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Businesses China The Almighty Buck Hardware Technology

Be it Smartwatches or Smart Speakers, It's Never Been Easier To Make Gadgets. But Only the Big Players Have the Muscle To Survive. (theguardian.com) 116

Posted by msmash from the closer-look dept.
Why would you go with the smaller brand, faced with those offerings from tech's behemoths? Or, at the previous displays, why not just buy the cheaper models? Charles Arthur, writing for The Guardian: That's the challenge for many consumer electronics firms. Not how to make things, or how to distribute them and get them in front of potential buyers. It's how to make a profit. Out of Fitbit, GoPro, Parrot and Sonos -- each operating in different parts of the consumer electronics business -- only the latter made an operating profit in the last financial quarter, and all four have made a cumulative operating loss so far this year. Making a profit in hardware has always been difficult. By contrast, in software, all the significant costs are in development; reproduction and distribution are trivial -- a digital copy is perfect, and the internet will transport 0s and 1s anywhere, effectively for free. If your product is free and ad-supported, you don't even need anti-piracy measures; you want people to copy it and use it. Software companies typically have gross margins of around 80%, and operating profits of 40% or so.

In hardware, though, the world now seems full of companies living by the Amazon founder Jeff Bezos's mantra that "your [profit] margin is my opportunity". Indeed, Amazon is one of the reasons why long-term profit is more elusive: it provides a means for small startups to distribute products without formal warehousing arrangements, and compete with bigger businesses at lower cost. That, together with the rise of a gigantic electronic manufacturing capability in the southern Chinese city of Shenzhen, about an hour's drive north of Hong Kong, has made the modern hardware business one where only those with huge reserves of capital and brand recognition can hope to thrive.
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Be it Smartwatches or Smart Speakers, It's Never Been Easier To Make Gadgets. But Only the Big Players Have the Muscle To Surviv More

Be it Smartwatches or Smart Speakers, It's Never Been Easier To Make Gadgets. But Only the Big Players Have the Muscle To Surviv

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  • How soon before there is a widely exploited bug that can put smart speakers or other devices in a state where they catch fire or do other real damage to themselves and things around them?

    If you google "halt and catch fire" you will see a history of devices that could, through software, be made to catch fire, move in unintended ways that would hurt other things or people, or simply wear themselves out sooner than intended. Think old-school monitors with flyback transformers, impact printers or anything else

    • Do the wall warts powering smart spy-speakers even put out enough power to set anything on fire?

      • Do the wall warts powering smart spy-speakers even put out enough power to set anything on fire?

        500mA is more than enough to start a fire with small enough resistance and some flammable material.

    • It wouldn't do anything bad for the makers of those devices. In fact, a HCF instruction would be a boon:

      1: Everyone would buy a v2.0 of their smart whatzit, when they are told that their existing one can't be fixed or upgraded.
      2: If they catch fire, that's their problem. They clicked on the EULA and now have to deal with arbitrators paid by the company.
      3: If a ton of devices catch fire, the C-levels short their stock before the announcement, then make their local shipwrights happy with new yachts.
      4: E

  • Baloney (Score:3)

    by 110010001000 ( 697113 ) on Wednesday January 02, 2019 @01:44PM (#57892738) Homepage Journal
    If you have good useful hardware you will survive and beat the big tech companies. The problem is that these gadgets are just junk and rely on fads. Eventually you run out of people to sell to and your market is saturated. Only a small percentage of people want a drone, or a fitbit, an action camera, or a $60k+ electric vehicle (like Tesla found out), or a $1000+ phone (as Apple is finding out). There isn't an infinite market of consumers out there with excess money. Once the fad is over you have saturated your market.

    • Re: (Score:2)

      by Luthair ( 847766 )
      I'm not sure its that simple, specifically "Smart" Speakers rely on the ecosystem. Even if you could manufacture a great speaker with a profit margin you're never going to be successful because you need to be able to tie into existing services otherwise its pointless.

      • Re: (Score:3)

        by xanthos ( 73578 )
        You seem to be implying that the speaker manufacturers are paying for the privilege of including Spotify, Pandora, Amazon Music, et. al. as streaming options. While admittedly I don't know the internal business arrangements, It is probably more likely that the manufacturers get the access for free since these services have an ad based and/or subscription based model that is independent of the device consuming the service. Either that or the streaming services are actually paying the hardware manufacturers

    • Re: (Score:2)

      by hawguy ( 1600213 )

      If you have good useful hardware you will survive and beat the big tech companies. The problem is that these gadgets are just junk and rely on fads. Eventually you run out of people to sell to and your market is saturated. Only a small percentage of people want a drone, or a fitbit, an action camera, or a $60k+ electric vehicle (like Tesla found out), or a $1000+ phone (as Apple is finding out). There isn't an infinite market of consumers out there with excess money. Once the fad is over you have saturated your market.

      Which is why companies try so hard to innovate and come up with new technology, though even that can't keep going forever, Apple hit that innovation wall with the last iPhone, which was mostly just a more expensive version of the previous one.

      There are still a few features that could be added to fitness trackers that would make people want to upgrade -- like cellular capability without being tethered to a phone (even sms-only would be useful), pulse-ox sensors, EKG sensors. Plus, the tiny battery with inabi

      • Add all the features you want, but once the fad is over, it is over. Fitness trackers are a definite fad.
        • Unless the US insurafilth mandate them for "discounts" on health insurance (read: not being penalized $200+ per month).

          • Or employers demand them, as it lowers their premiums.

            • That too -- Americans are way too accepting of authoritarian bullshit when it comes from private businesses. The French have the right idea: pitchforks, torches, barricades, and yellow vests.

              • The French have the right idea: pitchforks, torches, barricades, and yellow vests.

                They did that here too, but they [wikipedia.org] got called alarmist, conspiracy theorists, kooks & racists. Some of them may have been some or all of those things, but they were only the fringes of a fringe movement.

                • The Tea Party was co-opted by corporate interests who wanted deregulation. I'm thinking more like Occupy Wall Street plus the Tea Party, on steroids.
        • Add all the features you want, but once the fad is over, it is over. Fitness trackers are a definite fad.

          Especially sense most smart phones can do what fitness trackers do. Either they are already installed with these features(Samsung has it, LG has it) or you can download the apps for free.
          • They can't continuously monitor pulse rate and pulse oximetry. As far as step tracking, step trackers have existed for ages -- mechanical pedometers.
            • Smart watches can monitor the heart rate constantly, which are tied to the smart phones. As much as I HATE apple, https://www.cnet.com/news/appl... [cnet.com]. Others will follow.
              Myself, nope. I like my Citizens watch, so I will most likely stay with it. I know they also have a smart watch. Maybe someday.
              Just saying. Everyone has their phone with them. More and more people are buying the watch(god, please don't let me give in). They offer everything a fit and other health gadgets have.
              • A "smart watch" and a fitness tracker are essentially the same fuckin' thing, with slightly different software. I was lumping the two into the same bin.
                • Fitness trackers are specific purpose unit Smart watches are not.

                  • Re: (Score:2)

                    by hawguy ( 1600213 )

                    Fitness trackers are specific purpose unit Smart watches are not.

                    Where do you draw the line? I have a Garmin fitness tracker with a touchscreen that can run downloaded widgets and display notifications from my smart phone. Is that a fitness tracker or a smart watch?

                    • I would consider that a low end smart watch. How about Apples Watch, which now can do heart monitoring. Fitness tracker or smart watch? Probably wrong here, but I would define a fitness tracker that only is used for exercise and health(fitness). Smart watch, that and much more.

        • Re: (Score:2)

          by Luthair ( 847766 )

          Add all the features you want, but once the fad is over, it is over. Fitness trackers are a definite fad.

          Until there is a silver bullet for weight loss I doubt it. Just look at the perpetual emergence of diets based on bogus principles.

          • There's no silver bullet for weight loss, but there is one for getting a healthy amount of exercise. Live within 2 miles of work, walk to/from work. That gets you up to about 4 miles a day (8000 steps). Another mile of day-to-day activity and you're up to 10,000.

            • Re: (Score:2)

              by hawguy ( 1600213 )

              There's no silver bullet for weight loss, but there is one for getting a healthy amount of exercise. Live within 2 miles of work, walk to/from work. That gets you up to about 4 miles a day (8000 steps). Another mile of day-to-day activity and you're up to 10,000.

              Even if you live farther away and/or drive to work, there are lots of ways to get exercise. Like, instead of parking next to your office you can park farther away, like in a separate building then walk the rest of the way to work.

              Or ride your bike to work (some days or every day). If you live too far for a reasonable bike commute, then drive part way and bike from there. I have a 15+ mile commute which is more than I want to do both ways every day, so on days my wife goes in to the office,I ride in with her

      • I'd go the other direction. Make it JUST a watch and fitness tracker, no radio. Use a custom low-power chip to track steps and grab a pulse rate once ever 60 seconds; have the entire thing be powered by a replaceable watch battery. Garmin VivoFIT comes pretty close to this ideal.

        • That would be great, but device makers make just as much money, if not more, selling every single bit of info the device can snarf up, be it your heartrate, location, or whatever. In fact, last time I talked with a VC, no constant metadata/analytics/telemetry, no funding, when it came to IoT devices.

          • Yep, the only good VC is one who has cancer. Just like Lloyd Blankfein is a good banker -- hope his leukemia eats him alive.

        • Make it JUST a watch and fitness tracker, no radio. ... have the entire thing be powered by a replaceable watch battery.

          I bought two Polar heart-rate monitors in 1998 that were very much like that. I'd buy more of them if I could. My biggest complaint about most current HRM devices is that the only way to get the data out is to upload it to a Web site owned and operated by the manufacturer. I prefer to keep my data to myself.

          • There are a bunch of cheapie Chinese fitness tracker bands that only talk to a phone app which doesn't require account creation via Bluetooth. I don't think they even have the infrastructure to collect data. A "MyEpads" band is an example of this type of device, available for under $10.

            • Re: (Score:2)

              by Etcetera ( 14711 )

              Sadly, my concern there is that I probably can't trust the app. Especially if it's Chinese.

              There's a "non-cloud" 2-way pet camera I picked up on the cheap, but the phone app it connects to requests every permission under the sun. No thanks. I'd actually prefer it to run a small embedded web server since at least then I could FW it off and be aware of what on net might be able to reach it. With an app on my phone, the risk gets just that much bigger.

        • Fossil (and other manufactures) make what they are calling "hybrid" smartwatches. They are exactly what you are saying except they do have a bluetooth radio. They claim year long battery life with their built in (replaceable) battery though.

    • Only a small percentage of people want a drone, or a fitbit, an action camera, or a $60k+ electric vehicle (like Tesla found out), or a $1000+ phone (as Apple is finding out)

      Wow you are absolute pants at understanding markets.

      All of those things have growing markets with a lot of demand.

      Fads do indeed have issues with market saturation- but those ain't it, which is why all of those items are in markets with healthy growth (even if some companies may struggle within the space, like Fitbit itself which has a

      • Uh, no. Apparently you haven't been following the trends. Tesla and Apple have not been growing nearly as fast as they have been, especially on the high end. The market for $1000+ iPhones and $60k+ Teslas are very limited and the market is punishing them now as the demand has evaporated. The vast majority of people are not like you, or like the people you know.

        • I pay attention to earns reports, not market rumors.

          Little tip for you - growth is growth, even if it appears somewhat slower at times.

          You said the market was saturated. Which would mean no growth... there is growth, so the market is by definition not saturated.

          kthanksbye. You can have then last response since you appear not to understand markets or growth or, well, anything.

          • I said the growth was slowing and eventually the market is saturated. Obviously no market with any growth is 100% saturated, but the massive growth is over. In particular Tesla and Apple are finding that out the hard way. There are only a limited number of people in those markets. I know you are a young technocrat and Apple/Tesla fanboy, but you are too inexperienced to know that the valuation of these companies are based on massive growth not "earns reports". Once the growth slows, they have a harder time

    • Wrong. The problem is not poor quality or fads, it is copycats.

      Amazon's working principles make it VERY easy to find a good selling, patent protected product and copy them, selling via multiple amazon accounts. As the patent holders slowly shut down each of your copy cat accounts, they lose all their profit and eventually give up, as it costs them more to shut your accounts down then they gain in profit.

      Amazon itself encourages this because they demand low prices, so you can't be the high quality product.

      • I didn't say anything about "poor quality". Everything listed (GoPro, Parrot, etc) were FADS. They are just gadgets that are cool for a while and a lot of people with excess cash buy them, but eventually everyone who wants/can afford one, has one already. Copy cats are for people who couldn't afford the original and has little effect.

        • That is bullshit. The copycats do not say they are copycats, they pretend to be original inventions. Normal people do not know which is the 'original microwave popcorn popper", When they look for such a device they find:

          The Original HOTPOP Microwave Popcorn Popper, Silicone Popcorn Maker, Collapsible Bowl BPA Free & Dishwasher Safe (Red)
          by HOTPOP

          The Original Delizioso Microwave Popcorn Popper, 4 Popcorn Cups and Popcorn Recipes E-BOOK Included, Collapsible Bowl, FDA Approved, No BPA (Red)
          by Delizi

          • People who are interested know the difference between a GoPro and a knock off. Gopro isn't losing money because people are accidentally buying the knockoffs (or even knowingly). The market for action cameras is saturated, and everyone who wants a Gopro already has one. In addition the fad is over, so there aren't new people looking to buy.

    • If you have good useful hardware you will survive and beat the big tech companies

      You can also say that with Kickstarter and 3D printing, it's never been easier to sell niche hardware. There are so many more types of hardware available now compared to 20 years ago.

      • It definitely is easier. My point is if you make good hardware you will survive, no matter what the big tech companies do. In fact the big tech companies eventually drop out of markets once the profit margin drops or they aren't selling enough.

    • If you have good useful hardware you will survive and beat the big tech companies. The problem is that these gadgets are just junk and rely on fads. Eventually you run out of people to sell to and your market is saturated. Only a small percentage of people want a drone, or a fitbit, an action camera, or a $60k+ electric vehicle (like Tesla found out), or a $1000+ phone (as Apple is finding out). There isn't an infinite market of consumers out there with excess money. Once the fad is over you have saturated your market.

      Things like smartwatches have great ideas that can be very useful. But for $400, I've got plenty of alternatives to what the smartwatch would do for a lower price. Plus a purchase that high for me needs to be something particularly special, or something I will use just about daily. My use of a smartwatch would happen a couple times a month perhaps.

      So yeah, cost much higher than value makes it a fad to me. And this is what seems like the most useful smart device (other than a phone) to me.

    • If you have good useful hardware you will survive and beat the big tech companies.

      Not really - Because if you have "good useful hardware" (but not the economies of scale that the big tech companies have) you will have to charge more than your competitors, which puts you at a disadvantage right out of the gate.

      Yes, companies like Apple can charge a premium for good hardware, but they're an exception, not the rule.

      That's why the market today is well-known brands (Nest Labs [Google], Logitech) and cheap

  • It isn't so much about the device, it is about the Software service infrastructure behind it.
    Companies are not doing the IBM Mistake which allowed Microsoft to Dominate the PC Market. They are being careful who they license too and have stricter guidelines on who and what can use their software and their section of the cloud.

    Back in the late 1980's I could be a White Box PC maker and compete against the likes of Gateway and Dell. I would just need to get all the Case, Power supply, motherboard, CPU, Graphi

  • To Much (Score:5, Informative)

    by zippo01 ( 688802 ) on Wednesday January 02, 2019 @01:54PM (#57892788)
    As I get older the shiny tech edge gets not only less attractive but off putting. I don't want/need light bulbs with WiFi, I don't want my thermostat connected to the internet. Why does anyone need a washer, dry or refrigerator connected to anything but power and water? Why not get cameras all over the house, so people all over the world can watch you and your family. This extends to everything. Hey, buy a car only highly specialized and expensive people can work on! Rebuy all the media you already own, because we have a new format that isn't any better, just different! Hey we no longer have a working web page, download our app that has less functionality but might spy on you, it'll be a big surprise. Its just more to worry about, more to deal with, and I'm an electrical controls engineer! I would imagine most new tech is only used to a small fraction of its capability, because most people don't care or want to put the effort in. The move complex/connected something is, the less reliable, and harder to understand the ramifications and risks of owner ship..
    • What if those cameras are on your internal network and talking to a Raspberry Pi based DVR inside a box that looks like an ordinary circuit box? What if those cameras could also talk to a LOCAL thermostat, know when people are home, and raise/lower the temperature accordingly? There are proper/ethical ways of doing things and unethical shortcuts.

    • As I get older the shiny tech edge gets not only less attractive but off putting.

      Same here. Hell I hate the fact that macOS has facebook and other bullshit built-in because I'm never going to use it. It's wasted space on my SSD and maybe even wasted RAM and potentially insecure hooks in the OS itself.

      I don't want/need light bulbs with WiFi.

      I bought Philips SceneSwitch Colour (2200K, 2700K, 5000K) bulbs [homedepot.ca]. They don't connect to anything but they do offer something more than regular dumb bulbs.

    • I don't want my thermostat connected to the internet.

      Mine isn't, but I can see the value. Last night my family and I left a restaurant and started the 15-minute journey home. Would have been nice to have been able to remotely bump the thermostat from 60F to 70F before we left the restaurant so the house was warm when we got home.

      Why does anyone need a washer, dry or refrigerator connected to anything but power and water?

      Refrigerator I agree with you. Washer / dryers will soon be able to query the p

      • Technically, querying the utility only needs a one-way link. No cloud-clown account needed -- you should just be able to input a URL where your utility has an XML file of daily power rates. As far as the dryer, will the clothes be sitting wet in there all day growing mold before you turn it on?

      • It's also nice to remotely turn on the dryer an hour before you get home, so you can hang up your clothes without them sitting all wrinkled in the dryer.

        That sounds nice, but when you think it through
        1) Put load in wash (~45 min)
        2) Move load from wash to drier but do not turn on
        3) Go do something for up to 12 hours, but make sure you have the time and energy upon arriving back home to take out the load for hanging/folding

        Plus, let's be honest, if you are doing laundry for more than one person, you want to get it all done as fast as possible anyway, load after load. Your other scenario, about running when rates are lower was... slightly more realistic, but

        • Or instead of (2), you can put a clothing line on your back porch, hang the clothes, and never have them wrinkle. Bonus points if it annoys uptight neighbor or HOA goose-stepper types.

          • you can put a clothing line on your back porch

            I live in the Pacific Northwest. Here is my forecast for this week (with apologies in advance for the metric temperatures).

            https://imgur.com/a/mDQuEnM [imgur.com]

            ...and pretty much the previous two months and upcoming two months.

    • I don't want my thermostat connected to the internet.

      Well, I can only tell you why I personally got a Wi-Fi thermostat. I used to travel a lot for work. Like A LOT. Some years I would fly over 100,000 miles. When you're not home often you don't really need to heat or AC on much. But it sucks coming home to a freezing cold or burning hot house at 3AM on a Friday night / Saturday morning. Sometimes I would forget to adjust the temps while I was gone. So I could turn the AC / heat off. Set it to temperatures that keep the house safe from mold or mildew.

    • Re: (Score:2)

      by MobyDisk ( 75490 )

      I don't want my thermostat connected to the internet.

      IMHO, the problem is that we changed the internet from the peer-to-peer model to the server-based model. It should be that the devices sends the data to your local network, and you having control to expose that as you see fit. Instead, it sends it to a 3rd-party cloud provider, who then has a hole through your firewall.

      All this started when we went from personal home pages to centralized systems like MySpace and then Facebook. That was the beginning. Now it is just assumed that data is placed on the clo

    • Re: (Score:2)

      by antdude ( 79039 )

      Same here. I used to be excited to get the newer stuff, but not anymore. I got tired of buggy, costly, bloated, etc. products, I just use older stuff that are more stable, cheaper, etc.

  • The huge megacorps can afford the lawyers. If you can't you are a slave.

  • I think the problem is the products themselves, also development is harder than people give credit for. I mean sure there's a lot of standards based me-too products out there. But there's very little innovation. One of the things Steve Jobs was able to do was bring an entire new shape/form factor to market that was almost completely new, or at least so different to what was available for a reasonable price that it seemed completely new. I think start up companies just completely lack the resources to pull t

    • Re: (Score:2)

      by Nexus7 ( 2919 )

      Yeah, more than consumers, manufacturers are even bigger sheeple. Look at every big and small company making bigger and bigger phones with more and more cameras. The only way they can do that at a lower price than Samsung is to make a lower quality product. If I'm looking for a smaller phone say 5" and light with a newer processor - nothing out there. Smaller manufacturers should be developing niche markets and growing them, not chasing lower and lower margins with commodity products.

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