[Discuss] OSHW & Economics

Tue Nov 19 00:17:08 UTC 2013

Open source hardware is actually going to have a much larger market for
services than software.
1) just like software, hardware cannot run forever without problems, unlike
software, hardware cannot be diagnosed, fixed and/or replaced remotely
2) just like software, hardware benefits from digital sharing, unlike
software, hardware has to be converted into a physical form, and then
lessons learned have to be converted back into a digital form

Also, you don't have to worry too much about cloners ruining the market for
open source hardware.
1) nobody will clone it until it's already proven to be successful in the
marketplace and is therefore a good investment
2) if the hardware solution to the problem are still evolving, then the
open source work will always be ahead, if it's not evolving, then it's
appropriate to hand it off to someone else who can mass produce the stable
solution at low cost anyway
3) an open source community won't form around a product that is not open
source, so if the cloners change the design to make it profitable to mass
produce, and don't open source the new design, the community won't support
it

Think about the smooth metal bars used for linear motion in a lot of
RepRaps. Those linear motion components are absolutely necessary, but
nobody is buying "open source" smooth metal bars. The technical solution
stabilized a long time ago. Now they're a commodity, as they should be,
because commodity linear motion parts lower the cost of the whole machine
and allows developers to focus on the problems that haven't been solved
yet. As open source hardware advances the more complicated parts will
become standardized, which will allow mass production to lower the price.

On Mon, Nov 18, 2013 at 2:09 PM, Marketply <contact at marketply.org> wrote:

>   A few thoughts on that.
>
>  Open source hardware (OSHW) is a revolution as well for entrepreneurs and
> free culture. Although OSHW manufacturing won't be affected much by
> copycats.
>
>  Even the copycats will always only be playing catch-up more than
> innovating, and will always lack a strong community who supports them. For
> people in the community who actively contribute to improving open designs
> have invested themselves emotionally in the technology. So they're more
> likely to buy and promote goods from the original company.
>
>  And because OSHW is global, people from Asia working in factories will
> begin to have more of a choice: work for dirt cheap to make someone else
> rich, or make their own goods and the websites to sell from.
>
>  Gaining also the benefit of reduced costs by sharing knowledge: of
> manufacturing, for how to meet standards, best practices, etc.
>
>  The most proprietary companies often learn from scratch with each new
> venture, which translates to a greater amount of solitary spending on
> consultants, testing, trial & error, keeping secrets (expensive), etc. They
> don't have the luxury of ideas flowing freely from open collaboration.
>
>  So there will be less of a need for big manufacturers as more communities
> of people trade with other communities, becoming free to make and sell
> their own things instead of having to rely on a larger company.
>
>  And even when a manufacturer goes to find cheaper labor elsewhere, they
> may find increasingly that people there are doing fine making things
> themselves. The power a manufacturer has in hiring cheap labor is directly
> proportional to how badly workers need the money or resources it offers as
> wage.
>
>  Your point about service for open source software applies to OSHW as
> well. People usually buy from providers who know the most about what
> they're providing. People who use  Red Hat wouldn't generally turn to
> another company to provide service for Red Hat software.
>
>  As customization becomes greater with 3D print, people will seek out the
> ones with experience who know best exactly how to customize each piece for
> a given scenario. The ability to 3D print doesn't suddenly give a person
> expertise in crafts and engineering.
>
>  OSHW businesses will do more than fine sharing their knowledge. They'll
> do fantastic.
>
>  😃,
>
>  Marino Hernandez
> (just a founder of Marketply <http://www.marketply.org>)
> 203-429-4205
>
>
> On November 18, 2013 at 12:12 PM Mario Gómez <mxgxw.alpha at gmail.com>
> wrote:
>
>  OSHW & economics?
>
> Disclaimer: I'm not an economist and I only have basic notions of
> economics, so please correct me if there is any economist on the list.
>
> With Open Source Software is pretty straightforward to create a economy
> based on services where the "final product" doesn't have a direct monetary
> value but the services associated to it (support, customization,
> implementation, etc). This works OK this way because even if the
> development cost are high the reproduction of the final result is always
> near to zero, this means that with enough time (and people) using a OSS
> software the real cost of each individual copy start to decrease to a
> minimum for each user.
>
> So you cannot base your businness on selling the software per se but the
> services associated to it. For example if developing a OSS software
> solution costs $1000, assuming a reproduction cost of 0 and you have 1000
> users that means that the real value of the software is $1 by user.
>
> But those 1000 users would need support and if we assume that we sell the
> software to our users at $1 but also offer associated services to $5  that
> means that a bussiness based on services could have more oportunities to
> get profits by offering support solutions and associated services than
> selling just the software (see for example RedHat).
>
> But the OSHW always have an associated cost and there is no way that a
> small OSHW proyect can compete with an asian manufacturer for example. I
> mean, with the right facilities, any manufacturer could take an OSHW design
> and reproduce at just a small fraction of the costs that the original
> designer had.
>
> And obviously in a world were the predominant way of think is to generate
> maximum profits, if for example, I'm offering a custom solution based on a
> OSHW platform then obviously I would end choosing the provider with the
> lowest price, even if isn't not the original designer, even if that is
> against the OSHW philosophy and good practices.
>
> However, this kind of mentality could be a deterrent for someone to work
> on OSHW projects, and this is the same problem that originally was behind
> the creation of patents that had the objetive of protect the "inventor".
>
> But I'll give you another example of a good side of this: Imagine a third
> world country with income levels less than $100 at month. A simple Arduino
> could cost a third of that income, but a equivalent product manufactured in
> asia (I'm not talking about counterfeits) could cost just $10, that means
> that this versión at a lower cost at the end of the day increases the
> posibilities for the people on this countries to access this kind of
> technology. Making the access to the technology more "democratic".
>
> In Software is just the developer the one that could be "harmed" if they
> don't offer support to their own work because once the software is finished
> there isn't any external factors that prevent them to offer a solution to
> their clients, and even if there are other companies offering the same
> support services they all play in the same "field".
>
> But in hardware, how a OSHW company could survive if there is an
> "external" factor associated to the cost of manufacture that cannot be
> reduced for manufacturing in small quantities?
>
> How the OSHW philosophy conciliates with the simple fact that the "makers"
> need something to eat at the end of the day?
>
> For software we already know what's the answer: a service-based economy.
> But for software I don't know what could result in the long run.
>
> I would say that companies like SparkFun and Adafruit are really good
> examples of how this can work in the real world, not only offering their
> products but also the support and the knowledge about how to use them.
>
> However this companies are pretty "new", and they sell physical things
> rather than support. But you can find easily on eBay or DX exact copies of
> their products with the same functionality at just a fraction of the cost.
> If we follow the market rules, then the people is going to start choosing
> the lower cost alternatives (because the value of something is how much the
> market is willing to pay for it and not their real manufacturing cost)
> making more hard for this kind of companies survive in the long run unless
> they start to manufacture their products overseas.
>
> I know that this is not a problem with the OSHW philosophy but the current
> "global economy" and "global markets". How is possible that something that
> is manufactured at the other side of the globe has a lower cost than
> something manufactured locally even if the latter doesn't provide any value
> to the local comunity?
>
> I would think that the main problem is that current economy model doesn't
> take in consideration the added value for the people but only the
> "material" costs, including the sad fact that in this model treats people
> as just another material, lower wages mean cheaper production costs and
> more profits for the business.
>
> I would think that OSHW is not a manufacturing revolution, but more a way
> to question ourselfs if the current models really benefit anyone except the
> business. I would be willing to pay more for something if I know that it
> gives any kind to benefit to the community and the "inventors", but sadly I
> would think that is not the way of thinking of most of the world.
>
> Any ideas, suggestions, someone from SparkFun or Adafruit that could share
> their experience, any economist?
>
> I'll leave this discussion open for anyone that wants to share his toughts
> about this interesting topic.
>
> Regards,
> Mario.
>
>
>
>
> _______________________________________________
> discuss mailing list
> discuss at lists.oshwa.org
> http://lists.oshwa.org/listinfo/discuss
>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.oshwa.org/pipermail/discuss/attachments/20131118/b319dda6/attachment-0001.html>