On the death of hardware

23.09.2012 19:11

A few days ago I came across this article with an eye-catching title Hardware is dead. Two arguments are made there: first that consumer electronics designed and manufactured in Asia is becoming so cheap while maintaining a reasonable level of quality that western hardware companies don't stand a chance against them. And second that this will lead to a situation where content producers will be able to subsidize the whole cost of a device, giving hardware away for free with the hope that profits from content will more than make for the loss.

The first argument is nothing new. I remember how strongly it was voiced by the dean of Faculty of economics in the last year's round table on the role of engineers in society. Yet somehow there is still electronics design and manufacture going on in Europe. I am quite confident that the cost of eastern products will further go up as soon as their environmental and social standards catch up with the west, but this is merely my mostly uneducated opinion.

I'm more worried about the second prospect. It would create an incredible situation where you can get a physical object for free, something that necessarily requires a certain amount of raw materials and work to construct per copy, while on the other hand you pay for bits that are essentially free to copy. You may muddle up the issue by saying how selling hardware has low profit margins while content allows for a high margin. Still that doesn't change the fact that for the foreseeable future the cost of rearranging electrons in the RAM of your device into the recording of the latest blockbuster will be insignificant compared to the cost of rearranging atoms to make the said device itself.

I will conveniently skip the question of fixed costs, e.g. cost of design for hardware and production for content. We're talking here about complex devices produced by the millions where the situation regarding the cost of design is probably not all that different from the cost of producing some content for mass consumption. Hardware can still be surprisingly expensive for niche products though.

Subsidizing a product from the sale of consumables is nothing new of course. It's been done for all sorts of things, from printers, mobile phones, coffee machines to paper towels. The problem invariably appears when someone else tries to make consumables compatible with yours, only cheaper since they didn't have to subsidize your device. To prevent this kind of competition this business model always depends on some kind of intellectual-property monopoly-enabling legislation. In the past there have been some pretty creative uses of such laws in this context, for example where DMCA was applied to physical objects in the case of famous Lexmark ink cartridges.

Die Aktivitӓten in diesem Raum sind in deinem Land nich erwünscht.

What happens in the case where consumers themselves can make the consumable you depend on for your profit? Content shown on that give-away tablet is exactly such a case. Everyone can write text, make a program, record audio or video. Not to mention that pesky copy command every computer has that is just as effective as content producer's. Suddenly one product's users also become its enemies. This leads to nonsensical solutions like DRM and walled gardens. In some markets this practice has already been generally recognized as a bad idea. In European Union for instance mobile operators can no longer lock phones they are selling to their network, which means that at least in this country you can no longer get free mobile phones. Many are still subsidized of course, but whoever is selling them has to account for the subscriber's freedom to switch to another network. As regulators in other fields realize that such practice is harmful, I'm sure other kinds of give-away hardware will fail in a similar way.

Actually, I hope hardware subsidizing will never even come up to such a level. It might be great in the short term for hackers (hey, you get a free toy which you can jailbreak) and ordinary users (hey, you get a free toy) alike. But in the long term it will do more harm than good. For most people it basically exploits a psychological trick where people are bad at accounting for future costs, meaning you are tricked into buying things you don't actually need. Not to mention the throw-away culture such practice would enable (supposedly we are working towards a sustainable economy) and the escalation in the war over general purpose computing as companies more eagerly start to fight jailbreaks.

Posted by Tomaž | Categories: Ideas


This is a great article that really got me to think. My main problem with article you link to is that it generalizes to widely.

There is definitely a trend for mass produced hardware to get ridiculously cheap, even "free" (like you said you always exchange its cost for something). This is not limited to computers, you can buy toasters really really cheaply if you happen to need one. Difference is that toasters as such don't change much through years so our value judgement of their worth can adapt more easily compared with rapid change of computing devices and we are hence not as astonished.

Every industry or market segment at some point matures, which means it becomes good enough for vast majority of buyers. When it becomes accessible enough, it leads to market saturation. Camera makers have been experiencing this in last few years. That doesn't stop innovation (new design) completely as long as you can do it cheaply enough, but it is a point where price becomes more important and hardware becomes "dead" in sense of not receiving as much development or investment. Cheap can still be profitable which is why toasters still get made.

We are centers of our worlds which can easily lead to myopia of not seeing what we don't use, need or want. It's my main problem with the original article. Software is getting pushed in more places (hotel door locks being a popular example) and ALL of it needs hardware. Not all of that hardware can be just a simple computer with some input and output ports and those that do could use less power than yesterday, be more robust...

We will not run out of things that need new electronics any time soon. Hardware is most definitely not dead.

But lots of it will be cheaper than more ephemeral stuff. Lots of it already is and I, too, feel that as odd. Those atoms feel more solid and difficult to create. They are, but this is talking about cost instead of value, which is what we pay for. Only an idiot (or on occasions good Samaritan) pays more for something than he deems it worth so I guess we value that content more.

In a way I am hoping for such future. In an economic system that requires never ending growth on a planet with vast, but most definitely finite resources you only have three options, leave planet, change that system or start making value that is not tangible. I don't really believe in feasibility of first two (short of major upheaval).

It is impossible to predict effect of accessible 3D printing except to know they will be huge. It's amazing to draw a spare part on computer and have find it in post few days later. Even more when I will see it made on my desk. I used to think assembly would be another barrier and I am sure it still is for most people, but that changed for me when Rethink Robotics introduced Baxter. If 22000$ is cheap depends on point of view, but it is certainly much less for a robot than it used to be and not more than 3D printers cost not so long ago. Roomba felt more like a toy, but Baxter is different. It shows a not too distant future in which a general task robot will become accessible.

It's a future in which starting your own production line might involve having a bunch of 3D printers and robots like Baxter fed with schematics and assembly protocols downloaded from internet. What will we value then?

I am sorry for being so verbose, but like I said, your post really got me thinking.

Add a new comment

(No HTML tags allowed. Separate paragraphs with a blank line.)