cash flow.
    * “Nothing is free—the true cost of RISC-V includes verifying any changes made to the design… effort that is incredibly easy to underestimate.” Semiconductor Engineering
1. Support load scales faster than revenue
    * Users of cheap clones (and of your own early prototypes) still email you when things break. The time spent on forums, docs and returns competes directly with engineering the next product.
    * Clone users with “bad documentation and buggy firmware” generate the biggest support burden for the original vendor, per the Espruino case. WIRED
1. Misaligned funding timelines
    * Kickstarter cash or small grants cover first production run but not ongoing iterations, marketing or inventory buffers. When volume demand finally arrives, the firm often lacks working capital to order the next batch.
    * Academic review of 37 open-hardware firms finds sustainability hinges on continuous cash flow; many stall after initial launch when orders outpace capital. ResearchGate