The United States is the largest tech market in the world. But for new entrepreneurs, success in the tech sector is far from certain.
This past August, CBInsights calculated the tech startup failure rate at 70%. Among seed- or crowdfunded consumer hardware startups, a stunning 97% fail or become “zombies,” or those that struggle to break even.
Why are hardware startups so tough to get right? Because unlike software, hardware isn’t infinitely scalable. Hardware comes with steep logistical and manufacturing costs, and defect rates run high.
Whether you’re designing cutting-edge drones or something like kids phones, there are difficult hardware choices you’ll have to make. Here are five key ones to consider:
1. Server Infrastructure
Every tech product needs to transfer data. Servers distribute information to connected devices, whether they’re smartwatches, gaming consoles, or home thermostats.
Servers can be expensive and must be maintained. Choosing the right one is about understanding your options:
- You can choose an onsite solution, which will need to be housed in your company’s office.
- You can pay a monthly fee to rent space in a data center to store your server.
- You can also invest in cloud-based solutions that allow companies to purchase space on hosted servers.
There’s no “wrong” choice, but there are a few important considerations:
- Security: Contrary to popular belief, cloud solutions are actually more secure than onsite options.
- Accessibility: Most cloud solutions promise 99% uptime. But in most cases, you won’t be able to access them yourself.
- Costs: On-premise solutions typically require a larger upfront investment. Cloud solutions are rented, requiring a monthly fee. Owned servers come with maintenance costs, which are built into cloud fee structures.
If you don’t have a server administrator and hardware guru on your team, a cloud option may make more sense. But in the long run, an owned solution can be cheaper.
2. Data Input Device
A data input device enables a human being to create, change, or delete data via the product. Keyboards and mice are data input devices, as are buttons and touch screens.
The complexity and cost of these vary widely. For example, a scanner uses optical technology to turn physical images into pixels. A printer uses a wireless receiver or physical cable to accept image files before converting them to a physical form.
Consider what’s easiest for your user. A physical keyboard doesn’t make sense for a smartphone, for example, but a touchscreen version isn’t right for most work done on a desktop or laptop computer.
Spend a little extra here for sake of device longevity and the user’s experience. If your user has no way to input information, then they’re not going to care how robust your software is.
3. Internal Data Storage
Most tech products need some way to store data locally. Computers have both a hard drive and RAM. Some smaller devices can get by with only RAM-style storage.
Thanks to the ubiquity of the cloud, internet-connected devices no longer need massive internal storage. But some computer buyers still prefer a 1 terabyte hard disk to a 256 gigabyte one, for example.
Consider what your user would value. If your target audience is farmers, realize that they may not have a 24/7 internet connection. Citydwellers, however, probably won’t put much thought into the amount of internal storage your tech product has.
What if your user runs out of space? Provide a way to increase your storage space, such as through an external hard drive or additional RAM slots. This may not be possible for something small, such a smartwatch, but it’s important for tech products like desktop computers.
Most, though certainly not all, physical tech products need a screen. Imagine trying to use a smartphone without a way to read text messages, or a smartwatch with no face. Exceptions are devices that don’t need to be looked at in order to operate, like drones, app-enabled trackers, and smart speakers.
Screens can get expensive and are easily broken. Ask just how big of a viewing area your device needs to be functional. Beyond that, is your user willing to shell out some extra money simply for a couple of extra millimeters of screen space? Perhaps not.
Durability is particularly important when it comes to mobile tech products, and especially those with touchscreens. If your user drops the device, or simply presses too hard, can your product’s screen stand up to that?
5. Shell, Case, or Frame
All physical tech products have some sort of exterior hardware. For a laptop, that might be a metal case. A smartwatch needs a watch face and a band.
To decide on the right shell, case, or frame for your tech product, think back to its use cases. If you’re building a satellite phone for backpackers, realize that your product needs to be able to take a beating. It should be waterproof, shockproof, and rugged enough to last weeks in the wilderness.
On the other hand, say you’re building a sleep-tracking mat. Your external case should be just the opposite of the satellite phone: soft, slim, and flexible. You’ll want to consider a fabric cover, rather than a hard plastic one.
As with the data input device, this is a hardware area where spending a little more makes sense. If your product’s case falls apart as soon as your user takes it out of the box, it’s all but useless. Don’t expect them to buy a second one.
Software may run the world these days, but hardware houses it. Don’t spend all your money building a beautiful interface and forget about the physical aspects of your tech product.
Create a separate budget for each, and realize that hardware development costs can be steep. Not only do you have to design it, but you have to find a manufacturer to help you build it. And then you have to transport, assemble, and package it all up well. Your tech product’s success depends on those steps every bit as much as it does software development.